Major changes within General Practice over recent years have pushed GPs to move towards larger practice status, in particular there has been a rise in ‘super-size practices.’ With the new 5-year contract seeing an even bigger reform to GP services, the need for practices to work together, whether this be as a network, part of a federation, or by merging will only set to continue.

Within the dental profession, there have been numerous economic challenges, such as income VS inflation, rising cost of dental supplies, shift in the type of dental services on offer and a rise in corporate practices to name but a few.  All of these changes add increased pressure on practices to keep on top of financial performance.

Reviewing income and expenditure and budgeting and forecasting on a regular basis can ease this pressure and help increase profits, allocate resources more effectively and avoid unnecessary expense.

Here are five benefits of budgeting and forecasting:

  1. Budgeting sets out an expectation of income and expenditure and allows you to draw a comparison to actual performance:

Preparing a budget helps you manage your business and keep track of performance on an ongoing basis.  The starting point of a budget is usually based upon last year’s financial performance which is then tweaked to take into account what you think will happen and what you want to happen. Changes such as contract renewals, recruitment, services, changes to the partnership all impact on profit.  Accounting for these changes at the start of the year and comparing these to actual performance will highlight income that is missing or costs that are spiralling out of control and ultimately identify inefficiencies as the year progresses.

 

  1. Budgeting helps you plan for the year ahead:

Income and costs can be tweaked so that you can pull together financial data that allows you to make more informed strategic decisions. If you are considering giving a pay rise in excess of that imposed by the contract changes, you can tweak the salary costs to understand what impact the additional gross salary, NI contributions and pension has on profits, likewise, if you need extra clinical resource, do you take on a salaried GP or a dental associate or do you use locums as and when required, and how does each scenario impact on profit?

 

  1. Budgeting helps manage cashflow:

Budgets can be extended to allow you to look at the cash flow in and out from expected income and expenditure, which will allow practices to ensure they always have enough cash to operate. If this is looked at as part of a budget, the budget will identify when cash flow is most tight and allows practices to seek ways to mitigate that pressure in advance of such time.

 

  1. Budgeting helps draw team focus:

A budget that is shared across the team and that the team has been involved in pulling together, often tends to be more realistic. This is because it helps focus everyone’s efforts on achieving the same goals.

 

  1. Budgeting helps make finance meetings more meaningful: Budgeting allows you focus on the direction of the business giving you the ability to anticipate problems and provide greater confidence in strategic decision making.

 

We know that budgeting and forecasting will improve your business growth and financial performance. Please contact us for a complimentary review, where we can meet face to face to discuss your business goals and obstacles and work through a plan together.

 

Related Posts

NHS Pension

NHS Pensions – handy hints to plan your exit
Financial Planning Student

Financial planning for University – “Today playgroup, tomorrow university”
Xero for Healthcare

Xero for healthcare professionals
business growth plans

Business Growth Plans – are you a hunter or a farmer?