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Best value account? Don't bank on it

Now is the time for GPs to re-examine their practice's banking

Now is the time for GPs to re-examine their practice's banking

Practice finance has become increasingly complex and no two GP surgeries will have similar needs. Nevertheless all practices require some basic services that need to be accessed from the banking system. These include an account to receive money from the primary care organisation and other bodies, the ability to pay staff, day-to-day expenses, tax payments and partner's drawings.

Many practices will not have changed their bank accounts for years, but with new entrants to the banking business and innovative ways of handling money, now has never been a better time to consider moving the practice account and reappraising how it is used.

The first priority is to decide what you need from an account. Each practice will be different. For example some carry high balances while others run overdrafts. But in both cases the interest rates on offer will need to be factored into any equation.The number of items coming in and going out of the practice account, and whether these are automated transactions, is important because these are prime determinants of the running cost with most banks. Virtually all banks now offer telephone and internet services to businesses. They also offer payment cards, which have become a necessity when ordering goods.

Many practices feel comfortable when the bank has a high street presence but as can be seen from the table there may be a premium to pay for this service. Some banks pride themselves on offering high levels of advice to businesses, but this is not particularly relevant to the average practice unless the finances are complex, perhaps involving property development.

Cash can be a difficult issue. Banks seem to hate the stuff and you will pay extra if you want them to handle it. So if you can do without the facility to obtain and deposit cash, more competitive options become available to you. Most practices get all the cash they need from fees from patients. This can fund any incidental costs, but substantial amounts can build up. Our practice gets round this problem by acting as a virtual 'cash machine' for doctors and staff, cashing their cheques when the petty cash box is too full and then depositing the cheques with other payments.

Some financially alert GPs might argue that this is bad practice since among other things it makes drawing up the accounts more difficult. However, in theory it is not a problem since the cash ledger can create a suitable audit trail with few additional entries required.

Some firms of accountants, for example PKF, ask their clients to reconcile the cash and bank entries as this is something that can be done by the practice to reduce accountancy costs and enable practices to have control of the position throughout the year by picking up any differences in the month they arise.

PKF say they would not normally be concerned with the number of entries in the ledgers. The problem is cash per se. Cash is where most petty fraud occurs, so tight control is required and all 'advances' signed for.

Some practices pay partners a regular weekly amount in cash and charge this to partners' drawings in the same way as regular bank transfers. This saves a visit to the 'hole in the wall' machine, is very easy to police, and shifts surplus cash regularly.

Cheque deposit can be worrying with some banks. The ideal is to visit the branch and get a receipt, but if the branch is not local the practice has to rely on the postal service. In this case it is prudent to photocopy the cheques before dispatch.

Luckily most payments from PCOs will be via automated systems that are invariably cheaper and not apt to get lost. Staff should if possible be paid by automated credit. This is always cheaper and more secure.When deciding on the best value, trade-offs have to be made between the interest the account earns and the cost of transactions. For practices with the required level of financial and administrative discipline, it would be most economical to use one of the 'new' entrants and combine the account with a deposit type account paying higher interest.

For those of us who are less sophisticated, a visit to your current bank clutching the tariff from one of our more competitive examples might just work wonders!

Peter Saul is a GP in Rhos, near Wrexham

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