Bookkeeping can be a time-consuming and tedious process. While it is imperative to the financial health of your business, it can take away valuable resources from focusing on patient care.
Fortunately, with a bit of planning and some helpful tips, you can create a successful dental practice that not only offers exceptional service to your patients but also has impeccably managed books and constant access to the most up-to-date financial data.
1. Avoid mixing your personal and business expenses
This is a mistake that far too many businesses make when they first start up. It may seem easier to mix your personal and business expenses, but it can complicate things in the long run. Not only will combining your personal finances with your dental clinics make it complicated to get a realistic view of your current financial position, but it can make tax time a more complex process as well.
Also, investors and lenders will be looking for precision and professionalism in your financial data. Neither of these is possible when your personal finances are combined with your practices'.
2. Streamline your operations by going digital
There are numerous different software programs and apps that you can use to help streamline your clinic's operations and make things run more efficiently.
Choose a cloud-based accounting software to do your bookkeeping. This will allow you to collaborate easily with external bookkeepers and accountants without them having to come into your practice to obtain the data. It can also integrate with other tools like Dext Prepare to help manage your expenses.
A program like Dext Prepare will allow you to capture your invoices and receipts by taking a snapshot of them with your smartphone. It can quickly and easily extract vital information from these documents and export it to your accounting software. This simplifies the entire process, eliminating the need for manual data entry, and means that you don't have to store the physical documents, leaving a clean and easy-to-follow audit trail.
It is always advisable to have a paperless workflow process in place. Storing all of your documentation in the cloud makes it easily retrievable and ensures everything is kept safe and secure.
3. Leverage your dental management software for data
Many of the newest dental management software programs, like ClearDent, now include crucial functionalities like time tracking, billing, and inventory management.
You can obtain key invoicing and billing information from this software and export this data into your accounting software. Not only will it streamline the billing process, make things more efficient and eliminate the need for manual data entry, but it will also minimize the number of errors that you have.
4. Consider outsourcing
Outsourcing your bookkeeping is a great way to ensure your dental practice has up-to-date bookkeeping.
In many dental offices, it becomes the receptionist or office manager's duty to take over the bookkeeping, and in most cases, this personnel isn't adequately trained to handle this task. Hiring an in-house bookkeeper can be extremely costly and doesn't make good financial sense for most practices, so outsourcing to a bookkeeping firm is your best option.
A bookkeeping firm is trained and experienced in handling the specific needs of your dental practice. The right firm can help you keep your books current, run detailed and thorough reports, and even manage your payroll. Not only will this ensure that you always have access to the most up-to-date financial information, but it will save you a considerable amount of time and money.
5. Set up your chart of accounts properly
When you first set up your accounting software, they will provide you with a general chart of accounts. But if you want to get meaningful insight from your bookkeeping, you need to consider how you want to see your finances organized. A proper chart of accounts will help you measure and report on the most critical factors of your business each month.
Different dental practices may want to track different things depending on their unique business models. For example, your hygienist and dentist's payroll expenses should go under Cost of Sales. However, your receptionist and bookkeeper's payroll expenses will be tracked under your overhead expenses. You may also want to consider tracking the revenue from each service you provide to analyze the profitability of each service line.
If you choose to work with an experienced bookkeeping firm like Enkel, you can get the professional assistance you require when setting up your chart of accounts.
6. Monitor your cash flow regularly
Far too often, cash flow gets confused with profit, but it's important to remember that these aren't the same thing. Many dentists think that profit represents excess cash they can spend on purchases, but this isn't necessarily the case.
Cash flow is the money that flows in and out of your business. You need to monitor these fluctuations to understand if your practice has sufficient cash to pay for all of its expenses. Monitoring your cash flow can identify potential shortages ahead of time so you can deal with these situations proactively.
7. Keep track of your equipment and depreciation
Dental practices have an enormous amount of expensive equipment. If you expense all of this equipment when you purchase it, you are misstating your expenses.
Your equipment is a fixed asset and should be depreciated over its useful life. By managing and tracking the depreciation value of your equipment, you will be better able to stay in compliance with your audit requirements.
8. Set up proper tracking if you have multiple locations
Having a consolidated view of your entire operation is not very useful if you have multiple practice locations.
To better determine how each site performs, take advantage of your class or location tracking functionality in your accounting software. It is crucial to understand the performance of each individual location so that you can perform financial comparisons across all of your practices and find ways to improve each clinic.
By following these helpful tips, you will be better able to manage your clinic's bookkeeping requirements and ensure that you always have access to the pertinent financial data you require.
For more information on how to best take care of your bookkeeping needs or to find out how outsourcing with Enkel can help with your dental clinic's success, contact us today.