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HomemibusinessPractical Considerations for Practice Finance

Practical Considerations for Practice Finance

Whether you’re considering applying for finance, an overdraft, a mortgage – or establishing a term deposit – there are options to help you maximise your financial position.

When assessing the finance needs of your practice it is important to consider the following:

Maximise the value of asset purchases

There is more to financing assets for your practice than looking at the interest rate alone. Whether financing equipment, fit-out or a motor vehicle, it’s important to consider the after-tax costs that are affected by the finance structure, initial fees, dealership discounts and ongoing costs of assets. So, when considering a finance structure, be sure to look at more than just the interest rate, and consult your accountant before making a decision.

Secure a safety net for the unexpected

An overdraft is an essential cash flow management tool for a business, that provides a safety net for unexpected expenses. It can be used for working capital needs, advance bill payments
and other cash flow requirements. The big catch however, in traditional bank overdrafts, lies in the fees you pay even when you aren’t using the facility.

Generally, in the mortgage market, medical professionals have a lower risk profile than a standard borrower and are less affected by economic downturns

With a specialist financier, medical clients may benefit from a fully flexible overdraft facility that may be unsecured, or they can benefit from a higher overdraft limit with asset security.

Uncomplicated cash management facilities

Savings accounts can range in flexibility, so opt for an account type that works best for the practice. Whether you seek a call or term deposit account, additional considerations include fees, minimum requirements, interest rate earnings and transaction flexibility.

Get into your own home quicker

Since the Global Financial Crisis there have been many reports of banks tightening their lending criteria by reducing the loan-to-value ratio (LVR) that applies to residential property finance, citing the increasingly volatile economic climate, funding constraints and rising unemployment. Typically, this means that borrowers need to stump up more cash as a deposit, and it may even be more difficult to ‘trade up’ when the opportunity arises. It also prohibits recently-qualified professionals from

gaining access to their first home.

Generally, in the mortgage market, medical professionals have a lower risk profile than a standard borrower and are less affected by economic downturns. This should make them better credit risks but, unfortunately, many banks do not agree. This is where doctors and other medical professionals can benefit by dealing with lenders that have a stronger understanding of their profession.

Barry Lanesman from Investec Medical Finance is a registered dentist with private practice experience and over 20 years involvement in financing dental and medical practices. He has played a key role in the development of specialist finance for the ophthalmology and optometry professions. For information on Investec Medical Finance phone (AUS) 1300 131 141.

The information contained in this article (“Information”) is general in nature and has been provided in good faith, without taking into account your personal circumstances. While all reasonable care has been taken to ensure that the Information is accurate and opinions fair and reasonable, no warranties in this regard are provided. We recommend that you obtain independent financial and tax advice before making any decisions. The opinions expressed in this article are those of the author and do not necessarily reflect the opinions of Investec Bank (Australia) Limited or mivision.