Banking & Finances
Being familiar with some of the day-to-day banking and finances required to operate a business is useful for midwives to successfully manage the financial aspects of a midwifery practice group.
Opening an Account
Select a business-specific account that meets the practice’s current and future needs. Review small business account packages and consider recommendations from midwifery colleagues when deciding on a financial institution and the type of account to open. Financial institutions will request business documentation (e.g., partnership agreement or business registration number) and may conduct a credit check on all business partners before opening an account. All practice members who will have signing authority should be prepared to provide personal identification, regardless of whether the business is a partnership, corporation or sole proprietorship.
Although internet banking is useful for paying bills online and monitoring accounts, there are potential security risks. When setting up internet banking:
- Follow standard internet security measures.
- Implement financial controls for fraud prevention, including policies pertaining to signing authority, credit card use, and the issuing of cheques and electronic fund transfers.
- Consider adding cyber insurance to clinic insurance policies to protect against losses from the use of information technology.
Financing and Cash Flow
Private financing may not be necessary for registered midwives starting a new MPG, as many of the startup costs are funded through the Funding Agreement. However, receiving funds from the ministry is dependent upon government timelines, budget proposals and practice billings. Practices need to develop a process to manage the ebbs and flows of variable cash receipts. For example, operating expenses such as rent, staff salaries, payroll taxes, cleaning, and utilities may be due prior to income being received. As a result, the need to access additional funds may come up particularly in the first few years of a newly established MPG, and on occasion, for established practices.
Lines of Credit
Practices may consider having access to a line of credit or other financing options for cash flow management. A business plan can be helpful in the event a practice requires financial support from the bank (e.g., a loan or short-term line of credit). Ultimately, practice partners are responsible for the MPG finances. As such, a credit check on all partners at the start of the partnership is useful. If the MPG experiences financial difficulties, partners should seek counsel from their accountant and practice group lawyer.