Cash Flow is King

Despite recent falling inflation, businesses are still feeling the pressure of increased costs, particularly from April with the increases to National Minimum Wage. For GP practices, for whom staffing is often their largest area of expenditure, this will have a considerable impact on profits and monthly outgoings.

On the income side, the latest GP Contract only provides for a 1.9% uplift in core funding. While there have been some other contract changes from April, eg for monthly QOF aspiration payments to increase from 70% to 80% of total anticipated funding, this may be of little comfort to practices who are seeing larger increases in their monthly outgoings. BMA negotiations on the contract have continued and we are hopeful that a larger uplift will be secured shortly. 

While GP partners will be concerned about the impact of these changes on their profits, more pressing concerns are understanding and managing the cash flow implications to ensure the practice still has enough cash to pay its bills. There are a variety of digital tools and applications that can help businesses monitor and forecast their cashflows. Whatever approach you take, from our experience, there are a few key areas of practice finances where cashflow needs to be monitored closely to limit the risk of quickly destabilising your cash reserves.

Staff overtime

With the increased hourly rates, staff overtime costs can quickly add up and significantly increase a practice’s monthly pay bill – so ensure you have a robust means of managing and approving overtime to give you options. For example, it is sometimes possible to either delay or re-allocate tasks which avoids incurring overtime costs and helps to maintain a steadier cash position. Equally, if there is a regular requirement for additional hours, consider a review of your processes. It may be that some of these tasks could be streamlined using digital tools or even outsourced (at a lower cost than staff overtime). Reducing the level of overtime across your business can also help improve staff wellbeing and retention.

PCN funding

Several of the changes to the GP contract from April affect PCN funds. While it is positive that some of those funding streams are now paid in year rather than being weighted towards post year-end achievement payments, clearly it is important from a practice cashflow perspective that the PCN is paying out those funds to the network practices on a timely basis. Each PCN is different, but we would expect all practices to understand what cash is due to them each month to help them plan and monitor their cashflow.

PCSE contributions

In our experience, the area that causes most problems with practice cashflow has been around incorrect superannuation contributions collected by PCSE, often linked to issues with the Performers List. We have seen multiple cases of contributions having been suspended for a GP for an entire NHS year, with no warning or apparent reason. There is a risk that on identifying the error, PCSE will collect a full year’s contributions in one-go, significantly diminishing the practice cashflow in that month. We recommend that practices thoroughly check their monthly statements to ensure all partners and salaried GP contributions are as expected so that any discrepancies can be promptly addressed with PCSE.

For help and advice on managing your practice cashflow, please get in touch with our team.