Improved cash flow management for dental & medical practices
CFO Corner: Why More Control Equals More Cash for Your Practice
Are your accounting processes making it more difficult to help your dental practice, medical practice, or veterinary practice reach its goals? Establishing better internal controls is an effective way to systematically ensure better cash flow for your practice. Here are 4 reasons why:
- The little stuff adds up
Although anticipating and tracking major expenses is a critical aspect of cash flow monitoring, it’s equally important to pay close attention to minor expenses. While a small sum here and there might not seem like a big deal, the reality is these small expenses can really add up.
This is especially true when you’re thinking about your long-term goals for your practice. Over the course of several years or even decades, even 1% of your annual operating expenses amounts to a large sum of money. Make sure all of your spending is focused on growing the practice by paying close attention to cash flow on a regular basis, and setting firm budget controls. If you can reduce small expenses, you’ll ultimately have more cash to put towards achieving success.
- Fraud is common
Although it can be hard to believe, employee fraud is a sadly common reality for businesses of all kinds, and accounting for medical practices, dental practices, and veterinary practices can be particularly vulnerable. Most are small businesses, so it’s common for one or two trusted employees to play a significant role in the accounting process. Adequate internal controls can ensure this doesn’t lead to fraud in your own practice. Common internal controls to prevent embezzlement or fraud include dividing financial responsibilities between at least 2 people, requiring physician or manager consent for write-offs, and performing frequent reconciliations.
- Cash flow follows cycles
Although there will always be trends you can’t fully predict, cash flow within your practice likely follows predictable cycles throughout the year. There may be certain times that are consistently busier than others, while you might focus on purchasing new equipment during the quiet times. If not adequately anticipated and controlled, this can lead to cash flow issues which can limit your practice’s ability to succeed. Make sure you have a clear picture of trends in your cash flow over time, so you can plan for expenses and make those big investments when it’s best for your practice.
- Mistakes happen
Without proper internal controls, mistakes in accounting and compliance are simply inevitable. This can lead to frustration, ineffective decision-making, and even business fines for lack of compliance. Your accounting processes need to include adequate controls to ensure you notice errors before they become a problem. Frequent reconciliations, detailed reporting, and technology solutions will help you catch mistakes early.
Could you use more control of your cash flow?
If your practice struggles with accounting processes that leave you open to mistakes and fraud, or it’s difficult to maintain a detailed view of your finances, PBA can help. Contact us today to learn how we can help your practice set better internal controls, improve cash flow, make better decisions, and achieve long-term goals.
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We can help you transform your practice and simplify your life. Your partnership with us begins with an introductory meeting to work with you to determine if our services are a good fit and—if they are—set up an accounting assessment.