A big part of embezzlement prevention is separating the responsibilities related to money and bookkeeping. Maybe that seems counterintuitive – one might think that the more people involved, the higher the likelihood of the money getting into the wrong person’s hands; however, additional people serve as “checks” to the process, and we’re not necessarily talking about cash payments entering multiple peoples’ hands. Giving one person multiple responsibilities could be putting you at risk for embezzlement, especially if you’re not diligent about completing daily and monthly reconciliations.
Let’s take a look at the money-related responsibilities in your practice and see where we could prevent theft:
1. Accepting payments from patients
2. Entering payment into patient’s account
Tasks 1 & 2 are usually completed by the same person. If they were separate responsibilities, this would serve as a “check point” because it would be difficult for the person accepting the payments to skim (steal a portion of) cash payments and hide the skimmed amount, but separating the tasks would also cause a lot inconvenience and errors in the form of missing payment entries.
3. Depositing cash & check payments into bank account
As I have said in previous posts, all cash payments are given to me right away in my practice. In turn, I write a check back to the business from my personal account for the same amount. I do this because I don’t go to the bank daily, so I don’t want cash sitting around my office for days. Now that there is no cash to be handled, you can go to the bank yourself or send a staff member to drop off the batch of check deposits.
4. Entering payments into accounting software
4. Daily reconciliation
Preferably, you would perform all reconciliations but this can be time-consuming so you could hire a bookkeeper or have another staff member do this. Most importantly, this task should be separated from the person who accepts the payments and enters them into the patient’s account. Whoever performs this task needs to report solely to you.
5. Paying expenses
No one, other than you, should have the ability to write checks from your business account. Never ever sign a blank check. If you have a staff member or bookkeeper helping you to pay your expenses, then get them an employee card so you can easily differentiate who charged each expense.
6. Signing checks
Let’s say your bookkeeper brings you a check to sign, made payable to Verizon, your cell service provider. OK, sign it, no problem… except that without reviewing the bill, you unknowingly made a payment to their Verizon account. Each check to be signed must be accompanied with the invoice it’s for. Reviewing it just takes a quick scan – is this even your account? Any unexpected fees? If so, why?
7. Entering expense payments into accounting software
If you hire a bookkeeper, then oftentimes they are paying expenses and entering the payments into the accounting software. With the advent of super retailers like Amazon, that sell everything on the planet, it’s not uncommon to see monthly charges from them for office supplies, office snacks, and even dental supplies. You know what else Amazon sells? Gift cards. Gift cards that the bookkeeper can send to themselves for personal use.
8. Monthly reconciliation
You need to do this. No one else can do this task without risk for embezzlement. In addition to reconciliation, you should be regularly reviewing the charges to the employee credit card. Look for charges to retailers like Amazon or Target, where fraudulent charges would be more likely and periodically check the actual receipts to see what was purchased and if all the items were legitimately for business use.
9. Collections (A/R) calls to patients & mailing invoices
This task needs to be separated from the person who collects the payments.
Being diligent is of utmost importance to embezzlement prevention. Your staff will know you are being diligent when you catch an honest error, or have a question about a courtesy you see on the Day Sheet. That in itself will reduce the likelihood of embezzlement because the fraudster will know that there will be a high chance of getting caught. And by separating the money-related responsibilities, it will make it very difficult for anyone to conceal corrupt behavior.
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