To be a doctor in America means more than just treating people. You should take care of salaries, medical supplies, expenses on equipment, rent, insurance payments, payments of patients and other expenditures. To do that is essential to ensure stable functioning and to make good decisions in your business.
It is difficult enough for doctors and managers in medicine to take care of patients and make decisions, but accounting for money can also demand your time. Absence of full documentation and tracking of expenses can complicate your understanding of financial conditions. This is why many healthcare businesses explore offshore bookkeeping for medical businesses as a way to manage routine accounting tasks more efficiently.
Why Medical Practices Need Organized Bookkeeping
There are various financial transactions that are kept by health care firms simultaneously. These can be, for example, payments from patients, payments from insurers, salaries, purchase of supplies used in healthcare, equipment, lab services, and so forth.
The right accounting system will enable clinics to monitor all these transactions, balance outstanding balances, and realize what revenues and expenses are. With such an accounting system, clinics will be able to have all the necessary data needed for budgeting and taxation purposes.
Without an appropriate accounting system, clinics will find it hard to notice the rising expenses, reconcile transactions, and determine whether outstanding balances have any impact on the cash flows.
Common Bookkeeping Challenges in US Healthcare Businesses
It is often quite challenging to do the bookkeeping yourself as you grow your medical practice.
Patient Payments and Insurance Reimbursements
A medical practice is going to be receiving payments from patients, insurance companies, and other eligible payers. These payments may come in at different times and they may not necessarily add up to what was charged.
It is important to ensure that the payments are deposited properly and reconciled, among other things. Medical claims, denial management, and insurance reimbursement are some of the activities that are done during the revenue cycle process which might require different focus apart from bookkeeping.
It will make it easy for you as a manager to keep track of how much you have received.
Tracking Medical Supplies and Operating Expenses
Healthcare service provider costs can involve costs of medical supplies, diagnosis equipment, office supplies, facility maintenance, software costs, and many other needs. These costs can depend on the number of patients seen and services offered.
Inconsistency in the recording of such costs will make it difficult for medical practices to understand any trends in their expenditure and form appropriate budgets.
Offshore bookkeeping services will help manage the expenses and maintain the expense account and also manage the required documentation. This will allow the practice managers to monitor expenses more often and notice any problem areas.
Payroll and Vendor Records Management
Medical practices employ doctors, nurses, receptionists, laboratory technologists, and administration staff. In addition to that, medical practices work in cooperation with independent contractors, laboratories, cleaners, and equipment vendors.
Proper accounting records of the payroll and vendor payments need to be maintained. Through offshore bookkeeping services, practices will be able to manage the expenses, maintain the invoices, and reconcile the vendor balances. Offshore bookkeeping and payroll processing services must be separated clearly.
How Offshore Bookkeeping Simplifies Medical Practice Finances
Consistent reporting can also help medical practices plan their growth, evaluate their equipment purchases, and negotiate their financing requirements with banks or financial consultants.
Correct Recording and Reconciliation of Transactions
Bookkeeping services from offshores can help perform standard accounting procedures such as recording and classifying transactions, reconciling bank accounts, and keeping general ledger up-to-date.
Reconciliation is necessary in order to be sure of the existence of transactions' records, avoid double counting and discover inconsistencies between transactions' records and the information in the bank statement. These procedures are especially important for medical practices which receive money through various payment channels.
Proper records decrease the amount of work related to the closing of transactions at the end of the month and facilitate report creation.
Better Ability to Assess the Amount of Available Cash
Medical practice needs a certain amount of cash for salaries, rent, medical supplies, equipment leasing and other expenses. Delays in insurance reimbursement or uncollected balances complicate financial planning.
Offshore bookkeeping support helps keep the information on income, expenses and uncollected balances updated in the accounting system.
With greater visibility, it will become easier for healthcare institutions to plan payments, examine expenses and identify any potential cash flow problems in advance. While bookkeeping does not guarantee faster payments, it gives financial information necessary for making proper decisions.
Financial Statements
Healthcare organizations need financial statements to be generated periodically. These include profit and loss accounts, balance sheets and cash flow statements.
It is possible to get financial statements of such organizations through an offshore bookkeeping firm which will use the financial information recorded properly. This way, the practice owner will analyze the operating expenses and see whether they correspond to the income.
Key Bookkeeping Tasks Healthcare Businesses Can Outsource
Accounting functions of certain healthcare organizations can be outsourced depending on the internal resources and requirements of the business.
The above-mentioned functions include such services as:
- Accounting per day: Registration of incomes, payments, deposits, and other accounting entries.
- Bank reconciliation: Comparison of the bank statement and accounting.
- Accounts Payable: Registration of bills of suppliers and due dates of payment. Accounting of the suppliers.
- Accounts Receivable: Payments by patients and payers are registered, and reconciled with the accounts in accounting.
- Payroll costs: Registration of the payroll accounting entries.
- Monthly accounting: Review and reconciliation of entries and generation of accounting reports.
- Preparation of the tax report: Organization of all necessary financial documents for the tax specialist of the practice.
It is important to establish beforehand the scope of provided services. The list of accounting services which should be outsourced excludes the medical billing, claims processing, payroll, and tax services.
How to Choose the Right Offshore Bookkeeping Provider
The choice of the right vendor cannot consist only in the comparison of prices on the service. It is crucial for medical organizations to choose an experienced accountant, secure process, good communication, and familiarity with the accounting software of the practice.
The following factors have to be taken into account:
- Field experience: Knowledge of the cost structure of a medical practice, payments of patients, deposits connected with insurances, and reporting requirements.
- Software compatibility: Make sure that the vendor is compatible with the practice's accounting software, such as QuickBooks Online or Xero.
- Information security: It is important to clarify access rights, confidentiality policies, secure document sharing, and HIPAA requirements.
- Service scope: It is important to specify what kind of services the vendor will provide, and what actions will be performed by the practice/billing department.
- Quality control: Find out how the transactions are controlled, accounts are reconciled, and errors are fixed.
- Communication: Reporting schedule, turnaround time, and procedure of resolving disputes should be specified.
The contract has to contain information concerning who is responsible for approval of the payments and financial transactions, review of the reports, and management of the practice's accounts.
However, what one should do is have proper accounting, protect information, have proper roles defined, and have regular financial reviews. It is important that medical practices are careful with their requirements and select a firm that understands their requirements regarding accounting and information protection.
Whatever your outsourcing of accounting needs, when you belong to the health care industry and require professional offshore accounting and bookkeeping, The Fino Partners is the place to go for your bookkeeping needs.
