Using well-planned funding

Managing Director of Medifinance, Ray Cox, explains how well planned funding can help maintain vital cashflow and secure the future of your practice

Over the last few years we have witnessed some significantly influential politicians, of all persuasions, demonstrate that they have little, or no, grasp of the fundamentals of commerce. It's hardly surprising though when you take into account that they have no business experience, and they operate within a political system that favours short term expediency rather than longer term sustainability.

As a result, some fairly daft ideas have been mooted and, sadly, some implemented. Promises are easily made but easily broken and for businesses to prosper consistency is essential. There will always be economic ups and downs, but business needs to be financially robust enough to withstand these.

Politicians aren't helping. But I was listening to a very wise financier the other day whose thoughts ARE helpful and well worth passing on.

Essentially his message is this:

A healthy business is one that which has, or has access to, sufficient funding to meet its expenses, support its ongoing growth and steer it to produce a profitable return. The challenges experienced in recent years have been tough and have shown business owners just how vital maintaining cashflows are to securing their futures. And businesses cannot stand still. They need to invest to grow. To do so, in most instances, requires external finance as a positive tool

Differentiating bad debt and good debt

• Growing a business often requires substantial up front investment. Using external funding allows you to spread costs over time and maintain your essential liquidity
• Investing in growth opportunities such as new techniques and technology may take years. Accessing external funds can help you capitalise on time sensitive opportunities and gain a competitive edge
• External finance can help fund equipment upgrades and process improvements which will enhance operational efficiency. The ability to scale up without waiting for internal funds can boost productivity and profitability
• Whether you need to invest in marketing, open new practices or expand your on line presence, funding will help you reach new patients more quickly, leading to increased sales and economies of scale
• If you have more capital at the ready you may be able to purchase at better rates and/or take advantage of early payment schemes that will improve your margins 
• Unlike equity funding where you may have to give up ownership stakes and/or control to investors, borrowing allows you to keep full control 
• Taking on external finance and responsibly managing repayments can help establish and improve your practice's credit score. This may well make it easier to access larger amounts in the future and on better terms

Plan to grow

Sourcing funding to support business growth is a strategic tool when used wisely. It can enable faster growth, greater efficiency and help create new opportunities whilst you maintain ownership. The key is to assess the ability of your business to repay the facility and ensure that any investment leads to a positive return and sustainable growth

In order to help you with this assessment we have prepared a business and financial plan template that is available, free of charge and on request. Please contact me (details below) if you would like a copy.

My final piece of advice is not to be discouraged when the economic climate is difficult. There always have been uncertainties and there always will be.With a well thought through plan and reliable and informed advisers you are well equipped to weather any storm!