Dental Bookkeeping Basics for Growing Practices
As a dentist, you're skilled in everything from performing root canals with precision to spotting cavities before they become major issues. But when it comes to dental bookkeeping, things may not feel as smooth. You might be able to balance a spreadsheet, but if you're unsure whether your bookkeeping practices are setting you up for long-term success, you're not alone.
In this guide, we'll cover essential dental bookkeeping basics. Whether you're aiming to improve your accuracy, efficiency, or troubleshooting a specific problem, these strategies can help ensure your practice’s financial health stays on track.
Why Dental Bookkeeping Matters
Bookkeeping is more than just keeping tabs on the numbers—it's about reconciling your financial information so you can make informed decisions. Without accurate financial data, you risk facing issues like unpaid bills, missed collections, or even tax penalties. To avoid these costly problems, a solid bookkeeping foundation is key. Here's what you should include:
Point-of-sale transactions
Medical insurance billing
Bank account transactions
Accounts payable and receivable
Cash flow monitoring
By tracking these details, you can create a clear profit and loss summary, which is essential for monthly financial reports.
Ask Yourself the Right Questions
Once you've reconciled your financial data, it's time to use that information to drive your decision-making. Here are a few critical questions to guide you:
What are my largest expenses?
Payroll is often the largest expense in most dental practices, followed by facility and equipment costs. However, if your costs for routine supplies—like sterilization pouches or dental materials—seem higher than expected, it's worth investigating why. This might lead to finding better suppliers or negotiating prices.
How does my cash flow compare to my financial statements?
Growing practices often see an influx of cash, but it's important to differentiate between profit and funds earmarked for expenses. Just because there’s more money in the bank doesn't mean it’s all spendable.
What are the sources of my income?
Understanding your income sources can reveal the strengths and weaknesses of your practice. Is it an increase in patient visits? Are accounts receivable being paid on time? Identifying where your income originates helps allocate time and resources more effectively.
Are there any discrepancies in my finances?
Reviewing reconciled financial information allows you to spot inconsistencies quickly, whether it's unpaid invoices or unexpected expenses. Identifying these gaps early helps you correct mistakes before they escalate into bigger issues.
Avoid Common Bookkeeping Mistakes
Just as proper dental hygiene prevents cavities, good bookkeeping habits prevent financial issues. Here are a few common mistakes to avoid:
Mixing personal and business finances: Always keep these separate to avoid confusion and ensure accurate reporting.
Relying solely on spreadsheets: While spreadsheets can be useful, they’re prone to human error. Using accounting software like QuickBooks ensures a more reliable and efficient system.
Managing by bank account balance: Financial decisions should be based on your financial reports, not just your bank balance. Relying solely on the latter can lead to overspending.
By following these guidelines, you'll keep your monthly reports accurate and provide a stronger foundation for your practice's growth.
Increase Profit by Delegating
Your time is valuable, and while bookkeeping is essential, it can be a drain on your ability to focus on patient care. Many dentists find that when they handle bookkeeping themselves, other areas of the practice suffer.
Delegating this responsibility to an office manager may seem like a solution, but often, they lack the specialized financial expertise required to manage the wide range of bookkeeping tasks. Plus, if they spend more time on bookkeeping, they may neglect other vital administrative duties, which could negatively impact your practice.
At CPA by Choice we can help you, hiring a professional bookkeeper or Certified Public Accountant (CPA) ensures that the financials are done correctly, allowing your office manager to focus on keeping the practice running smoothly. By freeing up time, you can focus on growing your patient base, improving patient care, and ultimately increasing profits.
Should You Outsource Your Bookkeeping?
If you're spending more time on the books than with patients, it might be time to consider outsourcing. Outsourcing your bookkeeping comes with several benefits:
More time for patient care
Instead of crunching numbers, you can concentrate on delivering excellent patient experiences and building relationships.
Cost-effective
You only pay for what you need, and you'll save on productivity costs. An outsourced bookkeeper is typically more efficient, leaving your in-house staff to focus on their areas of expertise.
Accuracy and expertise
A specialized bookkeeping team will ensure that your financial data is correct and up to date, reducing the risk of errors that could impact your practice.
Access to the latest software
Professional bookkeeping services typically use advanced accounting software, which means your financial records will be backed up and easily retrievable.
Outsourcing allows you to maintain accurate, consistent financial records without overburdening your team, leading to better decision-making and practice growth.
Final Thoughts
While dental bookkeeping may not be your expertise, ensuring it’s done correctly is crucial for the success and growth of your practice. By asking the right questions, avoiding common pitfalls, and considering professional help when needed, you can spend less time on financial tasks and more time focusing on what you do best—caring for your patients. At CPA by Choice, we want you to focus on your patients. We are available to answer your questions, feel free to call us or send us a message.
Comentários