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Finance diary, September: How to ensure you survive disruption to payments

We may be six months into the NHS organisational changes but September is unlikely to see the disarray over payments to GP practices fully resolved.

Practices that were unable to save before 1 April, perhaps because of pressure from falling profits, may find themselves in a tight spot.

Don’t get comfortable in your overdraft

Fortunately, banks are happy to make overdraft facilities available to practices, so it is unlikely that practices will run out of money. Overdrafts, however, come at a cost. The arrangement fee has to be paid, followed by a painful hike in interest when the overdraft is used.

Probably the greatest risk of an overdraft, though, is that practices get used to having one.

Keep a register of claims

Overdraft facilities are useful to manage hiccups in cash flow, but they are not a permanent solution.

The long-term answer is for practices to build up their own financial reserves. Although the payments process will undoubtedly improve, practices should tighten up their financial systems to ensure they are paid everything they are due.

Such a process might include keeping a register of all claims submitted to the payments authority and then updating against money received. This will enable the practice to chase unpaid claims.

Don’t ignore payment mistakes

Although the main risk is that practices won’t be paid for claims they have made, there is also a risk that they might be paid for things that they have not done – or not be charged for costs they owe. The temptation is to keep quiet about payment mistakes, but this is not wise.

The authority will catch up, and the longer it takes the more painful it is likely to be.

Health centre service charges are a case in point. It might sound appealing if, for example, £20,000 is not deducted from the practice accounts. But if this carries on for three years the payments authority might want £60,000 in one go.

Bob Senior is chair of the Association of Independent Specialist Medical Accountants and head of medical services at RSM Tenon