This is for owners of dental, medical, legal and insurance practices turning over roughly $1M to $10M who read the rate news this week and wondered what it actually means for their own numbers. By the end you'll have a simple way to size the change for your practice, and five places owners commonly look to absorb it.
The cash rate is now 4.85%
As at 4 November 2026, the Reserve Bank's cash rate target is 4.85%. The Monetary Policy Board lifted it by 0.25 percentage points at its meeting on 3 November 2026, effective 4 November (RBA media release). The RBA's cash rate table shows it's the fifth rise this year, taking the rate from 3.60% to 4.85%.
That's the last time I'll mention the headline. I won't guess what the Board does next, and I'd treat anyone who claims to know with caution. What I can do is show you how to work out what this rise means for you.
The direct interest cost is usually smaller than it feels
Start with the arithmetic. On a variable facility, a 0.25 percentage point rise adds about $250 a year in interest for every $100,000 owed, assuming the lender passes the full rise through.
Take a hypothetical dental practice, call it Harbour Dental. All numbers here are illustrative. Harbour Dental turns over $3M and carries $400,000 of variable debt from a fit-out and a new chair.
- This rise: $400,000 × 0.25% = $1,000 a year, or about $83 a month.
- All five rises this year: $400,000 × 1.25% = $5,000 a year, or about $417 a month.
That's real money, but it's under 0.2% of turnover. The point isn't that it doesn't matter. It's that, once it's sized, it stops being a vague dread and becomes a line item you can plan around. Fixed-rate loans won't move until the fixed term ends, so it's worth knowing which of your facilities are variable and which are fixed.
Lock-up is often a bigger lever than the loan
In most service practices, the cash tied up in unbilled work and unpaid invoices is larger than the extra interest. That's where the way through usually is.
Back to Harbour Dental. At $3M a year, one day of revenue is about $8,219 ($3,000,000 ÷ 365). If the practice collects five days faster, say from 30 debtor days to 25, that frees around $41,000 of cash. Applied to the overdraft, that's working capital that doesn't need to be borrowed at all.
For a law firm the same logic applies to work in progress. A hypothetical firm, call it Ridgeline Legal, that bills monthly instead of at matter milestones is shortening the time between doing the work and getting paid. For a medical practice, it might be the lag between consult and claim, or gap fees that sit unpaid. I covered the bank-versus-P&L side of this in Drawings your practice P&L can actually carry.
Questions owners commonly ask here:
- What are my debtor days and unbilled days now, and what were they 12 months ago?
- Which payment terms or billing points could change without hurting the client relationship?
- Are payment plans being tracked, or just agreed?
A refinancing conversation goes better with numbers in hand
Higher rates are a reasonable prompt to look at how the practice is funded. That doesn't mean any particular move is right. It means the conversation with your lender is more useful when you bring three things:
- a list of every facility, its balance, rate, whether it's fixed or variable, and when any fixed term ends
- a 13-week cash forecast showing repayments alongside expected collections
- your current debtor and lock-up figures
With that on the table, owners commonly ask about repayment timing, whether an overdraft limit still matches how they actually use it, and whether a fixed term ending soon changes the picture. Whether any of it suits your situation depends on details a blog post can't see, so that's a conversation to have with your lender and accountant together.
Pricing is part of the answer, not a last resort
The RBA's own statement notes that many firms are facing cost pressures and are raising prices or looking to. Practices are no exception, and wages, rent and consumables have been moving too.
The arithmetic is worth seeing. For Harbour Dental, a 1% fee adjustment on $3M of turnover is $30,000 a year in revenue, illustrative and before any change in patient numbers. That's six times this year's entire $5,000 rise in interest. You don't need to pass on every cost, but it helps to know which services or client groups actually carry their cost, and when your fees were last reviewed. I wrote more about that gap in When costs rise faster than your prices.
A 13-week forecast turns a worry into a plan
A rolling 13-week cash forecast is the simplest way I know to see a rate change in context. It shows the loan repayments, the BAS and super dates, payroll and expected collections on one page, week by week.
The useful part is running two versions: one with today's collections, and one with debtor days five longer. If the second version still clears your minimum balance, you know you have room. If it doesn't, you've found out in week one rather than week ten. My post on Forecasting a quiet month before it hits walks through the build.
Your buffer target may need a fresh look
A buffer that felt comfortable at a 3.60% cash rate was set against different repayments. Owners commonly recalculate their minimum balance using current repayments and current lock-up, rather than last year's. If you haven't set one yet, How much cash buffer does your business need? covers how I think about it.
What to do next
If you want a starting point this week, these are the numbers worth pulling together:
- Every facility, its balance and whether it's fixed or variable.
- The direct cost of this rise: balance × 0.25%.
- Your debtor days and unbilled days, now and a year ago.
- When your fees were last reviewed.
- A 13-week cash forecast with a slower-collections version.
Most practices find at least one of those numbers moves more than the rate did. If you'd like a second set of eyes on yours, you can book a time to look at your numbers with me at Full Cycle Accounting.
This is general information only and doesn't take into account your objectives, financial situation or needs. Before acting on it, consider whether it's appropriate for you, or talk to me about your situation.