Finance for your practice

When investing in a practice with surgery equipment, digital imaging, and refurbishments, an easy option historically has been to use the overdraft or fund from surplus cash resources. This magnifies the importance of understanding the difference between profitability and cash flow. A business rarely goes bust through its losses, but uncontrolled cash flow will result in serious trouble.

In the current economic climate, the old adage 'cash is king' should come to the fore. This does not mean spend your cash. In fact it signifies the opposite, protect your cash and use funding wherever prudent.

Cash is the lifeblood of your business. Those that manage their cash flow best will always be better placed, in recession, in recovery and in growth also. Raising clean and efficient finance is therefore key to those that want to flourish rather than just survive.

Recommendations

My recommendation would be to 'spread the load'. Try to use a combination of lenders to help with larger projects, use finance companies where possible and do not be 100 per cent reliant on your own bank. A bank is great for long term loans (10-25 years) for practice purchases and mortgages. They are also great for most working capital requirements such as overdrafts. However, funding an asset often suits a finance house better because they take greater store in the value of the asset. This means there are usually less financial checks and less security (if any) required. This allows the load to be spread and takes the pressure off one source of funds (your bank), particularly if they hold a first or second charge at a time when property values are stagnant or even falling.