As the owner of one or many pharmacies, you may have your share of struggles as it relates to bookkeeping. There are a surprising number of moving parts, so it’s not uncommon for bookkeeping to be backlogged and full of errors.
Oftentimes, bookkeeping is a nagging task at the back of your head and when left undone for months at a time, you might not even know where to start to get your books back on track.
You may have a part time bookkeeper or be doing it yourself. Or perhaps have considered working with an online bookkeeping firm. Whichever route you’re taking, you’ll want to ensure you find someone who understands the ins and outs of bookkeeping for pharmacies.
We’ve gathered a list of tips to help you better understand your pharmacy’s bookkeeping needs and set up the right bookkeeping system to keep your books up-to-date.
5 Tips To Improve Your Pharmacy’s Bookkeeping
Tip #1: Choose the right accounting tools & technology
Gone are the days of spreadsheets and manual bookkeeping. Many businesses are adopting modern cloud-based accounting software like QuickBooks Online and Xero for easy collaboration and their integrations with other accounting tools. These software have the general accounting functionalities needed by most pharmacies and are user friendly (even for those without much accounting knowledge).
When it comes to accounting tools, consider using an expense management tool like Receipt Bank. Receipt Bank allows you and others on your team to easily take pictures of your invoices and receipts while you’re on the go. Receipt Bank will then extract the key information on your receipts and create a transaction that you can then export to your accounting software, reducing the need for manual data entry while storing images of your documents in the cloud.
Keeping receipts is important for all business owners, so it is best to have a paperless workflow in place to make sure all your receipts and documents are stored in the cloud and easily retrievable.
Tip #2: Think through your chart of accounts
In order for your bookkeeping to give you meaningful insight, it is important to spend the time upfront to consider how you want to see your financials organized. Your chart of accounts will allow you to measure and report on the right things on a monthly basis.
For a pharmacy, your direct, non-management labour should be included in your cost of goods sold (COGS) accounts. Product costs should also hit your COGS account. Working with an experienced bookkeeper or accountant to get professional advice before setting this up is always a good idea.
Tip #3: Record revenue accurately
Pharmacies often collect revenue from insurance billing after the prescription has been filled and delivered. It gets even more complicated when you receive the customer’s portion of the payment right on the spot. When should you record the revenue earned?
Pharmacies are required by the CRA to record revenue and expenses based on an accrual basis. Therefore, it is important for you to capture your pharmacy’s revenue based on the date that the transaction has occurred, not when the cash payment hits your bank account.
Capturing your revenues based on the transaction date also provides you with an accurate reflection of your business’ performance in a given period.
Tip #4: Leverage your supplier platform for bookkeeping data
Supplier portals, like McKesson’s PharmaClik, can be used to obtain key information like invoices and billing information that is necessary in the bookkeeping process. By integrating your dispensary with your front of shop systems and syncing them to your accounting software, you can minimize errors and streamline your billing process. You should also make sure that you’re comfortable navigating these platforms and review their different reporting options to meet your reporting needs.
Tip #5: Set up proper tracking for multiple locations
If you’re operating more than one pharmacy, understanding the performance of each location is essential. A consolidated view of your books will not be as useful.
Instead, leverage the class or location tracking functionality in your accounting software. This will allow you to get a clear picture of the financials for each pharmacy location. That way, you can perform comparisons across all your locations and find ways to improve each individual pharmacy.
Whether you’re doing your own bookkeeping or working with an online bookkeeping firm, these tips will help you better understand the ins and outs of your pharmacy’s bookkeeping and know what you should expect from your bookkeeper.
At Enkel, we have experience working with pharmacies across Canada and managing their bookkeeping and payroll functions. Contact us today to learn how we can help you get your pharmacy’s books done right!