Grow Your Medical Practice With These 3 Accounting Tips

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As a physician, you are seeking to provide advanced, quality healthcare to your patients. Delegating certain tasks that aren’t directly related to patient care can help you do a better job of succeeding at this goal.

In the early stages of launching your practice, you may have taken on many responsibilities to keep your practice running, including building management, marketing, and even accounting for a medical practice.

Though self-reliance may have been necessary in the beginning, continuing to try to handle everything on your own — especially accounting and financial processes — will slow down your operation over time.

When you’re ready to grow your practice, it’s time to start delegating certain financial duties. Just be careful about how you make this transition to ensure the long-term viability of your practice.

How to Transition Accounting and Financial Duties

When thinking about the specific requirements to support accounting for a medical practice, it’s important to remember these three elements: controls, taxes, and visibility.

1. Implement Cash Controls

When you started the practice, technology and online banking made it easy to track cash and pay bills on your own. Now that your practice is growing, this task can be delegated.

However, you need to be careful about how you make this handoff to your administrative staff or other team members.

It is critical to make sure you have controls in place to monitor cash deposits and disbursements. Ultimately, the goal is to make sure the money you are due makes it to your practice’s account and only the money that you owe leaves your account.

– Tip 1: Don’t give your staff signature authority on your bank account. Paper checks are still the simplest way to have a staff member prepare payments.

You can use online bill payment solutions, but make sure the solution separates preparation and authorization of payments.

In fact, our CPA firm uses an online accounting system, SageIntacct, that allows clients to separate duties. An administrator can enter bills before the owner can review and approve the payment.

– Tip 2: Implement a process to ensure that all daily collections make it to your practice’s bank account. This is easier if all of your third-party payers send payment by EFT.

Additionally, you will probably still have cash and checks on-hand in your office. You need a process to confirm that each dollar collected makes it to the bank.

– Tip 3: Reconcile all bank, credit card, and debt accounts each month. This ensures that all money is accounted for. It also lets your staff know that you are paying attention to the money.

2. Shore Up Your Books for Tax Purposes

Your practice’s accounting is the basis for your tax bill at the end of the year, which means that the accuracy of your accounting will directly impact the accuracy of the tax return.

It’s tempting to let a member of your team handle the accounting. This team member might be strong on billing and collections or patient care. However, tax is generally not their strength.

You can better manage your tax bill if your books are set up to consider the complexity of the tax rules regarding capitalized assets, depreciation, interest vs. principal payments on your debt, and other tax situations.

We recognize that trying to keep up with tax rules and apply them to your practice can be difficult. That’s why we recommend working with a CPA firm to help address difficult situations, as opposed to relying on a member of your team that might not have the ideal experience or knowledge to navigate these situations.

3. Ensure Visibility Into Operations

Medical practice owners need access to timely and accurate information regarding the financial and operational health of the practice. You also need access to information to evaluate whether delegated tasks are being performed correctly by members of your team.

How can you achieve this? As your practice grows, consider investing in a dashboard or diagnostic tool that provides real-time visibility.

Having access to information in a timely manner will help you understand whether your practice is achieving your goals, ensure that cash is making it to the bank and staying there as part of your delegation of cash flow management, and prepare an accurate tax return.

Additionally, accurate information helps you plan for the future:

  • Is it time to add another physician?
  • When should I build out another room?
  • Should I re-evaluate our benefits?

Work With Our CPA Firm to Support Your Growing Practice

Once you build a solid foundation on internal controls, you can delegate more tasks. This will allow you to spend more time on patient care and building up your practice, not worrying about taking care of tasks on the back-end of the operation.

Also, by adding Caudell and Associates to your team, you will be able to find support for common accounting issues that medical practices encounter.

Contact us today to inquire about specific accounting, business, or tax situations that require an expert opinion. As specialists in accounting for medical practices, we are available to support your growing practice so that you can focus on what matters!