Small Businesses & Cash Flow Management
Jun 25, 2015
The entrepreneurial spirit that compels people to start their own business does not necessarily translate into them being good business managers and this can lead to a stumbling block for many small business owners.
One of the most troubling aspects of running a small business can be learning how to manage cash flow. Understanding the basics of cash flow can help owners plan for large and small upcoming events in their business.
Cash is what you have at any given time to meet your daily expenses. The cash that you spend to buy inventory or business equipment is cash that is an asset on your balance sheet, but that cannot be easily converted to pay monthly expenses. Profit on an income statement does not equate to cash in the bank if you have accounts receivables waiting to be paid. You cannot spend profit. A profit on the income statement does not always indicate financial health unless the company also has a positive cash flow that correlate to those profits.
Many business owners use a cash flow statement to help them understand the movement of cash in their business. A cash flow statement will tell them the sources and uses of their cash. A typical statement has three areas:
Operating Cash Flow – The cash generated from the day-to-day operations of the business including the sales of products, the collection of accounts receivable, and the payments of vendors.
Investing Cash Flow – The cash that is used to purchase equipment.
Financing cash flow – The cash from outside normal business operations, money from lenders or shareholders. A new loan or the repayment of a loan creates the cash inflow or outflow.
Good cash flow management requires the business owner to be forward thinking – when and how will cash be needed. How will I acquire the cash needed? Through better accounts receivable collection or from a bank in the form of a loan?
Adapting to cash flow management could mean the difference the success or failure of a business.William Vaughan Company has the skills and expertise to help our clients with all aspects of their business management. Contact us today to find out more about how cash flow management can help your business.
Categories: Healthcare & Dentistry
Managing Patient Complaints
May 28, 2015
No matter how good of a dentist you are, when providing services, you most likely will have to deal with some patient complaints. Managing these complaints intelligently, efficiently, promptly, and pleasantly can turn a possible catastrophe into a solidly loyal patient. Here are a few ideas to help manage these complaints effectively:
Never take it personally when a patient raises their voice to you for something you both know is not your fault. The patient is frustrated, disappointed, and angry. If you don’t take it personally, you can control your own attitude, thus, easing the situation.
Don’t ignore complaints, even when they are indirect and non-confrontational. When there is basis for the complaint, it reveals a flaw in your business, you may not have known existed. When this is the case, acknowledge such to your patient.
Keep track of complaints and review them on a regular basis. A standard form is a good idea, and everything that happens, including follow-up should be documented and dated.
Deal the same way with phone complaints, emails, letters, and face-to-face confrontations. They are all important clues to how your business is doing.
Always try to offer something to a dissatisfied patient (if there is any basis to the complaint). Refunds or possibly a discount on an additional service will renew the patient’s trust in you.
When nothing you do calms your patient, ask what they would do in your situation. Does the patient have a better solution? Then explain why that would/would not be feasible, or modify it to a point where both you and the patient feel it is fair. Thanking the patient for the input will make them feel important and you will win their respect and continued support.
Always remember that you won’t have a business if you cannot keep your patients. They may not always be right, but they are always entitled to courteous treatment, whether asking a question, or lodging a complaint.
Categories: Healthcare & Dentistry
Adding Hours, Adding Revenue
Apr 30, 2015
Your practice may be considering adding office hours to accommodate patient requests for more convenient appointment times and to increase revenue. But before you do, you need to carefully weigh the pros and cons. Here are some issues to consider.
Focus on Patient Convenience
T
oo many practices maintain hours that force working patients to take time off from work to make their appointments. The traditional 8:30 a.m. to 5 p.m. hours may be fine for patients who are retired, work shift hours, or are full-time students, but they can be tough on those who work during the day. Opening your practice an hour or two earlier, staying open later four evenings a week, or offering weekend hours would be a huge convenience for many patients.
It’s important to determine whether you will have sufficient patient volume to absorb the additional hours you are open. One way to help increase patient volume is to promote your practice’s new hours through patient e-mails, website updates, office signage, and press releases to the local media.
