18 Jul Bookkeeping Basics for Chiropractors
You can perform a spinal adjustment with utmost finesse, but when it comes to bookkeeping, you may feel a little less confident. Sure, you can manage money fairly well and balancing a spreadsheet isn’t too difficult, but you suspect there’s something you’re doing that could be done better. If you’re like most chiropractors, you’re probably wondering if you’re doing your books the right way. Whether you’re looking to improve accuracy, efficiency, or are simply troubleshooting a specific problem, these bookkeeping basics can point you in the right direction.
Reconcile Financial Information
The primary purpose of bookkeeping is to reconcile financial information so you can make informed business decisions. If your books aren’t reconciled properly, the business decisions you make are based on inaccurate information. This can result in problems like internal theft, unpaid bills, uncollected receivables, tax delinquencies, and unpleasant run-ins with the IRS.
When reconciling your account, be sure to include:
- Point of Sale transactions
- Company bank accounts
- Medical insurance billing
- Accounts payable
- Accounts receivable
- Cash flow
- Credit Cards
With this information, you can compose a complete profit and loss summary which can then be incorporated into your monthly financial report.
Evaluate How You Make Financial Decisions
After you reconcile your financial information correctly, you are ready to make informed decisions based on those results.
Some questions to ask yourself:
1. What are my biggest expenditures? For most chiropractic practices, it’s employee payroll, followed by facility and equipment costs. However, if you notice that you’re spending a lot more than normal on business expenses, you might want to check out why that is and possibly find another vendor.
2. How does my cash flow align with my financials? As your practice grows and money starts coming in, be aware of how much is actual profit and how much should be designated for expenditures. Just because you see an increase in your bank account does not mean the money is spendable.
3. Where is my income coming from? Knowing where your money is coming from can help you evaluate the success of your practice. Are accounts receivable being paid more quickly or are you actually seeing a growing number of office visits? Is there an increase in new patients or are returning patients visiting more frequently? Finding the answers to these questions will allow you to allocate your time to make even more progress.
4. Are there any financial gaps? As you review your reconciled financial information, you’ll easily be able to determine any numbers that don’t line up and pinpoint any oddities. By keeping your books current, you’ll be able to catch most mistakes and implement new protocol quickly before stumbling into a situation that could take months to resolve
Avoid Common Mistakes
Just like good nutrition, exercise, and an aligned spine keep a body healthy, practicing good bookkeeping techniques will help your chiropractic practice thrive.
Avoid common bookkeeping mistakes chiropractors make by:
- Separating your personal and business finances
- Using accounting software, instead of a simple spreadsheet
- Managing your practice by your financials, not by your bank account
Remembering these tips when doing your books will keep your monthly reports accurate, prevent financial data from being poorly represented, and give your practice more opportunity for growth.
Increase Your Profit
As the saying goes, time is money. What are you and your employees spending the most time doing and are those tasks profitable for your practice?
Most chiropractors find that when they are solely in charge of bookkeeping, they cannot focus on their practice as much as they would like. Rather than building relationships with patients, they are sitting in front of a desk. As a result, office managers will usually be asked to take over all or part of bookkeeping responsibility. However, office managers are not typically trained to handle the wide range of small business financial details like a professional bookkeeper or certified public accountant. Office managers who oversee bookkeeping cannot attend to administration like they were originally hired to do. Instead of helping the practice run more smoothly, they are combing through numbers, and doing so much more slowly than a professional, which could get expensive if he is paid hourly. If office tasks are left incomplete, the entire practice suffers: employees become frustrated, turnover rates increase, and patients leave.
As you re-evaluate your practice’s bookkeeping process, you may find that the time you spend crunching numbers would be better spent somewhere else. If this is the case, we would highly recommend considering outsourcing your financials.
Here are a few benefits of doing so:
- Time currently spent on bookkeeping can be applied bettering your chiropractic practice.
- You will only pay for what you need and therefore save money by cutting productivity costs.
- Because your books will be done by experts in the field, you can be confident in the accuracy of the results and can run your practice accordingly.
- Your team can focus on what they do best, rather than financials, which will improve your patients’ overall experience.
- Instead of having one person responsible your practice’s bookkeeping, you will have access to an entire team, which means more consistency in bookkeeping best practices and more application of financial strategy.
- You’ll have access to some of the best bookkeeping programs, which will backup and save your data for years, making it easy to retrieve financial records later down the road.
At Two Roads, our services are designed for chiropractic practices like yours. We want your practice to run smoothly so you can enjoy what you do without having to worry about whether the financial side of your business is aligning with your goals. By allowing us to handle those details, you can focus on growing your practice and caring for patients. If you want more information on how you can take the next step, please contact us online or give us a call at 865-212-0063.