How to Transfer Cash Between Dental Clinics Without Creating Liquidity Risk or Tax Exposure

As a dental group owner, transferring cash between clinics without creating liquidity risk or tax exposure hinges on one thing: a structured intercompany transfer system. This isn’t about ad hoc movements or gut-feel decisions. It’s rarely the amount that causes problems; it’s the lack of timing logic, audit trails, and tax-safe visibility.

As a dental accountant and CFO since 2019, I’ve worked with UK dental groups from £1.6M to £4.3M turnover across Kent, Surrey, and Hampshire. The pattern is clear: as practices grow, cash moves faster, and without control, the risk compounds.

In this practice guide based on my dental group client interventions, I’ll show you:

• Why casual intercompany transfers distort cash visibility and inflate tax risk.
• How to build a legal, liquidity-safe transfer model that works across multiple sites.
• How one £2.9M private group removed £34,535 in overdraft reliance by installing just three cash flow protocols.

Group Case Study: Rochester, Kent (3 Sites, £2.9M Turnover)

This group was shifting £7K–£12K monthly between sites to meet payroll and supplier bills. Reports showed profit, but their overdraft told the real story.

Within 63 days, we:

• Built a group-wide intercompany cash policy.
• Synced transfers to their 13-week cash forecast.
• Embedded tax-safe logic into every movement.

The result? No more Emails, and Whatsapp messages or last-minute transfers. Just full clarity, legally structured.

Fast Takeaway

Unstructured clinic cash transfers increase tax exposure, hide liquidity stress, and confuse your financials. You don’t need to stop the transfers—just structure them.

TL;DR for Group Owners

• Why this matters: Ad hoc cash movements create financial blind spots and tax risk.
• What breaks: Guesswork timing, no audit trail, invisible cross-site debt.
• What fixes it: A transfer calendar, intercompany rules, and 13-week forecast logic.

Why Casual Transfers Quietly Break Group Cash Logic

Cash transfers between dental clinics feel harmless, especially if it’s all “your money.” But without formal structure, these movements quietly erode your ability to see, plan, and protect group-wide cash.

As a dental accountant and cfo working with multi- site owners, here’s what I’ve seen, in most growing dental groups: The moment one site needs help—to cover payroll, a supplier invoice, or lab cost—money gets shifted from the “healthy” site. No calendar, no forecast sync, no audit trail.

The result? You might solve today’s problem, but you’ve just introduced four more.

Are You Solving One Site’s Problem by Creating a Bigger Group One?

Most inter-site transfers start with good intent. But here’s what happens when they’re casual:

A £2.1M private group in Kent learned this the hard way, paying £6,400 in tax penalties. Their casual £11K transfer (done in Slack, booked as “loan”) triggered an HMRC query on intercompany balances. There was no policy, no schedule, and no compliance proof.

The Real Cost of Poor Transfer Logic

• Distorted Forecasting: You can’t predict group-level liquidity when transfers are reactive.
• Tax Complications: HMRC can reclassify unclear intercompany loans as potential director drawings or taxable transfers.
• Owner Pay Delays: Your personal income depends on stable buffers, not guessing who owes what.
• Lost Lending Trust: Banks view unclear intra-group movements as financial mismanagement.

As a dental CFO,here’s what  I advise you to remember

Every unstructured transfer creates a fog. It might solve one problem, but it breaks your ability to model the next.

What Makes a Transfer Legally Safe and Liquidity-Friendly?

A transfer is legally safe and liquidity-friendly when it follows clean accounting logic, is fully traceable for HMRC, and aligns with a group-wide cash flow forecast—not just a single site’s balance.

As a forward-thinking dental accountant and CFO since 2019, I’ve seen this pattern consistently: cash flows freely between clinics, but without documentation, timing logic, or structural safeguards, it leads to:

• Tax ambiguity: HMRC could reclassify the movement as undeclared director drawings or unrecorded intercompany loans.
• Audit trail gaps: Your accountant can’t reconcile accounts, increasing compliance costs and filing delays.
• Liquidity stress: One clinic sits on idle cash while another scrambles to cover payroll—and no one sees the group-wide position.

