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Resources Why Corporate Financial Management matters for companies?  By Medinex Team   |   Jun 2024   Financial management is the planning, organizing, directing and controlling of a company’s financial activities such as cash flow, procurement and use of funds.  In general, it involves applying management principles to financial resources to effectively manage your money and achieve your business goals.    Every industry will rely heavily on efficient financial management because the importance of corporate financial management is clear: business owners need an expert to handle the financial aspects of running a company.  A good financial team will oversee the company’s accounting, staff, revenue, operations, and information technology – all while improving client service and lowering the cost of services.  Here is the low-down on the gist of financial management:     1.  WHAT IS CORPORATE FINANCIAL MANAGEMENT? Your company’s finance is a critical and integral part of its existence as it is difficult for any organization to be sustainable without properly managing its finances.  Your finance team decides if a particular venture is viable and how much revenue is required to sustain your company.  As many such decisions are important, it is essential that you have a team of experienced financial experts to assist you in them.     Some of the top financial challenges faced by small companies include the lack of cash flow management, lack of capital, insufficient knowledge pertaining to tax compliance and burdensome legal paperwork.  To remain financially viable amidst these challenges, you must strategize and address these issues by being aware of key cost drivers and identify potential solutions to achieve financial savings.    2. BENEFITS OF FINANCIAL MANAGEMENT The benefits of good financial management in the corporate sector extend beyond just financial matters toward various benefits for you and your customers:   Proper Cash Flow Management Cash flow is the most reliable indication of financial health as it measures the amount of money coming in and going out of your company.  A finance team manages your accounts receivable balance to quickly increase your cash flow and implement proper cash flow management processes like quarterly cash flow statements.  By boosting cash flow, your company’s cash flow risk will decrease – cash-flow risk exists as a type of liquidity risk and is among the most important concerns for investors in private equity.  Therefore, good cash flow management is essential for your company to succeed, and having a cash flow statement will allow you to monitor your company’s growth.   Formulate a solid business plan and realistic budget Whether your company is a new start-up or a mature one, the success of your company rests on your company’s budget plan.  A good budget guide will help you to actively manage your income and business expenses to achieve your long-term revenue goals.  Your budget should factor in both fixed and variable costs.  Fixed costs include your rent, utilities, manpower cost, accountant, and marketing fees.  Variable costs include costs-of-goods-sold, commissions and raw materials.   For any new start-up company, a business plan details the various costs such as equipment, manpower, and even bank loans:   Equipment costs Every company requires some form of equipment and basic supplies like computers, information systems and software. You will need to decide whether or not to lease or buy certain equipment.  Depending on the type of equipment and terms of the lease, a viable option is to lease with the intention of buying only at a later date.   Manpower costs As any company owner knows, one of the biggest costs is manpower, which can account for as much as 70% of total business costs.  Especially in Singapore, recruiting quality local staff can be very costly.  Even for companies that hire foreign labour, they are vulnerable to other risks.  For instance, many companies experienced labour shortages during the pandemic period when travel restrictions slowed the influx of foreign labour and many foreign workers in Singapore decided to return home.  A finance team assesses your business operations and strategize workforce planning to increase productivity and better utilise your human resources.  By recruiting the right staff and establishing performance measures that best meet your company’s needs, you will experience an increase in productivity and obtain quality staff at the lowest possible cost.   Business loans There are many types of business loans available to companies in Singapore for whichever business needs you have. For instance, managing cash flow, furthering business growth, equipment and property loans.  There are also certain application criteria to be met when you are trying to secure a business loan.  A finance team will advise you based on your financial track record, business ownership and credit score.  Like any other loans, business loans are accompanied by interest payments and needs to be considered in your plan.  Having a business plan that is functional enough will allow you to repay the monthly repayments without digging into your own pocket. Credits: Zoho Books   Tax Advisory & Compliance Whether you are a sole proprietor, a partner or structured corporation, you are responsible for paying taxes on profits earned for the year. While keeping up to date with Singapore’s statutory and regulatory tax compliance requirements may not necessarily your core competency, you will still be penalized by the Inland Revenue Authority Singapore (IRAS) if tax payments are not made on time.   A finance team well-versed in the latest tax regulations will relieve you of this burden and prevent unwarranted penalties.  In fact, through proper management and monitoring of your expenses, some of these expenses can be used as deductions to significantly reduce your tax liability.   Achieve Long term growth A key component of financial management is strategic planning for long-term growth through sound investments and the creation of new revenue streams.  According to the Organisation for Economic Co-operation and Development (OECD), the digital transformation which has been underway for decades is now accelerated by the COVID-19 pandemic.  Although some digital divides have narrowed, some have not followed the same pace and since have been

