The success of your chiropractic practice depends on you providing the very best care to your patients. They rely on you to maintain their good health, and it's the good service you provide that keeps them coming back for regular adjustments.
While your patients depend on you to take care of their health, the health of your business is dependent on how well you manage your finances. Keeping your books in order and having good accounting practices in place will allow your clinic to grow and thrive the way that you intend.
By following these seven accounting tips, you can ensure that you always have access to accurate and timely financial data to base all of your important business decisions.
1. Have a separate personal and business chequing account
When your practice is small, it may seem tempting to combine your personal and business finances. This is a mistake that many business owners make, and it can complicate your bookkeeping process considerably.
Not only will having combined accounts make it harder to track the success of your clinic, but it will also make tax time a nightmare. Plus, when your personal finances are mixed with those of your clinics, it looks very unprofessional to lenders and future investors.
2. Keep your books current
Bookkeeping is an important task because it keeps you informed on the financial health of your practice and gives you the facts that you need to make crucial business decisions.
Typical bookkeeping tasks include:
- Recording and coding revenue and expenses
- Making cash deposits
- Sending patient and insurance providers invoices
- Paying suppliers, vendors, and contractors
- Reconciling insurance billing to accounts receivable
- Reconciling your bank and credit card statements
- Generating financial reports like profit and loss, balance sheet, and cash flow statements
It is crucial to ensure that all of these tasks are completed on a regular basis so that you always have access to accurate and timely financial information on your practice.
3. Use a cloud-based accounting software
Too many small businesses make the mistake of relying on Excel for their bookkeeping needs. Spreadsheet programs such as this are prone to errors and cannot scale with you as you grow.
Using cloud-based accounting software such as QuickBooks Online or Xero is a much better option. Cloud-based programs offer your practice the advantage of storing all of your vital financial data safely and securely in the cloud. You are able to access this information from anywhere and on any device, giving you clear visibility on your finances at all times.
4. Outsource your bookkeeping
Bookkeeping can take up a lot of your time and take you away from focusing on caring for your patients. You could enlist the help of your secretary or office manager to take over the bookkeeping tasks, but chances are they may not have the required expertise in this area.
Outsourcing your bookkeeping to a bookkeeping firm can help you keep your books in order and ensure that you have a team of professional and experienced bookkeepers handling your critical financial data.
Not only will this save you a significant amount of time, but it will also save you the costs associated with training someone else to look after your books for you. Plus, when you outsource, you will always have access to the most current data, allowing you to make educated financial decisions about your practice.
5. Monitor your cash flow
Cash flow is the lifeblood of your business. It's what allows you to make sure your clinic can meet its financial obligations.
One of the best ways to manage your cash flow is with a budget. An adequately created budget will allow you to ensure there is always enough cash on hand to pay your employee's salaries, cover the cost of your equipment, pay rent on your clinic space and cover all other expenses your business incurs.
Make sure that you consider that certain times will be busier than others and that your cash flow situation will fluctuate. You need to budget for these uncertainties and create a cushion to ensure you can always cover your expenses.
6. Stay on top of your collections
Insurance billing can take a toll on your cash flow because insurance providers may take a considerable amount of time to pay your claims. You will also have to deal with denied claims and have to reach out to your patients to have them pay instead.
Review your receivables and follow up on outstanding payments or denied claims every two weeks. Ensure that you are proactive about this to keep your cash flow healthy.
7. Review your financial statements regularly
Regularly reviewing your financial statements will provide you with constant insight regarding the health of your business. The three most important statements to review are:
- Profit and Loss
Your profit & loss (aka income statement) will show you your revenue, expenses, and profits (or losses) at the end of every month.
Reviewing this report will allow you to see which services make the most income and whether you have over or under-budgeted for your expenses. It will also give you a good indication of how you can improve your bottom line.
- Cash Flow Statement
Your cash flow statement will identify the total money flowing in and out of your business over a specific period of time. Many cash flow problems arise due to a mismatch between money entering your business and when it leaves.
By reviewing your cash flow statement, you can track the money moving in and out of your business and spot potential cash flow problems before they arise.
- A/R Aging Report
This report will show you all of your unpaid invoice balances as well as the length of time that they have been outstanding.
It is important to review this information regularly and follow up on outstanding invoices because these can have a negative effect on your cash flow. You need to make sure that you have sufficient cash on hand at all times to pay your staff and keep your practice afloat.
Bookkeeping can be a time-consuming and costly task, but it doesn't have to be. By staying up to date on your financial information, leveraging cloud-based technology, and enlisting the help of trained experts, you can ensure that your books are always accurate and current.