To address these, it’s vital to consider HMRC’s guidelines. Intercompany transactions should reflect the ‘arm’s length principle,’ meaning terms must be comparable to those between independent entities. While smaller businesses might have exemptions, proper documentation is always crucial to avoid scrutiny. Recent HMRC guidelines also emphasize the need for contemporaneous intercompany agreements, ensuring documentation is up-to-date and reflects the commercial reality of transactions. Finally, establishing a holding company structure can streamline intercompany transfers, centralizing cash flow management and simplifying tax reporting across your group.

Let’s break down how to fix that.

Set Up Formal Intercompany Accounts Per Entity

Each clinic should have dedicated intercompany accounts—one for receivables and one for payables—inside Xero or QuickBooks.

Note: An intercompany receivable recorded as a current asset in one clinic must be mirrored as a current liability in the corresponding clinic. This symmetrical ledger structure is the foundation of accurate group-wide reconciliation.

Client Example: 5-Site Group in Hampshire

We implemented “Interco In” and “Interco Out” in each chart of accounts. Within 30 days, their accountant could reconcile all transfers—without Slack messages, WhatsApp notes, or spreadsheet patchwork.

Create a Written Transfer Policy

You don’t need a 10-page document. A clear one-pager works if it covers:

• Why transfers happen (e.g., centralised payroll, buffer rebalancing).
• When they’re triggered (e.g., Friday reviews, buffer drops below threshold).
• Who approves them (e.g., Director + Ops Manager).
• How they’re recorded (e.g., forecast → journal → bank rule → intercompany ledger).

This protects you during audits and aligns your team around predictable, compliant workflows.

Use Forecast-Triggered Logic—Not Gut Feel

Transfers should never be reactive. They must be triggered by your 13-week forecast, not low balances. For example:

If Site A shows a Week 3 cash dip due to payroll + loans, and Site B has a £10K surplus in Week 2, your system should:

1. Flag the gap 2–3 weeks in advance.
2. Trigger the intercompany transfer based on fixed rules.
3. Record journal entries on both sides.

This is CFFP™ in action—Cash Flow Future Pairing—where future obligations determine today’s moves.

Liquidity-Safe Transfers Protect the Whole Group

When done right, transfers don’t just “move money”—they:

• Reduce overdraft reliance.
• Clarify group-wide position.
• Protect tax planning and owner pay.

The goal isn’t to make cash mobile. It’s to make liquidity intelligent. When every move is structured, forecast-led, and reconciled, your clinics function independently, but your group behaves like one financially healthy business.

How to Build a Transfer Model That Works at Scale

To scale cash transfers without chaos, your model needs to behave like a central nervous system—triggering the right movement at the right time, backed by forecast logic, approval discipline, and intercompany structure.

What works for two clinics will quietly collapse at four, unless your system evolves from reactive transfers to model-based movement. Here’s how we build that model inside dental groups managing between £1.6M and £4.3M annually.

Start With One Weekly Transfer Rhythm

Set a weekly transfer day—usually Friday—where you:

• Review your 13-week forecast.
• Check buffer levels across all sites.
• Trigger transfers based on forecast, not gut feel.

This installs rhythm and removes ad hoc panic movements mid-week.

Client Example: Private Group in Kent

Before: £27K moved across clinics over 6 weeks with no structure. After: Weekly 15-minute Friday review using forecast → 3 scheduled transfers/month → overdraft use dropped to zero.

Pair Transfer Logic to CFFP™

CFFP™—Cash Flow Future Pairing—means every movement today is linked to an upcoming obligation. If a clinic has salaries + loans due in 14 days, and another holds surplus, the transfer should occur today, not on payday.

