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What is Dental Accounting?

CoriAnneFavro

Cori Anne Favro

Product Leader

If you’re like most people, the words “dental accounting” might not exactly make your heart skip a beat. But don’t worry, we’re here to shed some light on this often-overlooked aspect of dental practice management. Simply put, dental accounting is the process of tracking and managing the finances of a dental practice. Accountants are crucial because they assist with all things financial and relieve you from the daily burden of tracking line-item finances. eAssist Dental Solutions is a dental billing platform that offers dental accounting solutions curated for general dental, orthodontic, and specialty offices. Let’s take a look at what this type of accounting entails and how outsourcing these tasks to accounting experts can give you the peace of mind you deserve.

What is dental accounting?

Dental accounting is the process of managing and organizing the financial transactions for your dental practice. It involves tracking business expenses, revenue, and profit, as well as creating detailed financial reports and making informed decisions based on this data, including:

  • Creating and analyzing financial statements, P&L, etc
  • Tax returns
  • Daily accounts receivable
  • Marketing costs
  • Rent, mortgage or utilities

A dental accountant works alongside you to help set financial goals and budgets and makes sure you stay within those budgets for your monthly and yearly expenditures. Outsourcing to an accountant experienced in dental practice accounting provides many benefits:

  • Verifies and reconcile electronic funds transfers (EFTs) with bank statements
  • Correlates patient payments with EFTs to reconcile statements accurately
  • Reduces the risk for employee embezzlement
  • Saves your front office manager time and sanity when it comes to combining multiple revenue streams
  • Maximize tax deductions specific to your practice and specialty

Imagine the peace of mind you could achieve as a business owner knowing that your bank account and practice management software reflect the same numbers month after month.

What is dental accounting

Why is dental accounting important?

Maybe your books are in such disarray that you’re thinking of Googling “dental accountants near me” on a daily basis. This can seem like a great idea at the moment, but the first thing you should do is find time to take stock of your books and figure out what you really need. We don’t always realize where we’re losing money until we actually look:

  • Debt structuring
    Would you rather pay $25,000 out of pocket or can you finance for a few months? There’s no need to wipe out a giant chunk of change when you can manage the same amount in solid, consistent payments for a small duration.
  • Overhead
    Do you have a set payment practice/rubric for employees at the professional and part time level? Do you know what those numbers are relative to minimum wage and average salary bases? Answering these questions will put you in a better position to distribute a long-term plan that takes your profit into account.
  • Taxes
    Are you familiar with the rules garnering the type of business you run relative to your quarterly and yearly gross? Sometimes we push our taxes to the back burner until we’re hit with a bill potentially costing thousands.

Be aware of EFT deposit reconciliation

Did you know that insurance companies occasionally deposit reimbursement funds into the wrong bank account? Or that front office staff responsible for posting payments may invert a number by mistake? It’s true, and mistakes do happen. If you are tracking and reconciling daily deposits, you could be losing money. Plus, come tax time, you’re going to want a knowledgeable expert who can effectively assess your deductions and credits. Having a dedicated accountant serves as another set of eyes on your financials and helps to remedy that human error from insurance companies and staff. By understanding your practice’s financial data on the whole, you can make better informed choices that support the growth and success of your business for the long term.

dental accounting problems solved with eassist

What does a dental accountant and bookkeeper do?

We all know that the best investment you can make in your business is to actually invest in it. Choosing whether or not to use a dental accountant depends on many factors, the foremost being consistent dedication and attention to your practice finances. You’ll need to think about the ROI of outsourcing to a specialist, which includes thinking about the tasks a dental accountant saves your team in the long run:

  • Clear labeling of dates and receipts to reduce confusion and overload. No one wants to be digging around “October” trying to figure out what year it is
  • Recording each business transaction, from salaries to equipment purchase. There shouldn’t be a “$10,000 operational surprise” one month
  • Utilize effective, easy-to-use management programs. Companies like QuickBooks and other CRM solutions should represent an efficient, less-wasteful method of keeping track of all of your finances. Maybe you want something searchable, or something faster and leaner so you can cross train your other employees. Research what fits your business, and then use it

Here’s a better look at some of the other duties you should expect from your bookkeeper:

Choosing a dental accounting software

Your dental accountant uses software like QuickBooks or Xero to track business data and create financial reports, so there are no convoluted spreadsheets to manage or complex math problems to solve.

