'Why are our balances so high?' as well as 'what should we leave in our current accounts?' and 'why won't you (aka me) let us take our money out of the practice?'
All good questions. The answer lies in a better understanding of the current accounts.
I suggested looking at the balance sheet - always a good place to start when talking about partners' current accounts.
The top part of the balance sheet (the assets and liabilities of the practice) always has the same total as the bottom part of the balance sheet (the current accounts). That's not a coincidence, it sets out who owns how much of the net assets.
'But why are the figures larger?' they cried. Well, because there is more working capital in the practice than this time last year. Why? Because PCTs are slower in paying their GPs and less reliable. One London PCT forgot to pay a client of mine last month.
This practice has also changed its make-up in recent years, moving from five full-time partners to three full-time partners and two salaried GPs. The financial needs of the practice have not reduced, so while five partners could each have £15,000 in their current accounts and leave the practice with £75,000 of resources, now each of the three partners needs to leave in £25,000 to leave the practice in the same place.
Finally the most difficult question of all: 'How much should we leave in our current accounts?' - followed by the easiest of answers: 'it depends'. But the answer lies somewhere between the balance sheet and the bank statements.
The balance sheet shows the net assets. Of all these assets, only the bank balance has some degree of flexibility. Looking back over the last six months of bank statements, the balance never dropped below £50,000.
If £30,000 was taken out of this practice, leaving a buffer of £20,000, the net assets would fall from £75,000 to £45,000 and each partner's current account would fall to £15,000. So £15,000 is the magic answer, for this practice, and at this time.