For a clinic to thrive, there must be sound bookkeeping practices in place. With precise and up-to-date records, you can protect your profit margins, speed up loan approvals, and reduce the stress surrounding audits.
From supporting the financing of treatment plans, to boosting the value of a practice, those who use bookkeeping services for dentists to keep on top of their real-time income and expenses, are in a much stronger position for making smart financial decisions about the future of their practice.
Read on for a simplified guide to dental practice bookkeeping:
Setting up a strong financial foundation
First things first: even before you select a dental bookkeeping specialist to work with, you must decide who will be dealing with invoices, who will deal with reconciliations, and who will be reviewing monthly statements.
Establishing a chart of accounts
It makes sense to group income using codes for different procedures, such as restorative, orthodontics and hygiene. Then, set up expense buckets for lab fees, marketing, supplies and sterilization.
Selecting the right accounting software
Save yourself and your team hours of data entry with cloud platforms that can be integrated with your system for managing the practice.
Establishing of daily and weekly bookkeeping responsibilities
By keeping your ledgers up-to-date and accurate, you can build robust habits for the betterment of your practice.
Recording of patient payments and insurance reimbursements
Helping to show your real cash picture, it’s always best to post patient copays on the day they arrive, and make a record of insurance explanations of benefits, directly after they clear.
Managing accounts receivable and payable
Run weekly aging reports, follow up on late claims and tardy payers, and match your vendor bills with peaks in cashflow.
Reconciling bank and credit card statements
With bank feeds on a daily basis, and credit card reconciliation every week, you can quickly identify any anomalies and confirm that supply orders have gone to the right ledger account.
Managing monthly and quarterly finances
By conducting regular financial reviews, you can transform your data into valuable insights and strategies.
Prepping financial statements
Reconcile every account at the month-end, review profit and loss to check production by both provider and procedure, and compare loan payments and plans for expansion with net cashflow.
KPI monitoring
Make sure you’re regularly tracking key performance indicators like hourly production rates, occupancy of chairs, collection percentage, and reappointment rates for hygiene procedures.
Managing expenses
Make sure that you’re tracking all equipment purchases, with purchase dates, cost and useful life, so that you can take appropriate deductions under Section 179.
Managing payroll and benefits
Use time-tracking software and a professional dental payroll service to manage payroll and employee benefits.
Controlling overheads
By negotiating rates with suppliers and regularly reviewing lab invoices, you can better control overheads and identify opportunities to make savings.
Tax planning and compliance
Seek professional guidance as to what federal, state and payroll taxes you owe as either an S-Corps or an LLC. With help from a specialist dental tax expert, you can maximize your deductions and lower your tax liability. They will also help you prepare for year-end filing.
Automation and cloud accounting can help reduce your dental bookkeeping responsibilities significantly as a dental practice owner, and reduce the risk of errors. But ultimately, the best way to limit how much of your own time you have to spend on bookkeeping duties, and simplify all processes, is to work with professional bookkeeping services, who will also help you keep your data secure, and ensure that you’re HIPAA compliant.
