Financial year-end review: Don't let money details slip away

From tax strategies to cash-flow projections, financial experts suggest now is the time to cover a checklist of items and plan ahead to make sure you can move smoothly into next year.

By Mike Norbut, AMNews staff. Nov. 7, 2005.

Between a busy patient schedule, hospital rounds and office emergencies, it's hard to think past the end of the day, let alone the end of the year.

Naturally, long-range planning takes a back seat to the day-to-day work that consumes a physician's time. But if a practice doesn't pay attention to its financial issues as the year winds down, it risks being surprised by events that normally wouldn't faze a forward-thinking practice.

Since budgets usually run on annual cycles and the end of the year flows into tax season, financial experts say now is the time to conduct a financial review and plan for 2006.

Whether your year-end review involves a detailed, written checklist, or even if it amounts to you checking in early with your accountant, the act of planning ahead can result in savings and financial security for your practice.

"The key is you need to start early," said Lisa S. Hastings, a partner in the Dover, Del., office of the accounting firm Faw, Casson & Co. LLP. "What usually happens is I get a call the week before Christmas saying, 'What do I do?' "

The year-end financial review often starts with tax strategies in mind. Financial experts stress the need to minimize tax exposure by taking advantage of deductions and accelerating some expenses to lower your group's operating income.

Assuming your practice pays taxes on a cash basis -- where you pay based on money in hand, as opposed to the accrual system, which counts uncollected revenues -- expenses play a pivotal role in reducing reportable income.