If you are setting up a new medical practice or clinic or looking to purchase one, this article will be useful to you. In Singapore, a medical practitioner can run his business as a:
This will include General Practice (GP), Dental Clinics, Specialist Clinics, Aesthetic Clinics, Orthodontic Clinics etc. Yet, unlike a doctor who is working in a hospital or large medical group where the job is mainly about treating patients, running the business as a practice owner entails much more than that. Some of the important aspects include building business processes for your clinic operations, hiring nursing and administrative staff, creating and maintaining medical records of patients, managing inventory including replenishing the medical supplies before they run out and many more.
On top of clinic operations, it is also important for practice owners to have access to the financial data at their fingertips. Take a look at the following accounting tasks that need to be conducted on a monthly, quarterly and annual basis:
It is important to monitor profitability on a regular basis, through analysing figures such as sales, gross profit and net profit. Identify the most and least profitable areas of the business, month-to-month trend, and from there, take proactive actions to drive profitability.
For instance, there is no point having increasing sales but decreasing profit as a result of poor cost management. Do note that running a business at a loss is common among start-ups but in the long run, companies need to generate enough cash or have a plan to be profitable.
2. Cash Flow
Without the right guidance, you may find yourself in a bind of situations like cash shortage and overleveraging if you have not been properly managing your cash flow. Businesses must always ensure there is sufficient cash inflow to cover expenses such as staff payroll, rent, purchase of medical supplies etc. Most importantly, you need to make sure your medical practice has positive cash flow from operating activities after meeting operational requirements. Cash flow from operating activities shows how much cash is generated from your core business activities, which is a more important benchmark compared to one-off items under cash flow from investing activities and financing activities.
Additionally, if you are relying on borrowed capital i.e. cash flow from financing activities, you will want to ensure that your medical practice avoids the situation of overleveraging. An overleveraged company might face difficulties in meeting repayment obligations and increase the risk of bankruptcy.
The above analysis will ultimately rely on the accurate recording of accounting transactions. When such information is recorded correctly in the books from the start, you can be alerted of any warning signs early and aim for better financial stability. In fact, there are a lot more important numbers to evaluate when it comes to determining your financial strength, and it is crucial to have an experienced accountant to simplify it for you – enabling you to gain better control over this aspect of your business.
1. Year-end closing of accounts
On an annual basis, there is a need to record year-end adjusting journal entries to reflect the correct financial position of the company at financial year-end. Common examples are accruals for expenses that have been incurred for which supplier invoices have yet to be received, accruals for bonus, recognition of contract asset and revenue for services that have been performed but have not been billed to the customers, impairment for assets etc.
2. Preparation of financial statements
The annual financial statements are important as it is the end product of the accounting process for the entire year. Prepared in accordance with the Singapore Financial Reporting Standards, the financial statements contain significant information about the financial performance and financial health of the company. It helps users of the financial statements make informed decisions about the company.
As business owners, take the time to scrutinise your financial statements and review how your business has performed against the prior year and against budget. This can help you see if you are on track to achieve your goals and precisely plan for the coming years ahead.
3. Mandatory Filing with IRAS and ACRA
There will also be the mandatory filing of Annual Return with Accounting and Corporate Regulatory Authority (ACRA) and corporate tax filings to the Inland Revenue Authority of Singapore (IRAS). Do note that penalties will apply when the deadlines are not met.
Late filing of annual lodgements, for instance, can lead to a penalty of $300 up to $600 for non-compliance, and failure to file for consecutive years may lead to the company being struck off by ACRA.
Similarly, the IRAS will take action against companies who fail to file the Form C-S/C alongside the required financial statements and tax computation on time. Bear in mind that you may receive any one of the following:
It takes more than just medical expertise to run a successful clinic. When you’re juggling the responsibilities of running your business, it’s easy to forget about the regulations and other administrative but essential tasks. At Chartsworth, we work with entrepreneurs and business owners so that you can better spend your precious time growing your practice.
In line with the recent Xero-Plato integration, there’s no better time than now to get full flexibility and visibility of cloud accounting. As Plato serves as an all-in-one operating system for medical practices, its integration with Xero will further empower medical practice owners like yourself with a clinic management system and accounting system that are entirely cloud-based. Now, you can save a lot of time and resources while staying informed on your company finances.
If you’re interested in getting on board, our dedicated Chartsworth team can help you move your accounting processes to the cloud. Get in touch with us today to find out how we can help as your trusted accounting service provider.