Managing Financial Risk: A Guide for Allied Health & Trades Businesses
For many health and trade businesses, bookkeeping is seen as a way to “stay square with the ATO.” However, international and Australian guidance now requires bookkeepers to use a Risk-Based Approach (RBA). This means your bookkeeper will be looking at your business through a lens of financial integrity and crime prevention.
1. Why the “Risk-Based Approach” Matters to You
The RBA means your bookkeeper shouldn’t treat a solo mobile massage therapist the same way they treat a multi-state construction firm. They must assess the specific risks of your industry to decide how much “due diligence” (checking your ID and money sources) is required.
For Allied Health: The focus is often on high-volume transactions, government funding (NDIS/Medicare), and third-party payments.
For Trades: The focus is on large cash flow, high-value asset purchases, and complex subcontractor networks.
2. Industry-Specific Risks to Discuss with Your Bookkeeper
A. Allied Health (NDIS Providers, Clinics, Specialists)
Source of Funds: If your clinic suddenly receives large private payments from overseas for “wellness retreats” or “unspecified consultations,” your bookkeeper is now required to flag this.
Third-Party Payments: A “red flag” occurs when a patient’s bill is paid by a company or person unrelated to the patient without a clear reason.
Medicare/NDIS Fraud: Bookkeepers are being trained to spot “ghost billing” (charging for services not rendered), as this is a common way to “clean” illicit money through a legitimate business front.
B. Trades & Construction (Builders, Sparkies, Plumbers)
Cash Intensity: If your trade business handles significant cash (e.g., residential “cash jobs”), your bookkeeper must ensure these are banked and recorded. Discrepancies between your lifestyle and your declared business income are a major trigger.
Supply Chain & Subbies: Paying “subcontractors” who don’t have an ABN, or whose bank accounts are in different names than their invoices, is a high-risk activity for money laundering.
High-Value Assets: Using business funds to buy luxury vehicles or property that doesn’t align with the business’s actual profit is a key area of scrutiny.
3. What Your Bookkeeper Will Ask For (And Why)
To comply with the new FATF-aligned standards, your bookkeeper will need more than just your receipts. Expect them to request:
Proof of Identity (KYC): Not just for you, but for any “Beneficial Owners” (anyone who owns more than 25% of the company or trust).
Explanation of “Outlier” Transactions: If you have a sudden spike in revenue or a weird refund request (e.g., a client pays $10k over, then asks for the refund to go to a different account), they must document the reason.
Verification of Subcontractors: They may ask for more rigorous checking of your subbies’ credentials to ensure you aren’t accidentally facilitating a “labor hire” laundering scheme.
4. Red Flags: What Your Bookkeeper is Looking For
The “Refund” Scam: A customer overpays by a large amount and asks for a refund to a different bank account.
Complex Structures: Creating multiple trusts or companies for a simple 3-person plumbing business without a clear tax or legal reason.
Unusual Urgency: Pressuring the bookkeeper to “just get the payment through” without following the usual verification steps.
5. The Benefit to Your Business
While this feels like “more paperwork,” having a bookkeeper who follows this guidance protects you:
Audit Readiness: You’ll be prepared for AUSTRAC or ATO reviews.
Business Integrity: You ensure your “clean” business isn’t being used by others to hide “dirty” money.
Professionalism: It signals to banks and lenders that your financial records are robust and trustworthy.