Resources What Do Auditors Look For In A Company Audit? By Medinex Team  |  Jun 2024   Auditors serve an important role in ensuring the accuracy and transparency of financial reports. They verify that a company’s financial accounts are accurate and in accordance with applicable legislation and standards. The auditing process is complex, with numerous procedures and checks.   Here’s a detailed look at what auditors normally look for during a company audit.   Assessing the Company and its Environment Before going into the financial statements, auditors must have a solid understanding of the organisation and its surroundings. This includes:   Understanding the industry in which the company operates enables auditors to discover specific risks and standard practices. Different industries have distinct regulatory requirements and risks that auditors must evaluate.   Company Activities:  Auditors must comprehend the company’s business processes, goods or services, and operational structure. This expertise allows them to identify significant points where misstatements may arise.   Internal Controls:  Assessing the successful operation of the company’s internal controls is critical. Effective internal controls serve to assure financial reporting accuracy and reliability, as well as compliance with regulations and laws.   Assessment of Risk Auditors undertake risk assessments to discover areas where there may be material misstatements due to error or fraud. This consists of:   Underlying Risk:  Assessing the susceptibility of financial report items to large misstatements, assuming no relevant internal controls are in existence. Complicated transactions or projections, for example, may carry greater inherent risk.   Control Risk:  The risk that a misrepresentation would occur and not be prevented or recognised in a timely manner by the internal procedures of the business. If internal controls are poor, the control risk increases.   Discovering Risk:  The chance that the auditor’s methods will fail to detect a material misrepresentation. Auditors seek to create audit methods that limit detection risk to a manageable level.   Audit Plan Auditors create audit plans based on risk assessments. This plan specifies the type, schedule, and scope of audit procedures. Key elements of the audit planning include:   Materiality: Setting materiality levels allows auditors to focus on the most important financial factors. Materiality refers to the extent to which an omission or mistake may influence users’ economic judgements based on financial accounts.   Audit Approach: Choosing whether to depend on internal controls or more on substantive testing.   Internal Control Tests Auditors assess the company’s internal controls for their efficacy in preventing or identifying errors and fraud. This includes:   Walkthroughs: Tracking some transactions through the system of accounting will clarify the processes and controls.   Control Testing: Testing controls to see whether they are functioning efficiently. This may include assessment, observation, and repetition of control operations.   Substantive Testing Substantive testing entails checking the accuracy of the numbers and disclosures in the financial statements. This can be broken down as:   Detail tests: examining of individual transactions, account balances, and disclosures. Auditors, for example, may do a physical count and compare it to the recorded numbers to validate the existence and value of inventory.   Analytical Procedures: Reviewing financial information by examining feasible links between financial and non-financial factors. For example, comparing current financial figures to previous periods and identifying noteworthy differences.   Assessment of Financial Statements Auditors examine the financial accounts to ensure they provide a true and fair picture of the company’s financial situation. Key areas of attention are:   Revenue Identification: Ensuring that revenue is acknowledged in compliance with the relevant accounting standards. Revenue is a major target for fraud, thus auditors pay special attention to the timing and amount of revenue generated.   Expenditure and Liability Recognition:  Ensuring that liabilities and expenses are reported in the right times and amounts. This includes verifying the correctness of liabilities and recording all obligations.   Asset valuation:  Determining the value of assets like as receivables, stocks, and fixed assets to verify that they are appropriately represented. Auditors, for example, may assess the processes utilized for depreciation and impairment.   Disclosure Conditions:  Verify that all required disclosures are included in the financial statements and reported clearly and completely. This covers both qualitative and quantitative disclosures.   Fraud Risk Evaluation Auditors are responsible for assessing the potential of fraud. This involves:   Finding out with Management: Speaking with management and others inside the organization to learn about their perspectives on fraud risks and the procedures in place to reduce them.   Reviewing Journal Entries: Examining records and other modifications for signs of probable fraud, such as unexpected entries made near the conclusion of reporting periods.   Accounting Calculations: Examining the judgements and assumptions used in accounting estimates for any biases that may suggest dishonest financial reporting.   Compliance with rules and legislation Auditors check that the firm follows applicable rules and regulations. This consists of:   Law and Regulatory Compliance:  Examining the company’s methods for adhering to applicable regulations and laws, such as tax, labour, and regulations pertaining to the environment.   Emergencies and Obligations:  Determine if the firm has properly accounted for and reported emergencies and commitments, such as pending litigation or contractual responsibilities.   Subsequent Event Review Auditors evaluate events that occur after the balance sheet date but prior the financial statements are released to assess their impact on the financial statements. This involves:   Discovering Upcoming Events: Recognizing and analyzing important events that occur beyond the reporting period that could impact the financial statements.   Changing or Disclosing Further Events: Assessing if subsequent events necessitate a modification to the financial statements or disclosure in the appendices.   Generating Textual Representations Auditors collect statements in writing from management as part of their audit evidence. For example, this consists of the Letter of Management Representation, which is a written statement from management that confirms certain issues, such as their accountability for the financial statements, the accuracy of information presented to auditors, and acknowledgment, evaluation, and disclosure of components of the financial statements.   Reporting Finally, the last step is to issue the audit report. This report

