Tip of the week: Independent practitioners need to consider some big financial issues. Vanessa Sanders shows the way forward.
As there is a short time-lag in most circumstances for the receipt of payment for services performed – because the vast majority come from the insurers – many consultants did not feel the tight pinch of financial hardship until a few weeks after the pandemic shut down their operations.
Many will have been busy with the build-up on the front line of the NHS and so may have had their income lines replaced in the shorter term.
Longer-term finances will need to be reviewed properly, looking at all costs and sources of income to see where the vulnerability lies.
For many, this will start with the need to fund living costs such as private school education and large mortgages – or even the purchase of a Tesla.
As we move towards recovery on a national level, private consultants and GPs need to look at the realistic position of their business.
I recommend doctors’ businesses should undertake extensive scenario-based exercises to find and identify vulnerabilities in this new way of working and develop solutions accordingly.
Indicative scenarios might include a cyber ransomware attack or a major IT failure, or the failure of staff to perform, among many others.
In identifying scenarios, what matters most are the additional stresses anticipated, the vulnerabilities identified and the solutions put in place.
These exercises will be valuable no matter what the future holds.
A cash flow forecast or a budget including income and expenses, plus the times of increased expenditure such as the payment dates and estimates of tax, would all help plan to meet those financial needs.
Most people put their heads down and just work and hope, but this is insufficient when major blips occur.
Vanessa Sanders (right) is a partner with accountancy, finance and tax advisory medical specialists Stanbridge Associates