How to track your income with a practice management software.
There are so many options for practice management software available to health professionals and clinics. Jane, Practice Better, OutSmart, Clinic Sense, OWL.. even Shopify and Clover are commonly used!
The question I get is, “How can I integrate my practice management and bookkeeping?”
The Downlow on Quickbooks
One of the great things about QuickBooks Online (QBO) is that you can sync your business with their 450+ apps to reduce manual entry.
One great example is Shopify; once correctly set up, every time an order is placed in Shopify, QuickBooks will create an invoice and match the payment to that invoice–all of your sales are recorded automatically in QBO for you! (pretty neat, right!). Manual invoicing, bookkeeping and typos are eliminated; imagine the time saved not having to look for a 0.01 difference… which I’ve had to do with clients before!
Practice Management Software + QBO
Unfortunately, there are currently no integrations or apps for practice management software in QBO. There is limited information on integrating sales for bookkeeping; however, Jane has an article on accounting software and importing sales into QBO. This article is an excellent reference for any practice management software, so check it out!
Reports vs Manual Entry
Tracking each patient visit in QBO is exhausting…and totally unnecessary! Your practice management software stores your sales data, so there is no need to track it twice. This is just one example of how understanding the capabilities of your practice management software is important to help efficiently eliminate duplication of efforts.
You can simply transfer your sales information to QBO with journal entries to complete your bookkeeping properly.
The most common financial information required for bookkeeping includes:
Sales
GST/HST collected
Payment processor fees
Unpaid invoices
In your practice management software, you can access summary reports of these totals for a specific period (usually monthly, but you might do it weekly if that adds value). By adding these reports as journal entries, you’ll be providing QBO with the total cash you received in the month, gross sales, GST/HST collected, payment processor fees and a total of unpaid invoices all in one entry.
And that’s it…you’re done!
What should your journal entries include?
Here is a list of considerations on what to include in journal entries:
Is total sales enough of a breakdown to show how your business earns money?
When working with clinics, I typically break out gross sales by type of service (chiropractic, naturopathy, psychotherapy, etc.) so the business owner can see the financial contribution to sales each month and year. This is great for understanding what services generate the most revenue and where opportunities for increased revenue exist! Take a minute to think about the most important metrics for you and your business - which might not be the same as anyone else!
If you are an individual practitioner, however, I recommend breaking down your income by categories that make sense to your business/decision-making so you learn how you earn revenue. Read more about this in our blog post here.
You also may have smaller items which are not essential for you to track, and that’s okay! I want to ensure you aren’t wasting time or energy tracking unnecessary items. All of the time and effort you spend on your business finances should provide value to your business.
2. Remember that gross sales do not include GST/HST collected.
GST/HST collected does not go on your income statement. It will need to be tracked separately from your gross sales. Reports usually have a “subtotal” column which is your gross sales and what you will track as income (and is all yours to keep!)
3. Do you have multiple payment processor fee reports?
If you use Jane, Stripe, Shopify and a debit machine in the clinic, you will likely have multiple reports to get your total bank fees–don’t forget these!
4. If you use the banking function, assign all incoming funds to “undeposited funds,” and your journal entry will offset this account.
Since you are already recording all the money coming in, assign this to a new “undeposited funds” account. After your monthly journal entry, the leftover balance will be the amount still owed to you by payment processors and insurance for direct billing. You must recognize gross sales on the day you treat your patient, so you will likely have some amounts receivable relating to those treatments each month.
5. Use different categories, items or groups in your practice management software to make tracking more efficient!
I always recommend putting as much detail as possible into the income category section of Jane. The best method is to take point #1 above and implement those categories as your income category. It will be much easier to track as you add new services, new practitioners or need to break out new income groups!
Bookkeeping and taxes are usually an afterthought for most business owners because they don’t see any value added to the business, and the process can be daunting. With these simple steps, you will make your bookkeeping a breeze and have a strong understanding of your business finances.
RESOURCES:
Want to implement this process but not sure where to start? Book a 1-hour consult here to talk about your business needs and see what reports are available to you. But hurry, these spots don’t last long!