To implement this, use logic like:

• Trigger: Buffer drops below 1.5x weekly outflow.
• Source: Site with surplus > 2.5x weekly buffer.
• Amount: Only cover forecasted shortfall, not full liquidity.
• Approval: Director + Ops/Finance Manager.
• Booking: Dual-sided intercompany journal.

Lock Transfer Rules Into Your Operating Manual

Create a 2-page SOP (standard operating procedure) that outlines:

• Your buffer logic (how much each site holds).
• Trigger thresholds (when transfers happen).
• Approval flow.
• Booking entries.
• Reconciliation process (monthly or biweekly).

This removes guesswork—especially as you scale to 4+ locations or bring in new managers.

Scale by Syncing With Owner Pay and Tax Logic

As groups grow, liquidity touches more than just site operations. It impacts:

• Director pay: PPBT™ must stay protected despite inter-site flows.
• Tax reserves: Avoid draining earmarked funds by mistiming transfers.
• Investment capital: Transfers should never compromise planned capex or refurb timelines.

That’s why your transfer model must plug into your forecast and tax planning—not operate as a standalone system.

Core Takeaway

Scaling a dental group means scaling your transfer logic. Without forecast-led rhythm, your business starts to guess, and every guess is a tax risk or cash gap waiting to happen.

Once Your Cash Moves Safely Between Clinics, The Next Step Is Funding Growth Without Breaking Stability

Now that your intercompany transfers are structured, compliant, and forecast-driven, your group finally has clean liquidity and true visibility across every site.

The natural next challenge for multi-location owners is this:

How do you fund the next practice — a new site, new squat, or strategic acquisition — without destabilising the cash flow of your existing clinics?

Because expansion isn’t just about securing finance.
It’s about protecting:

• your group-wide buffer,
• your tax reserves,
• your PPBT™,
• and the cash rhythm you’ve just restored.

If you’re preparing for growth, the next guide shows how to do it safely:

 How to Finance a New Dental Practice Location Without Jeopardising Group Cash Flow Stability

Your Next Steps to Structuring Cash Transfers Across Clinics—Without Risk

Used by 20+ multi-site practices and 3 dental groups between £1.6M and £4.3M in turnover.

If your current cash movement process relies on WhatsApp ,Slack messages, director gut feel, or bank balance checks—you’re at risk. Here are two clear paths to take control:

Option 1: DIY—Manual Transfer System Using Your Existing Tools

Here’s how:

1. Create intercompany accounts in Xero or QuickBooks for each site (receivable + payable).
2. Design a 1–2 page transfer policy: what triggers, who approves, how it’s booked.
3. Embed your 13-week forecast to predict site-level shortfalls.
4. Assign weekly review rhythm to Ops Manager + Bookkeeper.
5. Set PPBT™ targets to avoid draining owner income.

This works—but requires strict discipline and manual oversight.

Option 2: Dentpulse Transfer Engine—Fully Synced

You don’t need Dentpulse to move money. But if you want to automate clarity, compliance, and cash protection—here’s what our system does:

• Sets group-wide forecast triggers.
• Automates intercompany journal logic.
• Syncs every transfer with tax reserves + owner pay.
• Alerts you 2–3 weeks before buffer breaches.
• Keeps you HMRC-safe—without losing liquidity control.

No new software. Just connect Xero or QuickBooks.

👉 Book a Group Cash Transfer Diagnostic →

FAQ

Is it illegal to transfer money between my own dental clinics?

No, as long as it’s documented correctly. Transfers between limited companies under your control must be logged as intercompany movements, not hidden as director drawings or unclassified expenses. Without a paper trail, HMRC could question the nature of the funds. 

How often should I reconcile intercompany transfers?

At least once a month—ideally weekly. Every intercompany receivable in Clinic A should match the payable in Clinic B. If your “owed” and “owing” don’t match, your accounts—and cash logic—are broken.

Do I need to charge interest or create a loan agreement?

Only if the transfer is long-term or treated as a formal loan. For short-term liquidity support within an active trading group, a written policy and intercompany journal entry are usually enough. However, if your accountant suggests interest for compliance—follow that advice.