Future-proofing your GP Practice’s finance function

Typically, the Practice Manager handled the finances and record-keeping, often during evenings or weekends, as the demands of the day-to-day operations required more immediate attention.

Before Covid, the financial methods used by practices were more effective because income was relatively stable, costs remained consistent, and overall finances were simpler to manage.

Throughout Covid, practices saw sharp rises in income, but also large cost increases. In the periods following Covid, practice income returned to more usual levels, but higher and more sporadic costs remained. This has created volatility with practice profits, meaning a change in approach to practice finances is required. Unless practices adapt, finances will continue to be difficult to manage, creating a risk to future sustainability.

Below are key points to adopt to help implement a more robust finance function.

Seven ways to future-proof your GP practice’s finance function

1. Use cloud software

Work with your accountants to implement a cloud-based software. This can be accessed from anywhere and provides real-time information. There’s no longer a need to type up bank statements, as these are imported directly. Invoices and other receipts can be stored electronically, reducing the need for practice storage.

2. Create a chart of accounts

Again, work with your accountants to draw up the correct coding structure for you. This needs to cover your income and expense streams and be easy to navigate when keeping the records.

3. Review your processes regularly

Regularly process the data that is uploaded to the software package and sense-check the entries. Has all income been received or are there claims that need to be made? We’d recommend doing this once a week, to keep on top of transactions and ensure any issues can be sorted at the time. Storing up hundreds of transactions can be over-facing and can reduce the quality of the records.

4. Ask for feedback

Ask your accountants for feedback, including what improvements you can make to ensure financial data is accurate and meaningful. This may result in further analysis of transactions, which is important to track income and expense streams properly.

5. Budget

 A practice budget is key. There are two approaches to this:

• Last year as a base – Look at the results for the previous year and update what will change in the year ahead. This can be a simple way to understand likely profits but isn’t perfect.
• From scratch – Ideally, a proper budget would be built from scratch. Use the chart of accounts from your software package and build up the budget on a line-by-line basis, over each month of the coming year. Consider each service, how many patients you’ll have and what the value per patient or service is. Look at costs and be honest about what expenses are needed and what can be avoided. Staff costs will be the largest and are likely to have the greatest impact on profit, so it’s important to consider staff changes, particularly increases or decreases in partner sessions.

6. Create easily understood reports

Work with your accountants to build reports that present financial data in a way that’s understandable to you. Cloud-software can provide various reports, which can be tailored allowing you to compare actual figures against those from the created budget.

7. Use your data to make informed decisions

Use the reports and budgets to understand practice finances. It’s important to ensure income streams are profitable or provide adequate rewards for the effort involved. This may require further work, to look at services in isolation. Once profits are established, these can be scrutinised – Are they as expected? If not, what can the practice do to a) generate more income, or b) cut costs? It might be a combination of both.

It's vital practices adopt this approach (or something similar), even if responsibility for the finances remains with the ever-busy Practice Manager.

If difficult decisions need to be made, it’s best to act now, rather than when it’s too late.

Get in touch with our healthcare specialists

We work with our practices to implement the financial structures above, to enhance their finance functions providing oversight to the practice and partners. Should you have any questions, please do not hesitate to get in touch.

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