Tracking your income and expenses

Using specialized financial software also eliminates the need for manual data entry that takes hours of staff time, plus even more time to double check EFTs with bank statements. Everything is automated and presented in a detailed report using all available data in real time.

Creating financial statements

Statements help to summarize costs in a way that makes sense to every department in your office, including:

  • P&L (ROI)
  • Balance sheets (assets, debits and debts)
  • Accounts receivables aging report
  • Total cash flow (collections, patient payments)

All of these statements work to provide you with valuable insights into your practice’s overall financial health, which means a better grasp on needed improvements or future metrics.

Analyzing your data

Once you have financial statements in place, it’s time to analyze your data. Look for trends in your revenue and expenses and identify tangible areas where you can make improvements:

How can I make more money in the dental field?

Depending on the complexity of your data, you may want to consider hiring a dental accountant or bookkeeper to help you manage your finances. You need an accountant with the knowledge and expertise of balancing a dental practice’s books. Having this expert commit to these tasks allows you to focus on the important areas of growth for your practice. Let’s take a look at what that could look like:

  • The median production for a dental practice is around $500 per hour, with top dentists producing anywhere from $800-1000 per hour
  • Trusting an accountant with essential dental practice financial tasks can potentially free up anywhere from 5-12 hours of time each month
  • That means up to $6,000 or more in potential production revenue month after month!

This type of consistent scaling is every practice owner’s dream. And while you’re setting growth goals and generating more collectible revenue, you can breathe a sigh of relief knowing that the time-consuming tasks of bookkeeping and bill pay — just to name a few — are being handled by a trusted dental accountant.

Outsourcing your dental accounting

eAssist’s platform is proud to host knowledgeable and dedicated accounting experts on our platform who provide the expertise and help you reach the financial goals for your dental practice.

  • Balancing your checkbook (deposits, payments, debits and credits)
  • Reconcile EFTs and merchant statements with your bank and QuickBooks
  • Pay bills through limited access accounts (you are the only one handling your money, and no more vendor check writing)

Sound too good to be true? Here are our committed brand promises to you:

  • Reconcile deposits with your bank account and PMS daily
  • Balance checkbook monthly (with bookkeeping service) by the 15th day of the following month
  • (As applicable) Bookkeeping specialists categorize expenses and deposits daily
  • (As applicable) Bookkeeping specialists provide real time profit and loss as well as other financial reports monthly (by the 15th day of the following month)
  • Provide a monthly call with primary doctor to review financial health of your practice and discuss any reconciliation concerns

As a dental billing and accounting platform created by dentists and for dentists, eAssist understands the necessity of consistent, efficient profit and balance accuracy for your practice. Our platform supports you with the expert resources you need in order to find achievable, results-based success for the long term. Schedule a consultation with us today to learn even more about the benefits of dedicated dental accounting from the perspective of an award-winning dental revenue cycle management platform.

eassist can help with dental accounting

CoriAnneFavro

By Cori Anne Favro

Product Leader

3 Comments

  • The software has helped to raise awareness of esthetic dental treatment in cosmetic dentistry. The primary goal of cosmetic imaging software is to allow for the alteration of smiles and modeling of treatment outcomes. Smile libraries and databases may be used to research and evaluate the methods to be followed.

  • great article, enjoyed reading it and getting up to speed.

    • Thanks Andy for your continued support! We’re glad to provide you and all our readers with the most relevant information. We hope dentists will take advantage of the awesome dental accounting services eAssist has to offer.

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