Your Financial Risk Assessment
With tax season upon us, you have likely spent a lot of time recently with your practice’s financials at your fingertips. As tempting as it is to complete taxes as soon as possible and forget about them until next year, this is an opportune time to do a review. This month, I encourage you to take a moment with your post-tax organized documents and re-evaluate your “Financial Risk Assessment” by asking yourself a few of the following questions.
Do I have a process? As you were gathering your financials, did you feel that everything was easily accessible? Not many enjoy when tax season rolls around, but do you feel an extra sense of dread about it just because of the effort that goes into gathering all of your materials? If you find that filing your paper receipts isn’t working for you anymore, this may be a great year to switch to a digital method. Snap a photo of every business expense-related purchase receipt and email it to yourself. I use a free iphone app called “JotNot” that turns the receipts into pdfs. Store these pdfs/photos, along with any online purchase receipts, in a dedicated folder. Are you already embracing the paperless route, but still have trouble keeping track? Outsourcing your bookkeeping may be a new expense worth taking on for you. I use a professional bookkeeper, and when tax season rolls around I feel so much love for her I should bring her chocolates. No joke.
How have expenses changed over the past year? Learning how your business expenses change from year to year impacts much more than taxes. Decisions to raise your fees, create or eliminate a dedicated marketing or advertising budget, or outsourcing those tasks you dread (more on that later!) can be made more confidently if you know your practice’s numbers. With so many expenses going into ensuring that your practice runs smoothly, you may be surprised to see how much they have fluctuated since the last time you reviewed.
Are there some tasks that I can afford to outsource? Outsourcing the bookkeeping for your practice takes enormous pressure off of you and allows you to focus on your strength – patient care. I know a lot of business owners who embrace a DIY-er attitude, and that includes the DIY approach to taxes. However, making the decision to hire a CPA, though an initial expense, may save you money in the long run. A professional CPA can work with you as your business changes and ensure that you are not giving more money to the IRS than you need to be.
What risks come along with my financial decisions? Certainly not having ones’ financial ducks in a row can result in that most serious risk—having to close your practice due to financial insolvency. But beyond that, have you thought about things like double-checking the work of your biller, or bookkeeper, or your admin? Who can sign checks for you? What limits and oversights exist on the people who have financial access to (or influence on) your practice? Things can and do go wrong, so keeping a close, regular eye on your bank accounts, credit cards, and billing is very important.
Having a process, knowing the details and intricacies of your company’s financials, and working alongside trusted professionals can greatly decrease the risk of having unexpected financial bumps in the road.
PS. Hat Tip to the always wonderful Charlotte Cooper for today’s post topic. I talk about HIPAA Risk Assessments all the time, but the idea of a Financial Risk Assessment is hers. HIPAA risks come with plenty of potential consequences… and so do Financial Risks. Hopefully some of these tips will help reduce yours.