In today’s healthcare world, almost all medical practices struggle to manage their cost of doing business. There are many reasons for high healthcare costs, but there are also cost-saving opportunities for your practice.
Up-to-date bookkeeping is an integral part of this process. Not only does it give you accurate information, but it also simplifies reporting and the ensuing decision-making process. Bookkeeping also gives you a foundation for change. By providing an accurate picture of your financial situation, you can identify cost-saving opportunities and confidently implement them. This article will help medical practice owners understand the value of up-to-date bookkeeping. It will also provide tips for keeping your books up-to-date and help you solve problems if you don’t have adequate accounting information.
Small medical practices often have a month-to-month accounting system that produces the monthly statements on what has been billed, what is owed to vendors, and who owes amounts to whom. In most circumstances, this is adequate for them. However, many practices find that they have trouble reconciling accounts from month to month because there is no consistency in payments or inconsistencies in payments received versus actual payments made or pre-planned set-asides for payroll taxes and other items.
The result is that healthcare managers need help with keeping track of the money in the company’s profitability equation – revenues minus expenses equal profit or loss. Up-to-date bookkeeping can assist in these areas to help lower your company’s overhead cost while increasing its revenues and profits simultaneously.
The value of up to date bookkeeping for a medical practice
Bookkeepers for small or mid-sized medical practices can perform their duties almost entirely remotely and overseen by a CPA. Since bookkeeping is a critical aspect of a profitable business, having an accountant specializing in medical bookkeeping can also save you from costly mistakes and help ensure your financial records are accurate and correct.
The above may seem obvious, but consider the following value from having readily available financial information at your fingertips:
- Budgeting and forecasting: You may be able to better plan for the future if you know where you stand in terms of income and spending at any given time. For example, if you know that you have a particular amount of money that you need to spend for payroll each month, you can compare your actual expenses against that number to see areas that you can compare your actual expenses against that number to see areas that could improve your budget. This can reduce costs and free up funds for other uses.
- Tracking financial performance: Having access to the correct information at the right time is essential in assessing your company’s performance. For example, if your practice has been experiencing growth in a given area during the last quarter but has yet to increase its staff to accommodate for that growth, this is a good indication that things will not go as smoothly once business picks up. Having financial data available makes it easier for healthcare managers to plan accordingly and mitigate risks.
- Cutting down on mistakes: Having your books updated in near-real-time can help you avoid or cut down on errors. If you have a paper-based system, you have to manually enter information from receipts and other sources manually, so it’s easy to make a mistake over several days, weeks, or even months. With an electronic system that can synchronize with your bank accounts and credit card company statements, you’ll have the information automatically pulled in. If you need to make a change, you can do it right away instead of delaying the process by waiting to enter everything manually.
- Using that data to improve your business: With the information available via an updated bookkeeping system, you can use it to improve your business. For example, let’s say you’re seeing a decline in revenue over the past few months – maybe it’s time for a marketing campaign, or perhaps there are things you can do to reduce your expenses. If you’re able to look at the big picture and see how your business is doing overall, you can make informed decisions about making changes and improving the bottom line.
- Understanding — and communicating — your debt load: If you know what your debt load is at any given time, you can better share that information with others in your business. For example, let’s say your business needs to finance a large purchase, but you don’t have enough cash on hand to do it. Knowing what the debt load is will help you communicate that information to others, which can help everyone involved make informed decisions about moving forward with that purchase.
- Responding quickly to changes in the business: If you have an idea for something that could improve your business, you can act on it right away with an updated bookkeeping system. You may find that there’s a better way for you to conduct business than the way you’ve been doing things in the past. By having up-to-date bookkeeping, you can do more than hypothesizing about how things could be better – you can respond to your new ideas and move forward with them right away.
- Better knowing where your money is going: An updated bookkeeping system helps keep track of where your money is going at any given time. In this way, you can better understand where your money is going and how it’s spent. If your business knows where every dollar is going, it can be more efficient when deciding whether to invest in a particular area. It’ll know which areas are the most important and not so important, so it doesn’t waste money on things that aren’t necessary for the company.
- Increasing profitability: An updated bookkeeping system can help increase your profitability. If you’re able to see your company’s profitability and other information in near real-time, you’ll know what’s working and what’s not working without needing to wait for an end-of-the-year report or other review. Knowing what works and what doesn’t work can help you make changes that increase your company’s profitability — which can be a great incentive for any business owner.
Since healthcare is an ever-changing industry that demands high-quality service at a reasonable price, the importance of accurate and up-to-date bookkeeping cannot be understated. Health care professionals can use this information to evaluate their company’s quality of service and financial standing to improve their bottom line.
Cloud-bookkeepers and CPAs specializing in the medical field
To effectively lead a business in this modern age, one should know how to keep up with the internet-based tools available for bookkeeping. Below, we will provide you with helpful tips on what you should look for while seeking an accounting firm to work with your healthcare practice while also explaining what an accounting firm can help your practice achieve.
Tips on what you should look for in an accounting firm:
* Make sure that the accounting firm you are consulting with has experience working with other healthcare practices. There are numerous accounting firms, but if they do not have experience working with other healthcare practices, this is a point of concern. Also, ask to see what services they offer because not all firms focus only on the healthcare industry.
* The accounting firm should be able to customize the accounting procedures for accounting for your industry. There are many healthcare practices that do not use the same accounting procedures that other firms do, so it is vital that the firm works with you to customize its service methods for your practice.
* The accounting firm should be able to help you with your tax returns. This is a vital service because it keeps you compliant with the government, and if done wrong, it can cost you dearly. Therefore, make sure that the accounting firm can help you with your tax returns before choosing them.
* The accounting firm should give you advice on how to run your business more effectively and maintain better financial stability. They will help you set up a budget for your company, which is an essential service for any medical practice.
* The accounting firm should help you with the appropriate software that can help increase efficiency by allowing for easier accounting practices. Data and data entry are an integral part of healthcare practices, so make sure that the accounting firm can assist you with this type of software and how it will benefit your business.
How can an accounting firm help your medical practice achieve more?
* The accounting firm you choose should provide help with the day-to-day financial management, including accounts payable, accounts receivable, payroll, taxes, and financial statements.
* The accounting firm you choose should be able to offer your practice assistance with business start-up services. This can include providing you with proper accounting procedures and creating a company structure that works best for the needs of your practice.
* The accounting firm you choose should be able to offer you free seminars. These seminars can help all of your medical staff better understand financial procedures within your business.
* The accounting firm you choose should provide many other types of services besides just bookkeeping and accounting. For example: payroll, tax planning, and more.
The medical field is unique, and it is crucial that the practitioner understand the basics of the medical field to understand how it operates while also understanding some key concepts in business management.