I didn’t learn how to manage the finances of my private practice overnight but I got there eventually. It honestly took me years to understand the financial side of my business. I felt embarrassed to ask the accountant to explain it again and the internet wasn’t what it is today. So I bumbled along, hoping that there would always be enough in the bank. I recognised that my ‘fingers crossed’ approach was amateurish. To run the private practice I dreamed of, I need expert help and advice so I changed accountant, got a bookkeeper and engaged a business coach. I already had great but underutilised Practice Management Software (PMS). So began the climb up the vertical learning curve.
Are you using PMS that makes invoicing, receipting and reporting easy?
I built a finance team. The team consisting of accountant, bookkeeper and practice administrator and we had weekly and monthly meetings to discuss procedures, challenges and solutions. The bookkeeper worked on site one day per week, liaised with my practice manager and relied on reports from our PMS for MYOB data entry. It was critical that clean and correct money data was being entered into the PMS otherwise every single report would be wrong. Believe me, we got it wrong but we put cross checks in place which helped. I met with my accountant monthly to discuss all things Profit and Loss. Whilst it wasn’t always a happy occasion (think January and school holiday months), it was necessary. I was financially responsible for other people I had to understand my business and run it effectively.
Is your financial team in place and working together?
We built systems one-by-one. A written policy and procedure for therapy invoicing, receipting, stock purchases and sales (we had a huge online toy store) salaries, paying contractors, groups, workshops … in fact, every single aspect of the business that required money transfer was figured out and documented. Like eating the elephant, we took one bite at a time and steadily they all got recorded, reviewed and adjusted over time as required. If I was telling somebody what they had to do, then I wrote it down for next time. I am the private practice systems queen.
I had a budget and I used it. Whilst largely prepared by my accountant based on previous year’s figures and agreed growth percentages, I learnt to understand it. It became an invaluable tool I referred to it monthly and it was a reference for when the numbers were spot on or suspiciously good or bad.
When I sold my private practice it was a highly efficient and profitable business. There was a system for everything; the vast majority were written down and frequently reviewed. The Practice Management System software was core to every single business task. On reflection it probably saved me at least one full time salaried position in ROI (Return on Investment).
I fast tracked my financial knowledge. I attended business management programmes, read books and worked tirelessly with my business coach. With the belief that there is no such thing as a stupid question, I started to ask more and more people more and more questions. As my knowledge improved, so too did my systems and business confidence.
Are your financial management systems NDIS and growth ready?
It is one thing to be a excellent clinician but quite another to be a strong manager. Now more than ever, private practice owners need to be great at both. Hence the relevance of the expression working IN the business versus working ON the business. The NDIA roll out is accelerating the need for private practitioners to step up their management and leadership skills. Financial management is high on the task list and may well be the make or break factor for many. Financial questions arise with every coaching client I work with as its mission critical to a less stressful more successful private practice.
How would it feel if you completely understood and assertively managed all aspects of your private practice finances?
This article was featured in our May Edition of Paeds Biz. Read our latest issue here.