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Dental Accounting Tips – Making Sense of Numbers
You have ventured into dentistry because you were enthusiastic about helping people look great and get healthy. Nevertheless, if you had to spend all your time managing your books and looking at business financial reports, you would’ve chosen accounting as your profession, not dentistry.
This does not mean that you can ignore this aspect since it is also very important for any type of business. Keeping proper accounting records helps businesses in making important decisions that would pave the way for their long-term success. Here in this article, we’ve outlined a few simple but essential accounting tips for dentists that will help their practice attain growth and success.
Accounting Reconciliation of Financial Records for Dental Practices
The primary aim of dental bookkeeping is to reconcile all financial records and make informed decisions on the basis of the results. In case you do not pay heed to proper bookkeeping processes, there are chances that you’ll be making business decisions based on false information, and this may lead to more significant problems, such as uncollected payments, unpaid bills, delayed tax payments, unpleasant encounters with IRS and internal thefts.
When maintaining financial records for your dental office, make sure to include:
- Accounts payable (Procure-to-pay)
- Accounts receivable (Quote-to-cash)
- Point of sale transactions
- Business bank accounts
- Cash flow
One can use this information to create a profit and loss statement of your business, which you can integrate into your monthly financial report.
Make Informed Financial Decisions
After reconciling your financial records correctly, you are now ready to make business decisions depending on the results. Prior to doing so, here are some of the questions you must ask yourself: –
What are Your Major Expenses?
For the majority of dental offices, some of the significant expenses include their employee payroll, infrastructure, and equipment costs. Nevertheless, in case you observe that you are spending unusually more time on things like sterilisation kits, polishing discs, cleaning solutions, you need to figure out the reason behind it or change your vendor.
How Well is the Business Cash Flow Aligned with the Financials?
As your dental practice flourishes and money starts pouring in, it is important to keep track of the profits and the amount of money that needs to be allotted for handling expenses. Simply because you see your bank balance increasing, does not imply that you can spend that money the way you want. Budgets need to be made after analysing your cash flow and expenses.
Where is the Income Coming From?
Keeping tabs on where the money is coming from can help determine the success of your dentistry business. You need to see if the money owed to you is being paid on time and that you see a growth in the number of office visits. Figure out the percentage of new clients and returning patients. All these would help you in allocating your time to make even more progress.
Are There Any Financial Gaps?
While you are reviewing your reconciled financial records, you can easily figure out if there are any numbers that don’t make sense and also pinpoint the discrepancies. By keeping your books up-to-date, you will be in a position to spot the majority of errors and also implement new practices quickly before encountering a situation that could take a lot of time to resolve.
Avoid Typical Mistakes
Just like brushing your teeth and flossing keeps your mouth healthy, adopting good bookkeeping processes will help your dental office flourish.
You can avoid typical bookkeeping mistakes by:
- Keeping your business and financial accounts separate
- Using the latest accounting software instead of Excel spreadsheet
- Managing your business by your financials rather than bank account summary
Remembering these points when maintaining your books will ensure accurate financial reports, prevent data from being falsely interpreted, and will provide your business more opportunities to grow.
Increase Your Profits
As the adage goes, time is money, where are you and your staff members investing most of your time? Are you spending your time doing tasks that are profitable for the venture?
A lot of dentists face a situation where when they are handling accounting tasks on their own, they are unable to focus on core business tasks. As opposed to fostering relationships with the patients, they are sitting in front of their computer systems, updating books. As a result, the office supervisor will most probably be asked to handle the books.
But, he/she lacks the required professional expertise and would most likely mess up your financials. Don’t compare your office supervisor’s expertise with a licensed CPA or bookkeeper. That’s not it! An office supervisor who is assigned to handle bookkeeping will not be able to handle administrative tasks that he/she was actually meant to. Instead of assisting you in running your practice seamlessly, that person would be crunching numbers and doing those tasks at a much slower pace than a professional. This also means that it could cost you a lot more than if you hire a trained accounting professional.
Think About Outsourcing Dental Accounting
Accounting for dentists can be an overwhelming task. However, you can’t overlook it any cost. If dentists choose to do bookkeeping on their own, they will feel frustrating and start making mistakes. They’ll also begin to realize that the time spent in crunching numbers, one can use it on important business tasks. So, what should dentists do in such cases? Outsourcing accounting services can help you streamline finances of your dental practice easily.
Here are some of the benefits of outsourcing dental accounting:
- Time currently spent on bookkeeping and financial reporting reclaim it on improving your dentistry practice.
- You will only have to pay for the services that you’ve opted for and thus end up saving costs.
- Given that professionals will handle your books, you can rest assured that the financials would be accurate.
- Your dental team can pay attention to administrative tasks, rather than accounting processes.
- Outsourcing your bookkeeping, financial reporting, and tax preparation, you will have access to the entire team of experienced accountants who will ensure that your books are up-to-date at all times. Their team will also ensure the best accounting practices and timely reporting.
- Dental practices nowadays are moving to cloud accounting software but do not have the time or expertise to handle them. This won’t be a problem when you outsource. Outsourcing companies handling accounting for dentists have experience in working on all the latest accounting software. Using the software, they’ll timely update the financial records, run reports, prepare taxes, and perform various other accounting tasks.
At Cogneesol, we offer services to dental practices like yours. We want your business to operate seamlessly so you can do what you enjoy doing the most. Say goodbye to the stress of whether your books are up-to-date, reconciliation, taxes preparation, or reports.
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