Written by Bubacari Marega

4 July 2022

7 mins read

Content

Digitise your practice
Use cloud accounting software
Customise your chart of accounts
Leverage your EMR for accounting data
Separate your personal and business accounts
Keep track of your equipment and depreciation
Set up tracking for multiple locations
Keep track of your inventory and lead-times
Capitalise on your "Big Data"
Hire a professional to take care of your books

Bookkeeping can be a time-consuming and costly process for many medical practices. It can constrain your growth by taking your focus away from providing care for your patients and use up your valuable resources.

Fortunately, there are a few things that you can do to streamline the bookkeeping process for your medical practice and improve your efficiency . By implementing a few helpful tips, you can save yourself both time and money and ensure that you always have access to the most accurate and up-to-date financial information to guide your business to success.

1. Digitise your practice

Using digital tools to generate and record receipts is a great choice, not only for fraud prevention but for cost cutting as well. They can save you a significant amount of money on the cost of paper, ink and reduce loss due to cash misappropriation.

Plus, when you issue electronic invoices to both suppliers, insurers and patients, it reduces the need for physical document storage, improve audit trail and speed up collection time which can lead to improvements in your cash flow.

2. Use a cloud accounting software

A cloud accounting software is the perfect way to securely store your data and easily accessible. When you use cloud-based program, you can access your financial data from anywhere and on any device, giving you complete financial visibility at all times.

Software like QuickBooks Online and Xero are excellent options and user-friendly, especially for smaller-sized practices.

3. Customise your chart of accounts

Your chart of accounts is integral to how your transactions are organised, and reports are presented. Many businesses start off by using a standardized chart of accounts, and as a result, they are unable to gather valuable insights from their financial statements.

Medical practices have specific income, expenses, and liabilities which need to be classified correctly. You may want to create revenue sub-accounts for different types of services, physician wages, staff wages, PPE supplies, and equipment depreciation, to name a few. Spend some time discussing these factors with your accountant before setting up your chart of accounts.

4. Leverage your EMR for accounting data

When choosing an electronic medical record system (EMR), you should look for one that can easily integrate with your accounting software. Your EMR is an essential data source for your clinic, and you should take advantage of it to gather revenue and billing data.

There are numerous EMR systems on the market, such as the Jane App, Cliniko, and Juno, which can assist you with a wide variety of different tasks such as scheduling, charting, invoicing, and billing.

5. Separate your personal and business accounts

Many small business owners make a common mistake in combining their personal and business finances. For example, paying for their practice expenses using their personal cash or using the business' cash for personal expenses. Not only can this make the accounting process a much more complicated one, but it looks unprofessional to lenders and investors as well.

When you keep your personal and business accounts separate, it makes for easier bookkeeping and more reliable financial performance reporting. There is no need to estimate or guess your personal expenses from your clinic's expenses and your reports will illustrate a more reliable image of your finances. Also, it enables you to better preparer for potential cash flow problems.

Plus, your accountant will have a much simpler time identifying transactions that will count as tax deductions for your business when tax season rolls around.

6. Keep track of your equipment and depreciation

Computers, blood pressure monitors, examination tables, and diagnostic equipment are all assets for your practice. These equipment are assets that should be depreciated over their useful life.

If you categorise your equipment purchases as an expense at the time of purchase, you will be misstating your costs for that month, thus relying on misleading financial overview of your practice. Instead, you need to manage and track the depreciation value of all your equipment every year to keep your finance reports accurate.

7. Set up tracking for multiple locations

If you have multiple practice locations, you need to ensure that you are tracking the performance of each individual site instead of just following the consolidated performance of all your locations.

By looking at each location's performance individually, you can compare how each is doing from a profitability standpoint and can identify areas that need improvement.

8. Keep track of your inventory and lead-times

Inventory management is a significant contributor to your practice success as shortages of crucial medicines and PPE can be dangerous and damage your reputation. Also, poor inventory management can lead to medicine spoilage, thus increasing your costs.

That is why proactive inventory management is key and it can be easily done by keeping track of stock levels using accounting inventory systems (e.g. FIFO) and stockpiling to absorb supply chain disruptions and delays, which can greatly improve your reputation as a reliable clinic or pharmacy.

9. Capitalise on your "Big Data"

Big data for medical practices is the information generated within the practices and its partners that can be used extract valuable information about trends, profitability and cost-saving areas in your practice.

Digitising your practice can helps the data collection and analysis to give you an edge over competitors using readily available information.

10. Hire a professional to take care of your books

Your financial data is vital for the health and wellbeing of your practice. Because of this, your bookkeeping should be left in the hands of a trained professional.

Many practices will leave this job to the receptionist to double as accountant/bookkeeper, resulting in mistakes and errors. Other practices will leave everything in the hands of their accountant at year-end. When this happens, you don't get visibility on your cash flow and can't see how your practice is performing throughout the year.

To avoid these problems, make sure that you outsource to an expert bookkeeper. Hiring a full-time bookkeeper might not make economical sense for your clinic. If so, outsourcing your bookkeeping might be a great option.

An outsourced bookkeeping team will ensure that you always have good visibility of your finances and identify areas that need improvement. Plus, they will be able to scale alongside your business as it grows.

By following these helpful tips, you will be able to keep your books accurate and up-to-date all year long. It will be easy to track your financial data, and you will be able to identify areas of your business that need to be changed and areas that are ready for growth.