Dental Bookkeeping Mistakes That Reduce Profit

Dentists have a lot on their plates – from providing high-quality patient treatment to managing staff and finding better ways to reduce costs to scale. How much time you commit to your dental bookkeeping is crucial to this strategy. Are you managing your expenses in a way that helps or hurts your practice?

Five ways your dental bookkeeping processes can reduce your profit:

1. Mixing personal and business expenses

One of the most common bookkeeping mistakes that we can make is mixing personal and business expenses. It can be tempting to use the practice’s credit card or bank account for an impromptu lunch outside of work, but this can lead to complications in tax credits and accurate separation of funds if you’re not able to effectively justify the purchase.

• Avoid cash transactions without receipts whenever possible
• Use a tax professional to give you an idea of what does and doesn’t constitute a business expense
• Have business credit cards that are distinguishable from your personal ones, or even use a separate wallet for them
• Always keep physical or digital receipts even for seemingly inconsequential purchases

2. Not reconciling bank and credit card statements

Reconciling bank and credit card statements is a crucial part of dental bookkeeping. You must compare your financial records to your bank and credit card statements to ensure that all transactions are accounted for properly. Your practice gets dozens of dental insurance EFT deposits daily, are you able to keep track of them all?

• Insurance providers can apply funds incorrectly, making reconciliation and accountability difficult
• Reporting on improperly reconciled funds can create an environment for embezzlement
• Your staff spend hours trying to figure out what deposits go in which account

3. Overlooking deductible expenses and tax credits

Every business has unique deductions and credits available to them, but are you aware of the extent of those potential credits? You should also be separating these expenses as with others to ensure that they are allowable when filing taxes. A tax professional can help guide you to what is most effective and legal for your practice, but consider the following as a short list of what could potentially benefit you come tax time:

• Employee benefits and group medical expenses
• Liability insurance
• Retirement contributions
• Utilities and rent
• Any legal fees

4. Not having a backup plan

Your finances are precious. Not only are your profits, salary, and future investments secured through effective bookkeeping, but also your ability to scale. What could possibly happen to throw a wrench in that planning? Business insurance is just one piece of the puzzle when it comes to preparing for the worst. Depending on your location, there might be hurricanes, earthquakes, or tornados to worry about. You might think, “It could never happen to me.” But the process of protecting the tangibility of your current and past financial records is just as important as your home and personal items.

• Use cloud-based software for all of your primary bookkeeping tasks
• Ensure that all workstations are password protected
• Store physical financial records outside of your office, ideally at home
• Negotiate and purchase an insurance plan that can reimburse you for losses related to your financial records
• Implement HIPAA style guidelines for your finances as you would patient information

5. Falling behind on dental bookkeeping tasks and deadlines

Let’s face the facts: your practice is busy. Patients coming in and out, scheduling, dental billing -all of it adding up to less time for dedicated financial planning. Without standardized financial processes, the ability of your practice to remain profitable and scalable is reduced. Some days it may feel as though you’re doing everything but that nothing is getting done. Recognizing the signs of requiring help is the first step into setting up your practice for success. Consider outsourcing your dental bookkeeping duties to a platform that offers both solutions and achievable goals. Imagine these scenarios:

• 24/7 financial reporting and transparency in communication
• No more checks to write
• Deposit reconciliation between all business accounts
• Free installation of a HIPAA secure cloud-based bill pay folder
• Real time P&L statements and balance sheets

Why do practices outsource their bookkeeping and accounting?

The necessity of outsourcing your finances comes from the fact that 99% of your time in the office is spent on claim reimbursement and taking care of patients. Not every dentist can afford to have a dedicated dental accountant to work deposit reconciliation 24/7. Plus, how much of that time is spent identifying areas of growth, scaling, and cost cutting?

A dental bookkeeping and accounting platform that works for your practice

The eAssist accounting platform supports both dental bookkeeping and accounting. Built by dentists for dentists, we understand the unique financial needs that you require. Whether you need help with dental EFT reconciliation or expense management, here are just a few of the reasons why joining our accounting platform makes sense for your practice:

The achievable brand promises that we offer allow you to rest easy knowing that your finances are taken care of. Plus, enjoy the transparency in knowing that our communication line is always open, and that we will conduct a monthly review of our work and continued goals with your primary doctor or office manager.

Your practice doesn’t need to reduce time for your patients to balance the books. The eAssist Dental Accounting and Bookkeeping platform gives you the peace of mind you need and the financial preparation you want. Consult with one of our Business Development Specialists by clicking below today and see how our solutions can reduce headaches and financial management for your practice.