Ray Cox, Managing Director of Medifinance , feels that in the current economic climate, a review of practice loan arrangements could be a wise and financially beneficial decision.
The challenge I face whenever I am tempted to mention the word refinancing is to prevent people's eyes glazing over.
Nevertheless, I'm going to risk it.
Refinancing.
Taking into account the current market environment I think that many practices really could benefit from looking at the loans they have taken out over recent times. I say this because as interest rates begin to fall, the loan market becomes more competitive and terms and conditions (not to mention interest rates) reflect this. In short, by refinancing you could save a considerable amount of money each month. And, as I'll explain, there are other factors that could play to your advantage.
Why you may well benefit from refinancing
Of course, each practice and its finances are different, so what works for one may not work for another. There are naturally a number of pros and cons. But ask yourself if any of the following strike a chord:
- Is it possible that loans taken out when rates were at their peak could be replaced by loans offering better rates, terms and conditions?
- Have our needs changed and/or would we benefit, right now, from an injection of capital?
- Is our loan portfolio complicated and difficult to track and administer?
- Are our longer-term loan prospects perhaps being jeopardised by being seen to be too exposed to a plethora of current loan agreements?
There may well be other points to take into account and review. Other potential benefits for your practice may well emerge. In my own experience however, such an audit rarely fails to produce a positive outcome.
The factors you should consider
Let me set out for you the areas that should form the backdrop to any refinancing review. You don't have to do this, of course, but it's surprising how it can sharpen the mind and help you focus not only on short term needs but on your longer-term objectives……frequently highlighting ways of achieving those objectives more quickly and with less outlay.
- Are you on course to meet your long-term goals and if not, what is holding up progress?
- What short term and/or immediate requirements are causing problems and could an injection of funding, that does not impact negatively on cash flow, be helpful?
- Is cash flow a problem if so what steps are being taken to address and overcome it?
- Do we need to up our level of investment in the practice to keep ahead of the game and remain competitive?
A suggestion
Over the last few months, I have had meetings with a number of Practice Owners and their accountants specifically to look at their loan portfolios and review the benefits that could possibly accrue by refinancing. In a good number of cases the objective conclusion is to 'leave well alone' but, by the same token, we have, between us, unearthed some loan agreements which are, quite frankly, (and let's be kind) 'less than helpful'.
Even when the conclusion has been reached that there would be little or no value in following the route of refinancing, the time spent (as I explained above) is always worthwhile. Where the case for refinancing has been only too clear, better arrangements, terms and conditions have been put in place.
Other than setting aside a little time, such an exercise will cost you nothing. The potential benefits for you and your practice are significant.
If you feel we may be able to help you with putting together a business plan and sourcing funding and/or you have any other financial requirements do please contact me at
This email address is being protected from spambots. You need JavaScript enabled to view it. mobile 07785 757782
www.medifinance.co.uk
