The Fundamentals of Bookkeeping for Medical Practices

To run a smooth and efficient medical practice, your books will need to be in order and systems in place. Bookkeeping is fundamental to the financial health and profitability of your practice.

Double-Entry Bookkeeping

Bookkeeping relies on the double-entry accounting method, which requires recording every transaction in at least two accounts. This system helps balance the books and avoids errors. For instance, recording a bill payment would require debiting the expense account and crediting the cash account. This dual entry keeps the accounts reconciled.

Tracking Accounts Payable and Receivable

Accounts receivable must be followed up on to ensure timely patient and insurer payments. Carefully track accounts payable - bills the practice owes - and accounts receivable - revenue owed to the practice.

Maintaining Ledgers

Detailed ledgers are maintained, including the general ledger for overall activity, accounts receivable ledger, and accounts payable ledger. These provide comprehensive tracking of financial transactions.

Journals

Journals help organize financial data is sales journal, cash receipts journal, and purchases journal.

Financial Statements

The income statement, balance sheet, and cash flow statement are essential financial statements generated from accurate, up-to-date books. These statements give you the ability to do in-depth analysis of the business's profitability, health, and operations.