The Financial Reports Every Medical Practice Owner Should Review Monthly
- johnry8
- 6 days ago
- 2 min read
Many medical practice owners only review their finances at tax time. By then, it’s often too late to fix cash flow issues and rising business costs.
Regularly reviewing your financial reports helps you: • Identify problems early before they become costly • Understand where your money is really going • Plan for growth, staffing and equipment purchases • Stay compliant and avoid unexpected tax or cash flow shocks
A common misconception is that as long as the bank balance looks good, everything is fine. In reality, your bank balance only shows part of the picture.
1. Profit and Loss Statement (P&L)
Your Profit and Loss Statement shows how your practice is performing over a specific period, usually month to month.
What to review each month:
Total revenue from consultations and other services
Key expenses such as staff costs, rent and medical supplies
Net profit before tax
Best practices:
Compare month on month trends, not just one month at a time
Watch for rising expenses that don’t align with revenue growth
Do’s and don’ts:
Do review this monthly, not annually
Don’t assume profit equals cash in the bank
2. Cash Flow Report
Cash flow is critical for medical practices, especially those dealing with Medicare, private billing and delayed payments.
What to review each month:
Cash coming in VS cash going out
Timing gaps between billings and actual receipts
Upcoming expenses like payroll and tax payments
Many profitable practices still struggle due to poor cash flow timing, and understanding this report helps prevent last minute stress when bills are due.
3. Accounts Receivable Report
This report shows money owed to your practice that hasn’t been collected yet.
Why it matters:
Outstanding billings can strain your cash flow
Delays in follow ups or billing processes can add up quickly
Best practices:
Review aged receivables monthly
Set clear internal processes for following up unpaid amounts
4. Balance Sheet
The Balance Sheet provides a snapshot of your practice’s financial position at a specific point in time.
Key areas to focus on:
Cash and bank balances
Loans and liabilities
Owner equity
Do’s and don’ts:
Do use it to understand long term financial health
Don’t ignore liabilities that can affect future cash flow and borrowing capacity
5. Key Performance Indicator Report (KPIs)
Combines financial and operational data, such as revenue per practitioner, average billings per consult, cost per consult and staff cost percentage. This helps link day to day activity with financial results.
At Rise Accountants we look after a variety of medical specialists, including doctors, physiotherapists, chiropractors, dentists, allied health professionals, pharmacists and many more.
If you would like to start understanding your medical practice finances beyond the bank balance, the team at Rise Accountants can help you interpret these reports and provide tailored advice for you and your business.