Look at the Economics
Will it be financially worthwhile for you to extend office hours? We can help you run the numbers. For example, if practice overhead is $1,100 per work day and the average reimbursement per patient is $85, it takes about 13 patients per day to cover the overhead. For each additional patient, the practice incurs only variable costs before paying its providers. Once all costs are identified, a projection can be made of the potential profit associated with seeing more patients.
Evaluate Staffing Issues
If the demand exists, it might make sense to add a part-time dentist to see patients during your additional office hours. Offering a plan would allow patients to receive the medical treatment they need while providing a way for your practice to receive payment for its services.
We Can Help We can work with you to identify areas in your practice where streamlining operations may help optimize your practice’s bottom line.
Categories: Healthcare & Dentistry
Putting Your Tax Refund To Good Use
Apr 17, 2015
Are you expecting a tax refund from the IRS this year? Although it may be tempting to spend your refund on the newest electronic gadget, consider using it to meet one or more of your financial goals
Pay Down Debt
Credit card debt can grow quickly if left unpaid. Credit card interest typically accrues at a relatively high rate. Any unpaid interest is added to the principal balance each month, and interest then accrues on the new, higher balance. And on top of that, interest on personal credit card debt is not tax deductible.
You also may want to consider allocating part of your refund to an unpaid car loan. Like credit card interest, interest on a personal car loan is not tax deductible.
Save for Retirement
The longer you delay saving for retirement, the less time you’ll have to benefit from any investment gains on your savings. You might consider using your tax refund to cover current expenses and then allocating an equivalent amount to a pretax retirement savings plan, such as a 401(k). This way, you would reduce your taxable income for the year and increase your investable savings, which can potentially compound tax-free until you retire. With this strategy, compounding works for you rather than against you.
Add to Your College Funds
Although the IRS does not allow a deduction for contributions to a Section 529college savings plan account, the tax law does provide that any earnings on your contributions will be tax deferred and ultimately tax free if applied to qualifying education expenses.
Create an Emergency Fund
Consider putting aside part of your refund in an account you can easily access to pay for unexpected expenses, such as car or plumbing repairs.
Categories: Healthcare & Dentistry
The 3.8% Medicare Surtax — Will It Affect You?
Apr 07, 2015
When filing 2015 tax returns, higher income taxpayers might have to pay the 3.8% Medicare surtax on net investment income.
How Does the Tax Apply?
This tax is imposed on the lesser of (1) net investment income or (2) the amount by which modified adjusted gross income (MAGI) exceeds a threshold amount: $200,000 (unmarried), $250,000 (married filing jointly), or $125,000 (married filing separately). Because the tax applies to “the lesser of” net investment income or the amount by which the applicable threshold is exceeded, taxpayers want to take steps to minimize either MAGI or net investment income, or both.
What Does Net Investment Income Include?
Generally, net investment income includes all taxable income from the following sources: interest, dividends, capital gains, nonqualified annuities, royalties, rents, and passive trade or business activities. Note that net investment income includes gain from the sale of a personal residence but only to the extent the gain exceedsthe amount excluded from income for regular tax purposes. The gain exclusion can be as much as $250,000 — or $500,000 for a married couple filing jointly or a qualifying surviving spouse.
Net investment income does not include wages, income subject to self-employment tax, or active trade or business income. It also does not include distributions from qualified retirement plans or traditional or Roth individual retirement accounts (IRAs).
How Do You Plan?
- Going forward, possible planning steps for reducing exposure to the new tax include the following:
- Increasing contributions to qualified retirement plans
- Rebalancing portfolios to increase the percentage of tax-exempt bonds and non-dividend-paying growth stocks
- Transforming passive business activities into active business activities
- Deferring capital gains through the use of installment sales
- Giving income-producing properties to children in lower tax brackets (“kiddie tax” rules may apply)
- Contributing to Roth IRAs and Roth retirement plans (sole proprietors may want to consider a solo Roth 401(k))
Categories: Healthcare & Dentistry