Accounting for chiropractors brings its own world of challenges and opportunities. Staying on top of these unique nuances can play a key role in business success. In this article, we’ll explore best practices to build a solid foundation for your finances.
Let’s get cracking!
Best Practices in Accounting for Chiropractors
Keep Accurate Records
While many find keeping track of every transaction can be a hassle, it makes a big difference. Accurate and up-to-date records allow practices to have a holistic picture of their financial health, make informed decisions, and ensure tax time is less stressful.
Chiropractors should keep records of the following:
- Patient Invoices with a clear breakdown of charges, including consultation fees, diagnostic procedures, and any additional services.
- Business-Related Receipts for anything from office supplies to itemized receipts for staff professional development.
- Documentation of Tax-Deductible Expenses including mileage for business-related travel, professional memberships, and marketing.
- Insurance Claims and Reimbursements for patient treatments.
- Payroll Records for all staff members, including taxes withheld and any additional deductions related to employee benefits.
Stay Up-to-Date with Compliance and Industry Standards
Accounting for chiropractors requires staying informed of dynamic compliance and industry standards. In addition to ensuring a sound experience for clients, these standards can impact billing, insurance reimbursements, and reporting requirements. Not staying in the loop can cause stressful surprises and put practices at risk.
The Health Insurance Portability and Accountability Act (HIPAA) is an example of federal legislation that must be followed to protect patient privacy and avoid potential legal issues. This includes secure handling of patient records and financial information, which can be challenging given the amount of patient information often kept online and on company computers.
Additionally, ensure that your practice regularly reviews and updates billing codes to reflect accurate services provided. Failure to do so can cause headaches for business owners and their teams.
Use Specialized Software
Many costly delays and inefficiencies can be avoided by investing in software tailored to the needs of accounting for chiropractors. Ensure your software can handle the following:
- Streamlining billing processes
- Managing insurance copays and deductibles
- Tracking patient payments, including payment plans
- Generating financial reports specific to chiropractic services
Establish Clear Patient Payment Policies
Ensuring payment policies are clear maintains trust with patients and mitigates disputes. Make sure to communicate clearly in writing the following regarding payment expectations:
- Copays, deductibles, and out-of-pocket expenses
- Financial assistance options and payment plans
- Late fees
- Accepted methods of payment
- Pre-authorization processes
- Cancellation and no-show policies
- Refund policies
- Communication channels for billing inquiries
Focus on Cash Flow Management
Managing cash flow when many patients pay through insurance providers is one of the main challenges in accounting for chiropractors. Monitor cash flow to ensure that the practice can cover operating expenses, particularly during periods of lower patient volume or insurance payment delays.
Some ways to prepare for these challenges include:
- Building a cash reserve fund
- Using software for consistent invoicing and patient follow-up
- Offering discounts for early payments
- Implementing late fees for overdue balances
- Negotiating terms with vendors and suppliers, such as extended payment terms
- Establishing lines of credit with financial institutions in the event of an emergency
- Exploring additional year-round revenue streams such as memberships, workshops, or retailing health-related products that add value to the client
Develop and Stick to a Budget
Whether you hope to take on new staff, buy new equipment, or pay back debts – a budget will help you get there!
A comprehensive budget enables your practice to operate confidently, serving as a strategic tool for short-term and long-term decisions. Ensure your budget includes fixed and variable expenses, and reflects the cash flow accurately.
A budget has little value if it’s never followed. Stick to your budget and revisit regularly, adjusting as new information becomes available. Many software tools will be able to update and show your progress automatically, making the process much easier.
No budget is perfectly accurate, but with experience, it becomes easier to fully reflect your practice’s situation.
Work with a Trusted Financial Partner
Building a solid financial foundation requires thoughtful strategy. Maintaining accurate records, choosing software, establishing payment policies, managing cash flow, and adhering to a budget require a significant investment of time and energy.
Working with an experienced firm specializing in accounting for chiropractors can save valuable resources, allowing chiropractors to focus on serving their clients. Sorenson & Company, CPA specializes in supporting medical practices beyond the basics of accounting.
Sorenson & Company’s experienced team interprets your financial data to improve your practice’s success. We can assist with simplifying accounting procedures, minimizing unnecessary costs, and tightening internal controls. Our in-depth experience in accounting for chiropractors means we can recommend and implement the best software for your needs, find tax benefits and deductions, stay on top of compliance requirements, and take the guesswork out of accounting.
Our helpful team is standing by to provide expert assistance and insights. Contact us today!