Bookkeeping is a critical yet often overlooked aspect of running a successful practice. Proper financial management ensures your practice stays profitable, compliant, and prepared for growth.
This guide provides practical tips and best practices for bookkeeping in medical and wellness offices, helping you maintain accurate records, track revenue, and manage expenses effectively.
Step 1: Understand the Basics of Medical Office Bookkeeping
Bookkeeping involves recording and organizing all financial transactions. In a doctor’s office, this typically includes:
- Patient payments and billing
- Insurance reimbursements
- Staff payroll and benefits (note: this can also include commissions reporting for wellness businesses)
- Office expenses (rent, utilities, supplies)
- Taxes and compliance-related expenses
Accurate bookkeeping provides insights into cash flow, profitability, and areas for financial improvement.
Step 2: Choose the Right Bookkeeping Method
Doctor’s offices typically choose between cash basis and accrual basis accounting:
- Cash basis: Records income when received and expenses when paid. Simple, suitable for small practices.
- Accrual basis: Records income and expenses when earned or incurred. Provides a more accurate financial picture, especially for insurance reimbursements, but also increases your accounting overhead.
Step 3: Track All Expenses and Income
Keep meticulous records of every financial transaction:
- Patient payments and co-pays
- Insurance reimbursements
- Office supplies and equipment
- Rent, utilities, and overhead
- Payroll, taxes, and benefits
Using accounting software or practice management software with integrated billing can streamline this process. Make sure you are electronically capturing and cataloging receipts for all your expenses in case of an audit.
Make Sure To Keep Your Business and Personal Finances Separate
Maintaining separate bank accounts for your practice is essential. Mixing personal and business finances can create confusion, complicate taxes, and increase audit risk.
Tips:
- Open a dedicated checking account for the office.
- Use a separate credit card for business expenses.
- Ensure all income and expenses flow through these accounts.
Step 4: Reconcile Accounts Regularly
Reconciling bank statements, credit card statements, and accounting records ensures accuracy. Regular reconciliation helps identify errors, discrepancies, or fraudulent activity early.
Daily: Check that your processed payments line up with your clinic Superbills
Weekly:
- Review any outstanding patient claims
- Audit failing cards on recurring memberships and subscriptions
- Run a quick review of your inventory usage
[Bi-]Monthly:
- Analyze your financial metrics
- Run payroll and commission reporting
Read our article about How to Run a Financially Healthy Healthcare Practice here!
Step 5: Monitor Key Financial Metrics
As part of your monthly analysis, understanding your practice’s financial health requires tracking metrics such as:
- Accounts receivable: Unpaid patient or insurance balances
- Revenue per patient: Average revenue generated by each patient visit
- Profit margins: Net income relative to revenue
- Expense ratios: Percentage of revenue spent on payroll, supplies, or overhead
Regularly reviewing these metrics helps identify trends, optimize operations, and make informed business decisions.
Step 7: Consider Hiring a Professional
If bookkeeping becomes overwhelming (and often it is!), hiring an accountant or bookkeeper experienced in healthcare practices can save time and prevent costly mistakes. They can also help with:
- Tax planning and filing
- Payroll management
- Compliance with healthcare regulations
- Financial reporting for decision-making
Step 8: Leverage Technology
Using the right technology can simplify bookkeeping for a doctor’s office. Tools should help you:
- Track patient billing and payments
- Automate insurance claim submissions
- Manage payroll and recurring expenses
- Generate reports and dashboards for financial insights
OptiMantra offers an all-in-one platform for healthcare practices, combining practice management, cash and membership payments and insurance billing, time-tracking and more features. By automating invoicing, payments, and financial reporting, OptiMantra helps doctor’s offices reduce errors, save time, and maintain compliance—all while improving cash flow visibility.
Try OptiMantra for free here.
FAQs About Bookkeeping for Doctor’s Offices
1. How often should I reconcile my accounts?
Regular reconciliation is recommended to ensure accuracy and detect any discrepancies early. See step 4 for what to check and how often. Also, visit our article here on how to run a financially healthy healthcare practice.
2. Should my doctor’s office use cash or accrual accounting?
Small practices may prefer a cash basis for simplicity, while larger offices or those with insurance claims may benefit from accrual accounting for a more accurate financial picture.
3. Can I manage bookkeeping without professional help?
Yes, but using accounting software or practice management software is essential for accuracy and efficiency.
4. What are common bookkeeping mistakes to avoid?
- Mixing personal and business finances
- Failing to reconcile accounts regularly
- Not tracking expenses thoroughly
- Ignoring key financial metrics
5. How can technology simplify bookkeeping?
Automated platforms like OptiMantra handle billing, invoicing, and reporting, reducing manual work, preventing errors, and providing real-time financial insights.
