Understanding Your Business Financials: Q&A
Sep 22, 2021
Q: How does understanding financial reports benefit clinic owners?
A: Understanding financial reports empowers clinic owners to make informed decisions, predict financial trends, and plan for a healthier and more prosperous business.
Q: What reports do I need?
A: There are three main finance reports - cash flow forecast, profitability (profit and loss), and the business balance sheet.
Q: How does a cash flow forecast help my business?
A: A cash flow forecast provides a clear picture of cash movement in and out of the business bank accounts. It helps you plan and understand when cash inflows and outflows will occur, ensuring better financial management.
Q: What about the profitability report (profit and loss)?
A: The profit and loss report gives insights into monthly income and expenses, allowing you to analyse whether your business is making a profit or incurring losses. It also helps determine your average appointment fee and the profit per appointment.
Q: What does the business balance sheet show?
A: The business balance sheet provides a snapshot of the business's assets and liabilities at a specific moment in time. It helps you assess your business's overall financial health.
Q: Bookkeeping can be overwhelming. How can we tackle this challenge?
A: Hiring a competent bookkeeper can be a great solution. Alternatively, set aside a dedicated hour each week to address financial tasks and confront any challenges proactively.
Q: Can accountants help with understanding financials?
A: Yes, accountants can assist in interpreting financial reports, but as a business owner, you should also take responsibility for understanding your business's financial health.
Q: How often should you meet with your accountant?
A: Officially, accountants meet once a year, but it's advisable to consider meeting quarterly for better financial planning and understanding.
Q: What accounting software options are there, and which one is recommended?
A: Xero or QuickBooks are potential accounting software options. The recommendation is to choose the one that syncs seamlessly with your clinic diary management system.
Q: How can accounting software help in managing clinic finances?
A: Accounting software helps in reconciling invoices with bank statements, giving you a tidy overview of the money coming into your business. It also generates reports and streamlines financial management.
Q: What can be done to manage outstanding debts?
A: Raise invoices at the time of booking appointments and ensure clients pay before leaving the clinic. This practice minimises the risk of liabilities and reduces the need for prolonged debt collection efforts. If debt does accumulate send reminder emails and letters before action for debts that exceed 30 days can also improve debt collection.
Q: What should clinic owners prioritise when managing their finances?
A: Clinic owners should prioritise financial health and stability, treating their businesses with the same dedication as they do their clients. Efficient financial management contributes to the success and growth of the clinic.
Q: How can clinic owners ensure a healthier financial future for their businesses?
A: By actively managing their finances, using the right accounting software, hiring a bookkeeper, and maintaining efficient payment processes, clinic owners can secure a healthier financial future for their businesses.
Q: What's the key takeaway ?
A: Understanding your business financials is crucial for making informed decisions and ensuring your business's long-term success. It allows you to plan for the future and serve your community more effectively. With the right knowledge and discipline, you can navigate financial challenges and improve your business's financial health.
