The three areas you should be aware of are:
- Cash schemes involving accounts receivables and not fully recording services, writing off bad debts which have previously paid but not recorded.
- Accounts Payable: ficticious vendors, including personal bills in mass payments
- Payroll: ghost employees, incorrect time cards
Business plans are due on my desk (not in the mail) Sep 30 - 4pm CST. in hard copy and ready for a banker to critique.
This week's blog topic is about financial controls. How will you protect your assets? What issues have your doc's come across? and how did they change their processes so the situation did not happen again?
Alexis
I read an article written by Larry Laurent who is an attorney at law and deals with many chiropractic practices. He states that chiropractor's assets have been targeted for state and federal ivestigations more than ever before. He states that the best way a chiropractor can protect his assets is through professioinal liability insurance. Proper business organization is also a key component in asset protection. Chiropractors continue to start a business as a sole propietorships and not as a corpate or LLC which has more asset protection. Laurent also states other ways by which a chiropractor can protect his assets; putting earnings into a protected retirement account will do two things obtain significant tax deductions while building a retirement fund that is protected against creditors. He also states that you can use the Uniform Gifts and Minors act and transfer cash into the names of a beneficiary like your child and setup a college fund. This cash is protected from creditors. These strategies along with an the obvious benefits of an offshore trust will provide chiropractors with asset security. I think all chiropractors need to hire an attorney who knows these laws and if very familiar with a chiropractic practice.
ReplyDeleteInternal control is a must for every doctor when it comes to running a successful small business. Since there is no such thing as a perfect employee, we must all be fraud conscious and understand that anyone can partake in fraudulent acts.
ReplyDeleteSince cash is king we must monitor its activity directly with a proper log of what comes in and what goes out. Something as simple as a log in the cash drawer will help with this.
A close family member of mine just about lost their small business due to embezzlement for two reasons:
1. The business owner had no checks and balances set up with cash flow of the office.
2. The "best" employee in the office was writing checks to herself as a vendor.
The process was immediately changed following this discovery. One of the largest changes he made required that all vendors were to be approved by the business owner himself. This allowed him to know exactly where all business payments were going and when.
Making sure to total out both cash drawer and credit card machine at the beginning and end of every day is a good way to manage your cash flow. Also compare it to the amont of patients seen. Limit employee's access to one person to the register. You can also limit the employee's financial power within the company by managing those things yourself. Not give out company credit cards och check books for example. Another thing is to write it up in their contract when they start working, that if found guilty of fraud, they will be sewed. Being personally involved in your bsuiness's cash flow is a big thing as well.
ReplyDeleteI will be practicing out of the country so the whole schemo of things is very different, no insurance for example, all cash. I do not know of any docs where I am from that have had to deal with any problems of this sort.
Jacob Pudenz
ReplyDeleteSince I will be opening a small business practice, I will only have one employee running the desk. I will start the day out with the same amout of money every day in the drawer. When the day is over, there will be a spread sheet that keeps track of all the money that was brought in that day and recorded. I will check over the spread sheet everyday before the employee leaves the office. With a sister who is a accountant, she will be looking over the books on a regular basis. When the emplyee is hired onto my business there will be contracts about stealing from the buiness and actions will be taken if she does. Coming from a family who are chiropractors and farmers, employees are not afraid of stealing with their sticky fingers so you must make sure that the employee you hire is someone you will trust and not give you second thoughts. So doing a background check on the employee may be a good thing to look into.
In a perfect world we wouldn't need to worry about these types of things. However unless you own mother is the one writing the checks for your business you need to be on top of all finacial aspects. Like Brandon said, know who your vendors are and keep your eye on the checking account/statements so you know how much and where the money is going. Also as was pointed out have a routine of balancing and recording cash payments on a daily basis. I think most doctors probably extend their trust a little too far and get too busy or think they are too busy to pay attention to how much money is coming in and where it is going. The most important thing is to be resposible, this is your business, if you don't want to be the boss go work for someone else.
ReplyDeleteGroup 5
ReplyDeleteThe current Doc I'm precepting under logs everything. Looks like a great system that I will use in my office. Every transaction that is made within the office is logged whether it be products, care, or paying bills. He also uses software like Quicken and Mint to stay on top of his final gross and net balances each day. Not only are these great programs to monitor exactly where every penny is going, but great for creating budgets, goals, and savings. Using this stuff does take time and money, but really in the long run it's going to save you both of those.
