Gone are the days when all that accountants did was file your tax returns and generate revenue statements for you. In today’s world, accountants have become more valuable. This is evident across multiple industries with the latest being the increase of specialised accounting advice for the medical profession.
With a myriad of online companies offering free accounting tools that require no professional accountant overseeing the process, relying solely on those “free” tools can be a grave mistake for any doctor or medical professional.
Professional accountants not only identify opportunities that can help streamline your medical business but also assist in identifying areas where you can cut costs and save money. Investing in a professional and licensed accountant for your medical practice is often a critical decision in moving your business forwards.
A Certified Public Accountant (CPA) will advise you on mistakes that you might be making in your finances, tax rebates that you qualify for and offsets that can save money.
As a doctor, once you’ve chosen an accountant to work with, it’s important to have free-spoken and clear channels of communication in order to understand the well-being of your medical practice. Besides getting value for your money from your accountant, they will also help your business’ bottom line.
If you haven’t had a chat with your accountant and asked them these three key questions, then it’s time for you to do so.
1. Is your fee fixed and does it include ad-hoc accounting?
In a focus group, most business owners gave varied feedback on the number of times they called their accountants to ask questions regarding their business. Most of them said they rarely called. Why? They were scared of the costs that came with placing a simple phone call to their accountant. However, this shouldn’t be the case.
As a doctor, your number one concern should be the health of your patients and not getting beaten down by an accounting issue that you have no idea of.
Moreover, you shouldn’t be trying to figure out how much the service is going to cost. Before putting pen to paper with the accountant of your choice, you need to ensure that you have a clear understanding of what their fees cover. Nothing puts a strain on a business relationship that should be mutual than the reluctance to call and seek clarity when needed.
Having clarity on what it will cost on either a weekly or monthly basis regardless of whether you make calls to get answers or not is a key way of having open communication with your accountant and helps you make the right decisions for your business.
It’s important for accountants to provide their clients with a fee that covers emails, phone calls or any other channels of communication. However, if more work comes up, you can negotiate a separate fee with your accountant to cover the costs. In the event you opt for a large accounting firm to handle your accounting needs, you should have a dedicated account manager who you can reach out to when there is a need.
You can establish communication channels that work effectively for the both of you – emails, Instant Messaging, calls – this way, you are able to reach out to them using the agreed communication channel whenever you need to.
2. What Will Be/Is My Break-Even Point For My Practice?
Break-even means your business gets to a point where your profits are equal to the operating costs. The key question to ask yourself here is; how much sales does my practice need to make to break-even?
Getting an answer to the above question involves a breakdown of the sales needed on either daily, weekly, monthly or quarterly. Most people think that it’s an easy math, but it really isn’t as some costs differ depending on the volume of sales while some are fixed. Accountants like Charter Partners specialise in analysis of cost structure. In this case, your accountant can help analyze your business’ cost structure and advise on the amount of sales needed to break-even.
As a doctor, the cost of a transaction is quite predictable. Your accountant can help you break it down to the number of transactions you need to make so as to break even. If you have no idea on what’s required, ask your accountant to help you out as it’s very important that your business understands these numbers so as to enable your business to stay alive.
3. Is my business healthy financially?
Just as your patients come to you to help them know if they are healthy, so should your accountant help you answer this question.
Just as you are able to run tests and assess the health of your patient, so can your accountant do the same for your business by sharing data that can be used to evaluate the financial health of your company. They can also use the same data to gauge your business against your competitors and advise on where you stand. Your accountant can also advise on areas that you need to concentrate on to maximize on your business’ potential.
These areas might include:
- Retention of existing clients
- New lead generation
- Conversion of new leads to actual customers
- Getting your clients to buy more frequently from you
- Finding ways to upsell
- Reviewing your business’ pricing model
Out of the above areas that your accountant might suggest, the pricing is one that they can help you crack. If you opt to increase your pricing, they can help you calculate your gross profit margin and the potential customers you are likely to lose. This can help you make decisions that can help you break-even.
There are financial literacy quizzes that you can take so as to get an understanding of how financially fit your medical practice is.
Investing in an accountant is no longer a luxury, rather it’s a critical and necessary investment. Having open communication with your accountant needs to start from the moment you meet them. Accountants are very essential when it comes to the success of your business. As such, it’s quite crucial for you to build a relationship with them and ask lots of questions to assist in the growth of your medical practice.
Anthony McPhee, Principal
B.Bus (Accy) QUT | FCPA, SSA (SMSF Specialist Advisor with the SMSF Association) & Registered Tax Agent
Anthony has over 25 years accountancy, taxation and superannuation (SMSF) experience. He eagerly welcomes a challenge and his passion is in small business accounting, superannuation, consulting and taxation advice. He provides real business benefits for each of his clients and is well regarded for his succinct and accurate accounting skills. Anthony is also a self-managed superannuation fund (SMSF) specialist with Australia’s leading SMSF body, The SMSF Association.