- September 16, 2019
- Posted by: UpVue
- Category: Clinics, Industry Guide
Bookkeeping and accounting is one of the most important tasks that you will need to get done at your clinic. It can help you to make sure that your clinic is doing well. In addition to that, you will also be able to derive important decisions, which can contribute towards the success of your clinic through proper clinic accounting practices.
Why do you need clinic accounting services?
Plenty of reasons are available for you to go ahead with clinic accounting services. Therefore, you need to take a look at those options before you go ahead with anything else. A typical clinic will come across the need to get the help of an accountant to get following tasks done.
- Process the payroll
- Document and settle all bills
- Reconcile the financial accounts
- Record all financial transactions
- Provide appropriate financial documents.
What are the options available for bookkeeping?
Now you know what types of bookkeeping and accounting services are needed by your clinic. Along with that, you should also take a look at the different bookkeeping and accounting options that are available for you to consider and go ahead with.
- Do it yourself
You will be able to think about getting all clinic related accounting and bookkeeping work done on your own. If you have a clear understanding about basics of accounting and bookkeeping, you can focus on it. It is important to get the help of a CPA and make sure that all your accounting work are reviewed. Then appropriate adjustments will be made to the work that you do as well.
However, it is better if you can refrain from getting the clinic related accounting work done on your own. That’s because you have many other areas in the clinic to focus on. If you focus on accounting, you will be restricting the future development of your clinic.
On the other hand, you will not have a clear understanding on how to analyze the accounting statements and extract useful information, which can benefit your clinic at the end of the day. This can also lead you towards hassle in the long run. That’s because you were not exposed to the factors, which predict the future of your clinic.
- Recruit an accounting professional
Second option is to go ahead and hire an accounting professional into your clinic. Then you will be able to ask that person to work on your bookkeeping as well as accounting work. You can completely get rid of all the accounting related responsibilities by going forward with this method. However, it is also important to understand that this is not the most economical option available for you to consider. That’s because you will have to pay a salary to the accountant that you hire. If your clinic is still in a small scale, you will find it as a difficult task to go for it.
- Outsource the accounting related work
There are many external accounting firms, which are accepting outsourced work. You can think about outsourcing all the accounting related work that you have to such a firm. Then you will be able to pay only for the accounting services that you need to get done. You can also ensure that all the accounting work is taken care of them. This can help you to make sure that you don’t end up with any frustrating moments.
No matter with what option you decide to go ahead with, you will be provided with a variety of accounting related services at the end of the day. Here is a list of the most prominent accounting related services that you can receive.
- Financial reporting
- Managing accounts payable
- Forecasts and budgets
- Cash flow
- Business modeling
- Financial analysis
- Financing options
- General bookkeeping
What parameters should you consider at the time of working on clinic accounting?
There are some important parameters, which you need to be concerned about at the time of using clinic accounting services. Following are the most important parameters out of them.
You need to make it a habit to generate reports about financial information related to the clinic. This can help you to get a better overall understanding about the financial health of the clinic as well. Along with that, you will be able to make better decisions on how to provide a better service to your patients and how to get more patients to come into your clinic.
It is better if you can work on a daily sales report. Then you can understand how your day to day financial performance of the clinic are. In here, you need to pay attention to all sorts of financial transactions that you have to deal with.
Chart of accounts
Then you need to take a look at the chart of accounts as well. Your clinic will be subjected to a variety of expenses on a daily basis. In the meantime, you will also keep on generating lots of money from patients throughout the day as well. Therefore, it is important to work on chart of accounts and make sure how you are spending money and how you are making money. You can even focus on fine details such as marketing and staff payroll expenses when working on the chart of accounts.
Profit and Loss statement
You must go ahead and work on the Profit and Loss Statement of your clinic as well. In here, you will be able to understand how much revenue you are generating from the patients, and then calculate the cost of medicine and other expenses such as operational expenses and labor expenses. Most importantly, you can understand your profits with the help of Profit and Loss Statement.
The Profit and Loss Statement will provide a quick picture of the financial health of your clinic as well. Then you can understand how you will be able to end up in future, if you continue the current operations.
Cash flow statement
Cash is coming into your clinic. In the meantime, you will be spending money from your clinic for a variety of expenses. The cash flow statement can assist you to understand how much of money you are having in your hands. Then you can understand whether you are generating enough money to cover up the expenses of your clinic or not.
Balance sheet provides a quick picture of your assets, liabilities and the equity. Assets refer to all the items that you have in your clinic, including the machines and medicinal items. On the other hand, liabilities are the amount of money that you owe to external entities. In addition to that, you can understand equity, or the net worth. You need to make sure that this net worth value is a positive one at all times.
The revenue report shows how much of revenue that you are generating through the clinic by providing services to the patients who are in need. You need to make sure that you are logging the revenue of the clinic on a daily basis. Then you will be able to generate accurate revenue reports. You will also be able to understand the revenue that you are making per patient who walks into the clinic as well.
Controllable costs report
The controllable costs report will show you with detailed information on the costs that you can control on your own. Then you can determine the operating margin without any hassle.
