Management Accounts Healthcare

Managing cash flow, budgets and real time information

When assessing your practice’s financial performance for a given year, the first place you might think to look is the year end financial statements or “the accounts”. However, these tend to show what the performance of the practice was looking at from a historical point of view. To make decisions that are timely and relevant based upon accounting data, the practice should be monitoring performance regularly throughout the year.

One way of doing this is to produce management accounts, which can look at performance on a quarterly or even monthly basis. Assessing this information against budget expectations and monitoring cash flow are also essential to a well-run practice.

Why prepare management accounts?

  • Management accounts can be used for internal use by the management team and the partners to help provide up-to-date relevant information about the practice’s performance more frequently than year-end accounts, and in a concise, easy to interpret format that summarises all of the data – which the management may otherwise keep across a variety of spreadsheets.
  • The requirement to produce management accounts will necessitate the management team thinking about certain financial aspects of the practice on a regular basis that may otherwise be done only infrequently and at a time when they are of less relevance. This can help avoid problems at the earliest opportunity. Some recent practice fraud cases highlighted in the press demonstrate how important it is to regularly review the finances.
  • After a few cycles of preparing management accounts, trends for seasonal variations can be identified to help the practice alleviate certain pressures which fall upon the practice and its staff.
  • Management accounts may be a requirement from the bank if there is a possibility that your practice is looking to take out any arrangements for current or new loans soon. Having a system already in place for when it becomes a necessity in that circumstance will mean the management team are already accustomed to preparing the reports in a format accepted by the bank, and being able to show management accounts from previous periods when discussing a loan with the bank may facilitate its agreement.
  • Identifying and comparing costs throughout a year can highlight and justify if there is room in the budget to increase expenditure or to flag up when expenditure needs to be curtailed.
  • Timely identification of mismatches between expenditure and reimbursements (e.g. notional rent) will show up sooner and can be raised with the appropriate bodies to rectify.

How can MHA Moore and Smalley and our preferred cloud-based software help?

  • We recommend the use of Quickbooks (QBO) for the practice’s day to day bookkeeping.
  • If this is being used, the bank transactions which will form the foundation of the management accounts are already being inputted throughout the year by the finance team.
  • QBO can be used to track the income receivable and amounts payable by the practice and can automatically be set to update the debtors and creditors on the financial statements used for the management accounts.
  • Journals can be posted onto QBO which can be easily reversed in the following quarter. Furthermore, these journals can be set up using the same recurring template each time and with a reminder option to inform the finance team when a journal posting is due.
  • We can help you use QBO Management Reports to assist you to set up your own Management Accounts.
  • As well as helping with the initial process of identifying and setting up the journals the practice needs for management accounts, we can also review any management accounts produced for reasonableness, for the management’s peace of mind as to their accuracy or before they are presented to the bank if applicable.
  • Budgets can be set and these figures inputted into QBO enabling reports to be produced to show actual results against budgeted.
  • A cash flow statement can also be produced direct from the software to facilitate the monitoring of funds.

Next steps

If you believe that your practice would benefit from producing more regular reports and would like to hear how we can help your practice produce management accounts in addition to our year end services, please contact Matt Hodgson on 01253 404404 or your usual MHA Moore and Smalley Client Relationship Manager. Alternatively, you can email an enquiry here.

Help during the Covid-19 pandemic

During the Covid-19 pandemic, we appreciate that the sector is under extreme pressure to efficiently run some essential financial functions. We are able to provide temporary support to relieve the burden where possible and deliver finance functions which may have previously been done in house. Examples of this include;

  • Preparing management accounts
  • Maintaining the practice’s financial books and records
  • Assisting with VAT returns
  • Cash flow planning
  • Payroll services

If you would like further information on this then please contact Lisa Pennington on 01253 404404 or 0115 972 1050 or email lisa.pennington@mooreandsmalley.co.uk