How Doctors Can Manage Cash Flow in their Practice 

Running your own medical practice can be one of the most rewarding things you’ll ever do. You’ve got the freedom to shape how you care for patients, build a team, and create a workplace culture you believe in. But there’s a side to practice ownership that medical school doesn’t prepare you for: money management. And one of the trickiest parts? Cash flow.

It doesn’t matter how profitable your practice looks on paper — if cash isn’t flowing in and out at the right times, you can feel like you’re constantly juggling bills, waiting for Medicare rebates, or stressing about the next BAS.

Why Cash Flow Is Different for Doctors

If you were running a café, you’d get paid every time someone bought a coffee. Simple. In a medical practice, it’s a bit more complicated:

• Medicare & private billing delays: You might see the patient today, but the money doesn’t hit your account for days (sometimes weeks).
  
• High fixed costs: Wages, rent, insurance, and equipment repayments don’t wait for those rebates to clear.
  
• ATO bills: If you’ve only ever worked in hospitals, the first quarterly PAYG or GST bill can knock you off your chair.
  
• Bank loans: Many practices borrow heavily for fit-outs and medical equipment — great for growth, but tough on cash if not planned well.
  

So even with $1m+ in annual billings, you can feel broke if cash isn’t managed properly.

The Classic Mistakes We See

Here are the “greatest hits” of cash flow mistakes in medical practices (we see these all the time):

1. Mixing personal and practice money
   One account for everything. It feels easier, but it makes it impossible to know what’s really going on.
   
2. Forgetting tax and super
   It’s all smiles until the ATO sends a big bill. Suddenly you’re scrambling to find tens of thousands you already spent.
   
3. Buying too much too soon
   That fancy ultrasound machine? Great tool, but if you pay cash and drain your buffer, you’ve just bought yourself a problem.
   
4. Slow billing and collections
   Doctors are busy. Billing gets pushed back. But every delay is an interest-free loan you’re giving out.
   
5. No salary for yourself
   Drawing “as needed” from the practice bank account creates chaos. You can’t tell what’s profit, what’s tax money, or what’s safe to spend.
   

Case Study : Two Different Paths

Let me introduce you to two doctors (names changed, but based on real experiences).

Dr Sally
She  launched her GP clinic with a bang. Within 12 months, she was billing $1.2 million. On paper, she was flying. But behind the scenes? Every quarter she was stressed about wages and tax. She paid herself randomly, bought equipment outright, and forgot staff super in her budget. Cash flow felt like a constant battle.

Dr Bill  
Also a GP, but he set things up differently. She paid herself a fixed salary, had a “tax account” that skimmed off 25% of income each week, and financed her big equipment instead of draining cash upfront. He also kept three months of expenses in reserve.

The result? Even when patient numbers dipped over Christmas, her practice kept humming, bills were paid, and she didn’t lose sleep. Both doctors were smart, both cared deeply about patients. The difference wasn’t income — it was cash flow discipline.

Practical Strategies That Work

Here’s how you can keep your practice cash flow healthy:

• Separate Business and Personal Money:  Open dedicated business accounts. Treat your practice like the business it is. Pay yourself a set salary — just like your staff

• Forecast the Year Ahead Do a simple 12-month cash flow forecast. Plot when rent, insurance, and ATO payments hit. You’ll instantly see which months are tight.

• Create a Tax & Super “Sinking Fund” Every week, sweep a portion of income into a separate “tax account.” When BAS or EOFY comes around, it’s sitting there waiting. No panic

• Tighten Up Billing Get systems in place for prompt invoicing and Medicare claiming. The quicker you bill, the quicker you get paid

• Build a Cash Buffer Aim for at least 2–3 months of operating expenses in reserve. That way, if something unexpected happens (like COVID lockdowns), you can keep paying staff and rent without sweating

• Use Finance to Smooth Big Costs Don’t drain $80k on new equipment if you can finance it over time. Leasing can keep your cash available for day-to-day needs

• Review Regularly Sit down with your accountant quarterly. Compare your forecast to reality and adjust. Cash flow is dynamic — don’t “set and forget.”

Final Thoughts...

Cash flow doesn’t have to be complicated — but it does have to be intentional. The truth is, most doctors don’t struggle because they aren’t earning enough. They struggle because money flows in irregularly, while expenses march out like clockwork. By putting in a few systems — a forecast, a tax buffer, a salary for yourself — you’ll go from “constantly stressed” to “confident and in control.” And here’s the bonus: when you know your cash flow is sorted, you can stop worrying about bills and focus on what you do best — caring for patients

Disclaimer: This article contains general information only . It is not designed to be a substitute for professional advice and does not take into account your individual circumstances, so please check with us before implementing this strategy to make sure it is suitable