Group 6
ReplyDeleteThe doctor that I'm precepting for has had the same tracking system for many years. Most of the transactions in the office are check or debit/credit. There is no cash kept on hand, if a patient would like to pay cash they typically tell the receptionist to apply it as a credit to their account. Patient tracking cards and Eclipse EMR software is used to keep track of patient charges and A/R. At the end of each day a deposit slip is filled out for each doctor and their separate credit card charges are attached to the copy. Each morning the previous days spreadsheets are printed for each doctor in the office and double checked with the patients tracking card.
The doctor I work for has personally never had any employees or any external (lawyers, accountants, etc.) components interfere with his financial situation. The one situation he has had is with several patients that want to have their money and course of treatment kept off of the books.
Although incoming money is tracked with diligence, outgoing money could be tracked more carefully. As Kyle said above, I would recommend using Quicken software to create a budget plan, financial goals, and savings.
Group 21...
ReplyDeleteMy precepting doctor started financial control with the use of Eclipse, entering in patients charges and matching through the computer program. This process worked just fine for years, then large amounts of money were missing and unaccounted for continuously, which brought questioning of employees dishonesty. My doc started balancing the cash drawer with hand writing all money taken in. And drawer is balanced at least once or twice a day and cross referencing it with the service charges, cash/check/credit card entered in the patient accounts on Eclipse and found this system to work perfectly. This process has minimal to no errors and now can tell you were every cent is coming and going.
Group #1
ReplyDeleteAs I have observed the operations of the office I am precepting in, I have noticed that everything is recorded at least 2, maybe even 3 times. The doctor has daily printouts of financial reports and looks at them every evening. The software they use in the practice is a bit dated, but still works well.
Group #2
ReplyDeleteProtecting your assets in today's economy and the atmosphere of litigation happy people is of the utmost importance. The most common way we have seen different docs address this issue is to have their businesses as completely separate entities, whether it be an S-corp or an LLC. The doctor I'm precepting with just moved his practice across the river to a new state and had to change some of the ways he had the business set up. Its kind of complicated but it involves and S-corp and an LLC and a few other legal things but its all set up so that if anything were to happen, nobody would be able to sue him for anything that happened regarding the business. Overall if you set up your practice as a sole proprietorship, then you have no protection.
Group 4
ReplyDeleteAndrea - Make sure to have business, malpractice, and liability insurance to protect myself, my employees, and my patients. In addition, it would be wise to make sure that I take the extra hassle to make sure that my business is a professional entity rather than having the liability fall to my assets should a policy limit be overreached in a lawsuit.
Ed L: I agree with Andrea, I would make sure that flood, and tornado damage is covered too. If everyone in the clinic is covered along with All assets covered, there should not be a problem. Also, having an alarm system on the building would help protect assets/files from burglaries.
Ed K: Having insurance to protect yourself is a necessity. It would definitely be worth the to pay the premium to protect yourself as well as your business in case of an unforeseeable event. I would also make sure that my office manager is not permitted to to sign checks. This will hopefully prevent any form of theft from that angle. I would also make sure that my personal assets are protected by using a business entity that distinguishes between person and company assets. An alarm system like Ed mentioned would be a worthwhile purchase as well in order to protect patient information. A detachable hard drive may also be an option to allow the the storage of patient information in a company safe.
Alissa--I also agree with the above. Having malpractice insurance is important as well as having physical locks on the building. I also think that having employee manuals in place, making accommodations for those who may have physical handicaps, as well as statements of anti-discriminationsin place for the patients and employees. While these are in-direct methods of ensuring protection, they also work toward covering your assets. An open line of communication and trust may also go along way in protecting yourself.
I talked to my preceptorship doctor about this specific topic and e said that one of the most important things that you can do is to do background checks on your employees. Then he enters all of the money that has been received and double checks this with the account every morning. He said that he has never had any problems with fraud or embezzlement in 23 years and has had 10 or more employees most of the time. All the cash that is received is but into a lock box and a receipt is given for every payment. This makes it possible for you to check the receipts and the cash collected which also helps prevent embezzlement or fraud.
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