Finance diary, August: Making the most out of your annual accounts meeting
August heralds time away from the practice for many GPs but it also brings extra workload, CQC administration and accounts meetings, writes Bob Senior, so leave some time to get your accounts sortedason also brings extra workload, CQC admin and accounts meetings, writes Bob Senior, so leave some time to get the money side sorted
August is a strange month for many GPs. The heart of the holiday season sees them in one of four states; getting ready to go on holiday, happily on holiday, just back from holiday or covering for absent colleagues. While the time away from the practice on holiday is usually great, the rest of the month can be absolutely awful. GPs are not alone – August has triggered an avalanche of CQC admin work for their managers.
It’s not surprising, therefore, that few GP partners are giving little thought to the annual meeting with their accountant which, for many practices with 31 March year-ends, will be fast approaching. Unable to get all the partners together in July or August, lots of practices will have arranged accounts meetings from early September onwards. It is worth taking some time beforehand to consider how to get the most out of the meeting, which should really add value to the practice and cover a range of topics, not simply focus on the previous year’s accounts.
Tax and benchmarks
A key point for many GPs is their tax bill, and in particular how much they will have to pay in January. Your accountant should be able to give you a fairly accurate figure – but only if you have provided your professional expenses information in sufficient time before the meeting.
As well as examining your own practice accounts you should also ask you accountant to benchmark your results against other GP practices. This will help you see where you are doing well, but perhaps more importantly where there are opportunities for improvement.
The pressures on practice funding and the likely impact on your practice should certainly be covered in the accounts meeting. QOF changes, enhanced services cuts, the removal of the Minimum Practice Income Guarantee (MPIG) and further reviews of PMS contracts cannot be ignored. Since all of these funding streams generate significant income, the meeting with your accountant is the right place to discuss them.
Loans and retirement
If the practice has significant bank loans then they need to be on the agenda too, particularly if they were taken out between 2004 and 2007. These are quite likely to have low interest rates, which is fine if the loans are not going to change. However, many of these loans were arranged on an interest-only basis for the first few (perhaps ten) years. At that point repayments have to start – and this can result in a lot of money coming out of drawings and being paid to the bank.
Practices taking out this type of loan probably thought that, once the capital repayments were about to start, they would simply go to another lender for a new loan with another capital repayment holiday. Sadly the economic climate now means that is not likely to work.
Succession planning is another area for consideration at the annual accounts meeting. Are there any partners due to retire? If so then the remaining partners need to decide how to replace them. Since partners may well need to pay out the retiring partner before a new partner builds up their capital, money will either need to be paid in or drawings reduced for a while. Neither option is palatable but especially so if the practice has failed to anticipate what lies ahead.
Bob Senior is chair of the Association of Independent Specialist Medical Accountants and head of medical services at RSM Tenon