Financial forecast is a report that you should never ignore. It can help you understand how the future of your clinic would look like. If you notice that you have to introduce some changes to the clinic through financial forecast, you are strongly encouraged to go for them. Then you will be able to ensure profitability of the clinic in the long run.
Startup costs report
Any person who is about to start a new clinic should refer to the startup costs report. Then you can understand the investment amount that you have to bear when going forward with the decision.
How does the bookkeeping process of the clinic look like?
At the time of managing a clinic, you should also be aware of how the bookkeeping process looks like. Then you will be able to keep the peace of mind while managing overall business operations. That’s because you know what is taking place.
- Account reconciliation
Account reconciliation is the process where you double check and make sure that all the accounting related information you have are correct. In here, you will be doing cross checks with the financial transactions, including credit cards and bank statements. Through these cross checks, you ensure that all the records match and you have not done a mistake anywhere.
- Accounts payable
You will be working with a large number of suppliers and vendors while managing the clinic. This is where you need to focus on accounts payable. This can help you to ensure that you are making timely payments to all your suppliers. Hence, supplies that you need for the operational activities of the clinic will also be provided to you in a timely manner.
Payroll is about calculating the paychecks of all the staff members who work for the clinic. This is one of the most complicated accounting related activities to do. That’s because paychecks are calculated in a different way from one staff member to another. Some of the staff members will be paid on an hourly basis whereas others will be paid on a monthly basis. You will even have to focus on specific expenses, such as overtime hours when calculating the payroll.
What KPIs should you track?
At the time of operating the clinic, it is important for you to make sure that you are tracking appropriate KPIs. You need to define appropriate KPIs and make sure that you are putting effort to achieve them at the end of the day. This can contribute a lot towards the future success that you can achieve through your clinic. Following are the key KPIs that your clinic should be tracking.
Breakeven point is the financial figure where your revenue is equivalent to your expenses. You need to think about keeping the breakeven point positive at all times. Otherwise, you will be spending more money through the clinic, which refers to a loss.
Net profit margin
Net profit margin is the profit that you will earn after the deduction of all the operating expenses, including rent, equipment, medicine and utilities. This KPI can help you to get a clear picture of the profits that you are making through your clinic.
Average treatment charges
Average treatment charges refers to the amount of money that you are getting from each patient for the treatments that are offered through the clinic. This can help you to understand the efficiency and effectiveness of your clinic.
Claims denial rate
Claims denial rate reflect to the overall efficiency of your hospital’s revenue cycle. When the claims denial rate shows an increased value, your clinic will be taking more time in order to take care of the patients. Therefore, you need to reduce the claims denial rate as much as possible.
What are the common mistakes that you can do with clinic accounting?
You will be making lots of mistakes in terms of clinic accounting as well. If you can get to know about those mistakes, you will be able to stay away from committing them. Along with that, you will be able to end up with effective results as well.
These are the common mistakes that you would do with clinic accounting.
Errors in bookkeeping
Bookkeeping process should be handled carefully. Even a simple error that you make in bookkeeping is enough to make you end up with an inaccurate report. Therefore, you should never leave room for this to happen. You need to get the help of a professional bookkeeper, so that you can reduce bookkeeping errors as much as possible.
Failing to hire an experienced accountant
You must hire an accountant for the clinic, who has previous experience in working on clinic accounting. Then you don’t need to worry about anything because the accountant is equipped with proper background knowledge to provide an outstanding service to you. This can help you end up with getting a quality service from the accountant as well.
Not monitoring the KPIs on a regular basis
Once you define KPIs for the clinic, you need to make sure that you are monitoring them on a regular basis. Failing to monitor the KPIs can lead you towards lots of surprises. Therefore, you should think about allocating a time to monitor the KPIs at least once a week.
Not sticking to the correct account periods
Some of the months have 31 days whereas others have 30 days. You can even find February, which has only 28 days. Due to the same reason, you need to be mindful at the time of defining the accounting periods. You are encouraged to take case by case and then define the accounting periods, so that you can stay away from hassle.
Failing to use the right accounting methods
There are two main accounting methods, which are named as cash based accounting and accrual accounting. You need to stick to the right accounting method and get the accounting work of your clinic done.
Getting a clinic accounting software
In today’s world, you will be able to discover innovative and advanced clinic accounting software. Even if you are managing a small scale clinic, you need to think about getting your hands on one such clinic accounting software. This can help you to make sure that both the accountant and the software are in same page at all times. This can also help you to automate most of the work and help the accountant with getting work done.
You will be able to track all your accounting data and manage them from one centralized place. In addition to that, the clinic accounting software can deliver an efficient performance in analyzing financial information whenever you want. Therefore, getting a clinic accounting software is one of the best investment that you can do towards the future.
Some of the most prominent clinic accounting software available for you to consider include:
As you can see, clinic accounting is extremely important and you should never ignore it. You need to focus on all the above-mentioned areas and make sure that you are working accordingly to get your work done. This can provide you with outstanding results at the end of the day. You will love the outcomes that you will receive from them as well.