Accounting plays a crucial role in the world of businesses. Accounting for medical practices is as vital as the rest of the private-owned companies. Most healthcare providers opt to hire proficient licensed accountants to deal with their account needs as they have so many things to juggle in their everyday tasks.
Medical practices accounting and bookkeeping require a comprehensive and in-depth understanding of the healthcare services for it to be efficient and accurate. Today, we list down some of the essential tips in maintaining your books. So, you can get the benefits and all the advantages that come along with it.
Keeping your books healthy
Running a medical practice is a massive workload to carry, and so, when you add accounting to that, it makes things more daunting and a headache, especially during tax time. With that said, here are a few tips and tricks that you can learn to help you out lessen the burden.
- Maintain a well-detailed record
One of the essential steps a medical practice needs to observe to keep a clean book is to maintain a well-detailed record. It is more than just bank statements, but keeping track of the payables and receivables, from and to which account the money came from and going.
By doing that, it would be easier for you to find the information faster when needed. You should also have a dedicated folder where you can store the receipts, both physical and digital. With this kind of practice, you will have smoother and more efficient transactions and transitions along the way.
- Take out taxes immediately
Keeping your books clean also means to take out taxes immediately at the point of sale or during generations of payroll. Although you might get tempted to delay the process most of the time, for whatever purposes it may be, errors are going to happen. So, you do it right there and then.
When you pay your taxes immediately, your medical practice will be free from getting a large lump sum of the tax bill at the end of the calendar year, which may come in high-cost and hard to trace. Upfront payment of taxes will also save your medical practice from incurring any penalty due to the delays.
It would be advisable to acquire the service of a certified tax professional, who has years of experience in accounting works, so your medical practice will be saved from all the hassle and stress, not to mention the time and money cost for doing things wrong. Besides, highly experienced tax professional knows the ins and outs of the laws governing taxes.
- Keep track on your cash flow
Produce a cash flow statement or schedule statements for your medical practice’s profits and losses. Keeping track of these relevant factors is highly effective in checking and evaluating the general financial aspect of your health practice.
You should validate the daily records and resolve discrepancies immediately. With tracking your cash flow and keeping statements for the profit and loss of your medical practice, it will also give you an idea of how you can move money around and invest further.
- Record receipts and invoices
It is significant to make money for your medical practice. Thus, recording receipts and keeping track of invoices are of utmost importance. However, the task can be daunting when done manually. That is why there are medical software tools available for your medical practice to make things easier, faster, and more efficient.
The healthcare industry is also adopting digitalization in their transactions. Hence, it would also be appropriate for you to follow the trend. By doing so, you are also making it easier for your medical practice to log receipts for expenses and record cash expenses, at the same time.
- Determining invoices from receipts
Frequently, these two get mixed-up that can cause unclean accounting and bookkeeping records. Therefore, it is a must that your medical practice should be able to distinguish invoices from receipts. So, how is an invoice different from a receipt?
- What are the invoices?
Invoices are bills that a medical practice sends out to patients after providing or rendering services requested. It is typically the same as our electricity or water bills.
An invoice details each service and product provided to every patient during their visit to the medical practice. It reminds them of the money they owed.
One of the best things about keeping track of invoices is that it helps speed up the cash flow. Thus, maintaining financial records, and most of all, you get the payment from the services you offered.
- What are the receipts?
Receipts are proof of transactions that occurred. Once the patient paid their invoice, your medical practice should provide a receipt in return.
- Utilize licensed online medical application tools and software
With the advancement in technology, all transactions are now online. The healthcare system is also adopting the use of online medical application software for faster, more accurate, and more efficient process flow of transactions in the industry.
Through online applications, it would be easier for your medical practice to keep a record of your patient’s information. Thus, it would be easier for you to pull it up when needed and bill them accordingly.
- Don’t mix business accounts with personal
Many of the reasons of financial constraints in the business is mixing it with personal accounts. Some owners use personal funds to run a business, which is not a good practice.
Correct accounting can, therefore, provide higher profits to medical practices as more revenues come. That is also the reason why you need to employ or hire an efficient bookkeeper who has years of experience and can highly focus on the accounting aspect and overall finances of your medical practice.
The role of an accountant includes daily keeping all records, billing entries, and the management of stocks and inventories, among many others. The success of the medical practice mainly depends on the efficiency of the accountant they hired. That is how essential accounting is in medical practices and other businesses.