Many practices are dependent on their year end accounts to determine how well the year has been and as a platform to project forward for planning purposes. The accounts are no doubt essential as they provide the basis for tax compliance, banking facilities and determination of partners drawings amongst others.
However, they are historical in nature, detailing past financial events.
Some practices look towards management accounts to assist and like the annual accounts they too are historical but to a lesser extent.
What many practices fail to identify is the power of the cashflow.
Cashflows can take on different levels of complexity and as such different levels of sophistication and experience of the end user is needed. A large company would have different cashflows for each division or subsidiary and maybe each activity which is then consolidated into one unifying cashflow statement.
Depending upon the ultimate end user of the cashflow, the statement could be prepared as an easy to understand straight forward summary or something incredibly detailed or something in between.
A cashflow can easily be adopted by GP Practices.
Below we will look at the different levels of cashflows that can be adopted to help with GP practice finances.