Healthcare business owners tend to wear a number of different hats to keep their businesses going. Many have to learn to juggle patient satisfaction, employee performance, and overall clinic success. And while most PT providers focus heavily on the clinical side of things (i.e., providing top-notch patient care), they can’t continue helping patients if they don’t keep their finances in order. With that in mind, here are seven tips to help you overcome one of the biggest struggles you may face as a physical therapy business owner: handling the accounting for your business.
Here are our top seven accounting tips to keep your PT business running smoothly:
1. Go paperless.
One of the areas where PT business owners struggle is keeping track of receipts and copies of bills paid—as if maintaining and securing patient records weren’t enough to manage. Instead of trying to keep file folders of receipts in a filing cabinet that takes up too much space, you can download a receipt scanner app on your mobile device that will help you quickly scan paper receipts. After all, having a digital copy is vitally important to streamlining your accounting process, whether you’re doing it yourself or outsourcing the work.
Also, if you receive mailed paper copies of any bills, you can contact the vendor and request an electronic bill. E-bills are great, because you can simply download and save your bills each month. For tips on how to organize electronic files—as well as information on the length of time the IRS requires you to keep certain documents—check out this small business bookkeeping guide.
2. Use an accounting software to manage your books.
There are many benefits to using accounting software to manage your books.You can easily create professional-looking invoices to bill customers, pay your bills on time like clockwork, and keep tabs on the overall health of your business by reviewing key reports.
Accounting software will also make tax time a breeze, because instead of driving over to your CPA’s office with your shoebox of receipts, you can give him or her access to your accounting data and receipts. Check out this accounting software guide to find the program that best suits your practice’s needs.
3. Set up recurring billing for repeat customers.
Because most PT facilities have repeat customers who require appointments on a weekly, monthly, or quarterly basis, it makes sense to set up recurring billing in your accounting software. This means the system will automatically create an invoice for the proper amount at the proper interval. You can choose to review all recurring bills before they are sent to your patients or simply allow your accounting software to automatically email them the invoices. This ensures that there is no delay in the invoice going out, and you can even track the status of an invoice, determine whether an invoice has been viewed, and see when a patient has submitted his or her invoice payment online.
4. Consult with a tax professional.
I think it’s worth the investment to hire a tax professional with whom you can consult year-round—not just during tax season. It would be nearly impossible for you to stay on top of all the IRS rules and regulations regarding the tax deductions for which you may be eligible. Professional tax preparers, on the other hand, know the IRS tax regs like the back of their hands. The investment you make in hiring a professional will pay off, because he or she will make sure you take every deduction you qualify for—which could lead to a lower tax bill. This will also allow you to focus more of your attention on other aspects of your physical therapy facility—like ensuring you are always providing the best possible patient experience.
5. Pay bills online.
If you’re like most people, you are probably writing fewer checks these days. I recommend that you eliminate check-writing altogether and pay all of your bills online with your bank or use a 0% business credit card to pay your bills and earn miles at the same time. If you use an accounting software program, you can connect all of your bank, credit card, and debit card accounts to your accounting software so that the transactions automatically download for you! This eliminates a ton of data entry and allows you to review these transactions on a daily—or even weekly—basis instead of waiting until you receive your bank/credit card statement at the end of the month.
6. Update your books monthly.
It is very important for you to update your books throughout the year—preferably on a monthly basis—as opposed to waiting until April 15. Keeping updated books makes it easier to do your taxes. Other benefits of regularly updating your books include:
- Quick, anytime access to key financial information to analyze income and expenses (e.g., profit and loss report).
- Ability to catch fraudulent activity sooner, as you’re reviewing bank/credit card transactions more often. And the sooner you notify your financial institution that something is awry, the sooner it can freeze your account and minimize the negative impact on your credit report.
- Streamlined process for obtaining a bank loan or line of credit if you’re ever strapped for cash, as you can show up to the bank with up-to-date financial statements such as the balance sheet, profit and loss statement, and cash flow statement.
Now that we’ve shared a number of great accounting tips with you, I bet you’re probably wondering, “Where do I start?” I’d recommend starting with the receipt scanner app and working toward going paperless. The right accounting software will make your life easier and save you countless hours working on your books, leaving more time to improve the overall health of your PT business.
Jeff White is an editor at Fit Small Business, specializing in small business finance. As a JD/MBA, he has spent the majority of his career either operating small businesses (in the retail and management consulting spaces) or helping them through M&A transactions. When he is not helping small businesses, he spends his time teaching his five kids how to become entrepreneurs.