When it comes to cash flow, it’s not uncommon to constantly feel like your cash is only flowing in one direction! But, it does flow both ways, and it’s important the cash going out of your business whether it’s in the form of paying expenses, like rent or a mortgage, monthly loan repayments or taxes, is structured appropriately to ensure you’re in the most suitable cash position at all times.
Here are our top 5 tips on cash flow:
1. Review your business debts
Medical professionals often come to us with the same finance contracts they have had for years. However, as time has passed, so too have their goals and plans changed. More often than not, the loan terms are no longer suitable. The banking and finance world has also changed a lot over the years, so you may find that you have been paying too much and are eligible for a much better product or interest rate which in turn can help you save some money on your repayments. The team at Credabl are always happy to sit down with you and review your current finance contracts to see if anything can be improved.
2. Is Interest Only for you?
You will find that a lot of lenders have maximum interest only terms. In our article The impact of the current mortgage lending climate on Medicos we give some background to the changing face of lending policies and procedures. Working with your accountant or financial advisor, we can determine, whether interest only is the best option for you. Medical professionals with personal debt, such as a home loan (non-tax deductible debt) may find they are better off paying interest only on their business debt and putting the additional funds towards their personal debt. Imagine being able to restructure your debt to pay off your home in 7 years, instead of 30!
3. Business Overdrafts & Credit Cards
We don’t come across too many medical practices that don’t have a business overdraft in place. With fluctuating cash flow, it is essential. Ideally you don’t want to be paying interest on a credit card or overdraft however sometimes, it is inevitable. Why not set yourself up with a 55 days interest free credit card and utilise the interest free period for as many expenses as possible (frequent flyer points are a bonus!). If your cash flow doesn’t permit you to pay off your card by the 55 day cycle, an overdraft may provide you with the cash to do so.
4. Home & investments properties
Ensuring your cash is working for you is key especially if a large sum is going towards property repayments each month. When it comes to your home loan, the days of set and forget are over. The art of lending gives insight into the value of reviewing your portfolio regularly.
5. Plan
As business owners, we understand it is really hard to put time aside and plan. A cash flow forecast can help your business in multiple ways. Setting goals, Along with targets and sharing these with your staff, is a great way to help grow your business. Celebrate your wins! Secondly, allow for seasonal business. For example, Dental practices are known for being quiet in January – so don’t get caught out – you may need to plan and put away some funds for this quiet time.
At Credabl, we understand your profession and can navigate the lending landscape intimately. But most importantly, we have your back. Whether you’re simply looking to review your circumstances or have a particular need in mind, contact us today to see how we can help.