Question in full:
I would like to improve my monthly reporting to the partners so better use is made of our accounts information. We have previously drifted along happily as long as we have been able to pay the staff, suppliers and not gone over drawn but I think we should now be more careful than this. Which areas would you suggest I monitor and report to my partners on?
A: For many GMS and PMS practices there are going to be regular income and expense streams that remain constant from month to month, such as the Global Sum, QOF Aspiration and GP Superannuation payments on account. The regularity of such items should make financial planning easy, because you know exactly what is coming in and going out each month.
Therefore I would suggest that the areas you need to concentrate on from a monitoring point of view are the variable items which could potentially put the practice’s finances out of kilter. Examples of this might be the annual QOF Achievement income which can vary from year to year or the GP Superannuation balancing payments taken from the practice’s monthly income statements annually.
At the most basic level, I would suggest that you could prepare a monthly summary for the partners of any income or expenditure that is new or significantly different to the previous month which is likely to have an impact on the cash flow position of the practice. A quick totalling up of the net variable movement should help give an indication to the partners of the likely impact on the working capital position of the practice so that they can adjust their drawings and capital injection decisions accordingly. This should help to guard against short-term cash flow problems or unexpected surprises.
At a slightly more advanced level, if the practice resources are available, either monthly or quarterly management accounts; estimates; or projections could be prepared in order to give a more detailed picture of the practice’s financial position. Such reports can be adapted or tailored in order to focus on the areas which are considered to be the most important or problematic for the practice. So, if for instance the practice has an overdraft problem caused by inequitable or underfunded partner current account balances, then monthly or quarterly management reports can be prepared which focus on the impact that the period’s transactions have had on each individual partner’s current account balance and appropriate action can then be taken to remedy this situation moving forward.
Your accountant should be able to be advise you in more detail about the reporting options and requirements of your practice, as well as providing assistance and help with the compilation of the reports, where required.
