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Why Financial Soundness is Important for your Practice
Reading time: 5 minutes
Your healthcare practice is in a unique position when it comes to financial management. The decisions you make on your money matters, can affect your bottom line, and affect the services you to provide to your patients. This is especially important when it comes to preventing fraud and ensuring that your employees are following the rules. In this article we’ll discuss the different ways you can manage your finances and which red flags to look out for.
There are diverse ways in which a practice can be defrauded. Practices can be vulnerable to financial fraud committed by employees, customers or an external third-party. One of the most important ways you can protect your business from fraud, is to stay on top of your financial information. This doesn’t mean that you should scrutinise your bank statements and to analyse each financial transaction. Instead, it means taking a few minutes each day to look through your financial reports such as audit trails, age analyses; as well as bank statements, to ensure you’re aware of any unusual purchases, deposits; and to identify gaps where deposits should exist. This will help you spot any potential signs of fraud before it’s too late.
Another way to protect the business is to ensure that any financial documents, sent to patients or accountholders, are password protected. This ensures that only users with the correct password can open and view these documents. An unprotected statement or invoice is at risk of being intercepted once sent, and the banking details changed.
The strategy and direction of the practice also depends on the financial health of the business. If you have healthy cash flow, you can invest in your business, grow it over time, and generate a steady income. This is the route many small businesses take. If the cash flow is tight or non-existent, you’ll need to focus on day-to-day operations and fraud-prevention.
Cash flow constraints have other implications as well, such as its impact on the quality of patient care. It has the potential to take away a staff member’s ability to focus on the patient rather than the paperwork. This also has the potential to have a negative impact on the practice’s reputation. It could potentially come across that the practice is not prioritising patient care. It is therefore important to understand the finances of your business so that you can make sound decisions that will keep your costs as low as possible without sacrificing the quality of the service that is provided to your patients.
Most small businesses fail due to a lack of management skills. Therefore, it is imperative that you understand how to navigate the complex world of small business management, so that you can maximize the profits that are generated and minimize the risks that are presented by your business. This will allow you to plan with the future in mind, so that you are not in a position where you must cut back on the number of employees, the services, or level of care that you provide your patients.
Ultimately it is important to keep on top of your practice financial health by regularly reviewing financial reports and ensuring that processes are put in place to prevent fraud. The software that is in place in the practice should have some measure of fraud prevention built-in and should also provide you with the required reports to understand and help manage practice financials.
To find out how Solumed can help your practice with software solutions that would aid in your fraud prevention and financial management efforts, contact us on +27 11 719 2111, or email info@solumed.co.za.
