Taking care of the numbers and bookkeeping in your dental practice can add just one more thing to your already too-long list. A bookkeeper trained in dental practices is the answer to your dilemma.
The one thing every successful dental practice has in common is knowing their numbers. But bookkeeping has not been easily accessible to dentists. The time it takes to do it yourself is a waste of valuable resources, and the books often gather dust and remain vacant until tax time. Alternatively, you might have an accountant who does both bookkeeping and tax preparation but only provides financial reports every few months. This does not have to be the case.
Fortunately, there’s a way to streamline your dental practice’s bookkeeping to give easy access to your financial reports and important dental metric, such as overhead and industry average comparisons, without ever personally stepping inside the accounting software. All you have to do is get your books started with the right processes and software in place. Use these four steps and watch your books turn into a well-oiled machine with the click of a button.
Step 1: Find a dental specialty bookkeeper
Avoid using a CPA firm or your accountant since these people do not specialize in dentists. Yes, they’re definitely qualified to do bookkeeping, but dentistry is not their specialty and that can affect the quality. When you hire your CPA firm or accountant to do your books, the person actually working on it is often a college intern or non-degreed person. This might be satisfactory for tax preparation, but it’s not suitable for streamlining your books for practice success. On the bright side, your accountant can be used for genuine consulting instead of fixing bookkeeping mistakes.
(Hint: If a firm offers tax services for other industries then they don’t specialize in dental bookkeeping. A jack-of-all-trades in an expert in none.)
Step 2: Automate the bookkeeping process
Your dental bookkeeper should be independent. Don’t have the person come into the office because that wastes time and resources. It’s important to use technology. Everything the bookkeeper needs is available online. Provide the person with “view-only” online access to statements, check copies, payroll reports, and other relevant accounts. This will allow the bookkeeper to consistently keep up with entries without waiting on you for information. Reconciling your accounts should be a smooth process with very few interruptions.
Step 3: Tailor your reports
Think of all the types of reports you would like to see and ask your bookkeeper to generate and upload them on a monthly-basis to a secure place in the cloud such as Dropbox or Google Drive. This way you have everything at your fingertips and anytime you need to see how your practice is performing, you can check with easy access on a web browser or an app on your phone.
A Benchmarking Report should be included in these reports. This is a report comparing your practice to industry averages through calculations of categories such as personnel costs, facility costs, clinical costs, and total overhead. This report can be created in Excel and updated monthly by manually entering the new numbers from your income statement and having the spreadsheet do the calculations. Your bookkeeper can maintain this for you on a monthly basis.
Step 4: Rinse and repeat
Now that you regularly have access to your financial information, there are many ways to use it for better practice performance:
• Hire a good accountant. If the books are clean and clear with all the information available at your fingertips, then finding an accountant for taxes and consulting will be easier.
• Budget your expenses and watch how well those budgets are being followed in real time instead of waiting until yearend.
• Forecast earnings and play with different financial scenarios, such as adding an assistant or purchasing new equipment.
• Compare yourself to the averages of other dental practices. This is where the benchmarking report from your bookkeeper will prove helpful.
Times have changed and new age dentists aren’t using their mom and dad’s accountants anymore. It’s important to have necessary information accessible on demand and the influence that can have on your practice’s performance. While doing your own bookkeeping may seem like a smart idea, it could potentially hurt your practice. The cost saving potential that comes from having accurate and understandable financial information on is high, and the steps spelled out here can get you there.