It’s a new month and that means it’s time to complete our month end tasks!  We complete these tasks so that we have an up-to-date picture of how our practice is doing, and it allows us to make decisions and improvements based on data. If you’ve been following along, then it should be no surprise that I love a good checklist so here you go:

1. Lock the ledger & clinical notes

Locking the transactions and clinical notes in your patient management software prevents them from being edited or deleted.  Any changes that need to be made after the month end should be made as an adjustment (or addendum, if we’re talking about notes). 

One reason you want to lock the transactions is because it could throw off the reconciliation of the collections to your bank account of a previous month.  As an example, 2 months ago, Mrs. Smith paid $200 towards a filling ($100) and an upcoming whitening appointment ($100).  She decides to cancel her whitening appointment, postpone it indefinitely, and leaves the credit ($100) on her account.  Today, Mr. Smith, needs a filling ($100) and they want to apply the credit to his appointment.  

If the transactions from 2 months ago aren’t locked, then Mrs. Smith’s payment could be edited to $100 (from $200) and a second transaction could be made in the amount of $100 for Mr. Smith’s appointment.  The family account now equals $0 and you have collected the fee for both services.  The problem with this is that ALL the money was collected 2 months ago.  Let’s say the total collections for that month was $100,000.  If you reconciled your bank account to the collections report for that month, then you should have seen $100,000 go into your bank account.  If you edit Mrs. Smith’s payment down to $100, now there will be a $100 mismatch between the collections number for that month ($99,900) and what your bank account shows ($100,000).  And, when you go to reconcile the current month’s collections, there will be another $100 mismatch in the other direction.

One transaction doesn’t seem like a big deal, but if there are multiple transactions that are edited every month, then your reports start to get very messy and ultimately unreliable. The correct way to handle this is to record the two transactions (-$100 from Mrs. Smith, +$100 to Mr. Smith) as credit and debit adjustments with today’s date.

*While the family account balance shows $0, there is actually still a $100 credit under Betsy Smith and a balance of $100 under Howard Smith.  

This brings me to my second reason: preventing embezzlement.  Using the same example, what if your office manager edited Mrs. Smith’s payment from 2 months ago from $200 to $1000?  So now, every time Mrs. Smith comes in, the office manager can pocket the payment (she might even offer her a cash discount to make it easier to embezzle!), Mrs. Smith’s account won’t show up in the Aging Report because it shows a credit balance, the edit will not show up in your Adjustments Report (because the change wasn’t applied as an adjustment), and it won’t show up in the current month’s collections report (because the transaction is dated 2 months ago), and you’re unlikely to re-run a collections report from 2 months ago.  It’s simple, just lock your transactions.

While this function can be performed as often as daily, I close out (lock) my transactions monthly because I do it concurrently with reconciling my bank statements.  In Dentrix, this function can be found in the Task Manager and in Open Dental, it is in the Close Out Year function (but you can enter any date you wish to lock).  I wasn’t able to figure out where the function is located in Eaglesoft, but I suspect it is included in the End-of-Day or End-of-Month processes.

2. Reconcile your accounts

I’m talking to you, millennials! Since we grew up on the cusp of rapid technological advancement, there are a few basic skills that a lot of us were never taught thanks to automation.  One of these skills is account reconciliation.  All this means is matching up what you think you earned and spent for the month vs. what your bank statement says you did.  In order to do this, you must already be keeping track of your spending with an accounting software like QuickBooks, Xero, Wave, etc.

The reason you need to do this is because you might be losing money and not know it!  Your business is too big to just “eyeball” the charges.  By reconciling, you may find that your bank is charging you unnecessary service fees, that your telephone bill has increased drastically, that there are questionable charges on your company credit card, that a patient’s check bounced, or that you forgot to make a payment on your intra-oral scanner (and you’re about to get hit with interest charges).

Monthly reconciliation of your credit card and bank statements is vital to accurately knowing how much money is coming in and going out of your business.  Without this, we’re just playing a guessing game.

3. Print monthly reports

  • Production report 

This is list of the production, collections, and credit & debit adjustments for every provider in your office.  In Dentrix, this is called the Analysis Summary; in Eaglesoft, this is part of the End of Month reports; in Open Dental, this is called Production and Income reports.

  • Aging report/Accounts Receivable Report

Use this report to keep an eye on balances that are over 30 days past due.  Is there a reason that the patient hasn’t paid, such as an in-office financial agreement?  Have they not paid for so long that it’s time to send their account to collections?  Have they actually paid, but your office manager (who is in charge of making the collections calls AND collecting payments*) pocketed the money and is pretending like nothing has been received from the patient?

*Tip: Separate these two job responsibilities when possible to prevent embezzlement.  If the same person is responsible for both tasks, then they could pocket the money, not enter the payment, and never call the patient to collect the fake balance.

  • Adjustments report

Scan this report for any unapproved courtesies and write-offs.

*I use Dentrix in my practice, so if I make an error with where to find certain information on Eaglesoft or Open Dental, please let me know so I can correct it!

4. Keep track of your practice numbers in a spreadsheet

I like to have all my data in one place so that it is easy to compare our performance from month to month, and year to year.  It’s not practical to calculate or look up your key performance indicators (KPI) every time you want to know, and it’s hard to compare from month to month when you look at different reports.  Your KPIs help you realize where you’re not meeting industry standards, where your practice can improve, and allow you to set tangible goals.