Resources 12 Things To Know When Setting Up A Medical Business By Medinex Team  |   Nov 2023   Starting up your private medical practice and clinic can be both exciting and challenging.  As you are planning to fulfill your vision of providing your unique brand of medical and healthcare service, there are things that you would like to take into consideration for a smooth clinic set up.  We have highlighted 12 important things that should be on your ‘must-do’ list:    Incorporation of Clinic Business  You must first register and incorporate your new clinic business with the government agency ACRA.  Choose a business name or brand name that reflects the nature and vision of your clinic business.  Use short, easy-to-remember, relatable name.  Avoid words like ‘National’, ‘Temasek’, ‘Singapore’, etc. which are protected by law or reserved for government bodies.  You are to seek the approval of MOH when apply to use your business name containing words such as ‘clinic’, ‘surgery’, ‘medical’, ‘dental’, etc.    Also, avoid words which are vulgar or with negative connotations.  Using a business name that is similar in structure to existing registered names may not be approved by ACRA too. You can check whether your desired business name has already been registered through the ACRA’s ‘BizFile+’ portal.    Open A Bank Account  Starting up your clinic requires not only personal investment of time, expertise but also financial resources.  Sometimes, the upfront expenditure outlay on clinic renovation, general working capital, practice acquisition, drug procurement and medical equipment can be quite daunting for a start up clinic.  For that reason, it is critical in finding yourself a reliable banking partner who can help you ease off some of the financial stress during the first few years of the clinic start up by extending to you loans designed for the healthcare business.  Some banks can offer ‘set up loans’ as high as $300k to help new clinic ease into its practice.    Accreditation with Private Hospitals  For private medical practitioners who need to admit patients and perform surgeries, it is imperative to get a valid and current specialist accreditation with major hospitals such as the Parkway Hospitals ( ME Orchard, ME Novena, Gleneagles, PW East ), Thomson Medical Centre, Raffles Hospital and Farrer Park Hospital, Mt Alvernia Hospital, etc.  You will need to submit the necessary medical certifications and documents to the hospitals’ respective Medical Affairs Department ( or equivalent ) for vetting and approval by the credential committee, or the Medical Advisory Board (MAB) committee.  Different hospitals have their guidelines on accreditation of doctors – for example in the case of medical specialists, some hospitals would require a minimum of 5 years as a Consultant in specialization practice before accreditation is granted.  The process of getting accreditation usually takes about 3 months upon completeness of an application.  Some hospitals approve the application within a shorter time, thus it is advisable to plan this in advance before commencing your practice.    Clinic Location  Selecting the right clinic location is to reach out to the right patients or clients ( also called your ‘target market’ ).  Your clinic location reflects your healthcare service’s vision and to provide the appropriate healthcare for your patients.  The amount of traffic that a location generates is important for a clinic, and especially so for a newly established clinic.  Some hospitals and medical centres offer Doctors’ Network Services or have Patients Assistance Centre that provide referrals for doctors in support of their practices.  Rental of clinic space is also one of the main considerations for new clinics.  There is a vast difference in rentals for locations that are outside of CBD areas and those right in the middle of the commercial districts or major shopping belts.  For example, rental of clinic spaces in the city centre may be in the upward of $30 psf while those in residential areas may only be a fraction of it.  While the prestige and the aura of location is a valid consideration, it is important also to balance it with the objectives and financial goals ( which we will discuss in a future post ) of your clinic.    Medical Equipment Acquisition  Medical equipment procurement may be one of the largest expenditure items in clinic set up, other than the clinic renovation cost.  Depending on the specialization, medical equipment may range from a few thousand dollars per unit to the upward of a few hundreds of thousand per unit.  Thus, spending time in selecting the right equipment with the appropriate service and maintenance contracts is something worth doing as it impact your clinic operating profits.  Some local banks offer ‘Medical Equipment Loan’ for clinics during their start up to assist in defraying initial investment expenditure.  In addition, medical equipment must be licensed by HAS.  Doctors who are operating equipment such as ultrasound apparatus should possess license from NEA too. During pre-operation clinic inspection, MOH officers will have to be presented with the current licenses and certificates before the clinic can commence using the equipment.    Clinic Space and Operation  As the clinic is a purpose-built space to dispense healthcare services, guidelines have been laid out by HSA on the hygiene and operational aspects for a functional clinic.  MOH Officers would check on some of the following during the clinic’s pre-operation inspection:  Firstly, the floors of treatment room/s in a clinic must not be laid with carpet or fibrous materials – this is to aid ease of cleaning and prevent spreading of infection or microbial growth within the space.  At least a sink, disposable hand-towel device, hand-soap dispenser must be installed in the treatment room.   The clinic should engage vendor to dispose of bio-hazard waste – such as gauze dressings, sharps, syringes, one-time-use devices, etc.                                                                                                                                                    Secondly, the lighting level of the treatment room must be adequately bright to allow the doctors to see details of the surgery areas.  Generally, ambient lighting level in the surgery room should be around 1,000 lux while the focused surgery and treatment areas should be around 100,000 lux lighting level using surgery lighting