Financial tips for a more secure new year

The clock is ticking for doctors to jump on incentives from the government to put them in a better position for 2021.

With some medical practices struggling to make ends meet this year, financial experts say there’s never been a better time for GPs to review their business plan and apply for government stimulus.

In a recent presentation at the GP20 conference, BOQ financial consultant Trevor Knowles shared his top tips for managing your cash flow in the new year.

“There are a number of doctors who have managed to take advantage around the timing of COVID to secure property, and who are making good use of loans,” Mr Knowles said.

“At this time, it’s important to take stock (as a business) and for some, it’s been a really rough ride.

“Now is the time to talk to your colleagues about the year, and start looking at how you can move forward.”

For those who rent their practice rooms, now could be the time to cash in on low interest rates and buy into the market, said Mr Knowles.

Doctors who are seeking a loan to fund property, a fit-out, or new equipment could be eligible for a loan up to the value of $1 million under the SME Government Guarantee Scheme Phase Two.

From October this year, the government agreed to fund $40 billion in government guarantees to stimulate lending to small and medium businesses.

“What the package looks like is a guarantee from the government for every loan written under the scheme and it reduces the lenders’ exposure by half,” Mr Knowles said.

“You might be thinking ‘Well how does that impact me?’ Its impact for the end-user is around the interest rates.” 

And provided your ABN has been active and registered from October 2020 and your annual turnover is less than $50 million, you could be eligible for this scheme until 30 June 2021.

“Unless you are running a hospital, I would imagine most people in the GP space would qualify for under $50 million turnover, and most would have an active ABN,” Mr Knowles said.

“You can take advantage of this scheme to secure lower interest rates, which could give you the chance to get into the market.”

But doctors should be aware this stimulus is only available on new loans, and the currency must be in Australian dollars.

Additionally, if you’ve been considering buying something new for your business, this month is your last opportunity to turn it into a tax saving. 

Until 30 December this year, businesses are able to instantly write off assets up to the value of $150 000.

This instant asset write-off threshold is up from just $30 000 since 12 March 2020.

“When you write off an asset instantly, you are effectively accelerating the depreciation, which means it is counted as an expense in your profit and loss,” said Mr Knowles.

“Ultimately this will reduce the tax on your profit, or taxable income.”

But beyond jumping on the government loan schemes and tax incentives before the end of the year, Mr Knowles said now was the prime time for doctors to review their business plan.

“Take the time to work out all the political, economic, social, technological, legal and environmental [PESTEL] impacts on your business,” he said.

He said business owners could use a PESTEL analysis to determine what external factors were influencing their practice, so they can develop better financial planning.

Particularly for those considering setting up a new practice in 2021, Mr Knowles said doctors should ask: “What are the demographics around me, where am I going to set up my practice and, am I the right for that?”

“Writing a business plan will also reveal the opportunities out there and show where you should be moving.”

Read more about the SME Government Guarantee Scheme Phase Two here.