BLOG #7
How to Clean Messy Books: A Guide for Healthcare Practice
Running a healthcare clinic is a rewarding experience, but keeping your finances in order can often feel overwhelming—especially if your books have become disorganized. When you’re busy managing patient care, overseeing staff, and handling day-to-day operations, accounting can easily get messy. At Dream LogiQ, we understand the unique financial challenges faced by healthcare professionals, and we’re here to help you get your clinic’s finances back on track. In this guide, we’ll walk you through the steps to clean up messy books and set up systems to prevent future disarray.
Why Clean Books Matter for Healthcare Practice
Having clean, organized books is essential for the financial health of your clinic. Accurate accounting ensures that:
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You’re compliant with tax regulations.
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You can monitor cash flow effectively.
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You make informed decisions about staffing, equipment purchases, and clinic growth.
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You have a clear understanding of your clinic’s profitability and financial health.
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Prepare your practice for exit requires years of planning before doing so to optimize value.
Disorganized books can lead to costly mistakes like missed tax deductions, overpaying suppliers, or even legal issues if financial statements are inaccurate. Cleaning up your clinic’s books will not only save you time and stress, but also ensure that you’re maximizing profitability and minimizing risks.
Steps to Clean Up Messy Books
Whether your books are months behind or just need a little tidying up, here’s a step-by-step process to regain control of your clinic’s financials.
1. Reconcile Bank Accounts and Credit Cards
The first step in cleaning up your clinic’s books is reconciling your bank accounts and credit cards. This means matching your transactions to your bank statements to ensure everything is accurate.
How to do it:
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Collect all bank and credit card statements for the months you need to clean up.
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Match each transaction with what’s recorded in your accounting software (or manual ledgers).
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Look for discrepancies like duplicate entries, missing transactions, or errors in recording amounts.
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Resolve any differences by adjusting the books accordingly.
The first step in cleaning up your clinic’s books is reconciling your bank accounts and credit cards. This means matching your transactions to your bank statements to ensure everything is accurate.
2. Organize Invoices and Receipts
As a healthcare professional, your clinic likely deals with a range of expenses, from patient care supplies to office equipment. One of the most common sources of messy books is misplaced or unorganized invoices and receipts.
How to do it:
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Gather all invoices and receipts related to clinic operations. These may include payments for medical supplies, utility bills, software subscriptions, and payroll records.
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Sort them by category (e.g., medical supplies, office expenses, equipment) to make tracking easier.
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If you don’t already have one, consider using a digital system to scan and store receipts electronically. This not only helps with organization but also ensures you have backups in case of an audit.
By organizing your invoices and receipts, you’ll also be able to track deductible expenses more easily, which can significantly reduce your clinic’s tax burden.
3. Review and Correct Payroll Records
Healthcare clinics often have a team of professionals, including nurses, administrative staff, and other support personnel. It’s crucial to ensure that your payroll records are accurate and up-to-date, especially since payroll mistakes can result in compliance issues or fines.
How to do it:
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Review employee records to ensure all salaries, bonuses, and benefits are accurately recorded.
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Check that payroll taxes (including Social Security, Medicare, and unemployment taxes) have been correctly calculated and submitted.
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Correct any discrepancies such as underpayments, overpayments, or missed payroll periods.
4. Categorize Expenses Properly
A common mistake in healthcare clinic accounting is improperly categorizing expenses. For example, mixing patient care expenses with general office supplies can skew your financial reports and make it difficult to understand where your money is going.
How to do it:
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Review your expense categories in your accounting system to ensure they align with your clinic’s operations.
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Re-categorize any misclassified expenses, such as separating medical supply costs from office supplies, or identifying expenses related to continuing education for staff.
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For better clarity, consider creating specific categories for major clinic expenses, such as “Medical Equipment,” “Insurance Payments,” “Patient Care Supplies,” and “Staff Training.”
Properly categorizing your expenses ensures that you can accurately track your clinic’s costs, which is essential for making informed business decisions and optimizing tax deductions.
5. Address Outstanding Invoices and Payments
If your clinic extends credit to patients or works with insurance providers, you may have unpaid invoices on your books. Unresolved invoices can distort your cash flow and create financial uncertainty.
How to do it:
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Review all outstanding invoices and determine which are past due.
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Contact patients or insurance providers to follow up on unpaid bills and establish a plan for collection.
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If necessary, consider setting up payment plans for patients or working with an insurance billing specialist to recover overdue payments.
In addition, ensure that your clinic has a clear system in place for tracking future payments, so your cash flow remains steady and predictable.
6. Streamline with Accounting Software
Manually managing your clinic’s books can lead to more errors and make financial management more time-consuming. If you’re not already using accounting software, now is the perfect time to make the switch.
How to do it:
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Choose an accounting software that fits your practice’s needs, such as QuickBooks. Many platforms offer healthcare-specific solutions that help manage billing, patient payments, and medical supply costs.
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Set up automated workflows for tasks like invoicing, payroll, and expense tracking.
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Ensure the software integrates with your clinic’s point-of-sale (POS) system or medical billing system for accurate income tracking.
By automating your clinic’s accounting processes, you’ll reduce the risk of human error and free up time to focus on patient care.
How Dream LogiQ Can Help
Cleaning up your books can be a daunting task, especially for busy healthcare professionals who are focused on providing excellent care. At Dream LogiQ, we specialize in helping healthcare clinics organize their finances, streamline accounting processes, and ensure compliance with industry regulations.
Our services include:
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Bookkeeping cleanup to organize months (or years) of disorganized financial records.
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Payroll management to ensure compliance with tax laws and timely payments.
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Expense categorization and invoice tracking to improve financial clarity.
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Customized accounting solutions to help automate and simplify your clinic’s financial management.
Yes, we are accountants but we are not your accountants and this article does not create an accountant or advisor client relationship. This article is about accounting, financial or tax information and should not be seen as accounting, financial, tax or legal advice. You should consult with an accountant or attorney before you rely on this information. Dream LogiQ assumes no liability for actions taken in reliance upon the content presented on this