Improve your dental and medical billing.

Improve your dental and medical billing.

Has your production income dropped? It’s probably time to look into your practice’s billing department and have a chat with your accountantant to run some numbers.

Dental and medical office owners should review their financial statements with their accountants to compare production income of  previous months along with previous year of such months and look out for any decline in income. If in fact there is a decline in income then it’s time to have a meeting with the billing staff. Make sure claims are not being denied or rejected.

Some reasons why claims are denied or rejected:

  • Incorrect information on claims and improper coding.
  • Information on claim does not match patient’s info.
  • Claims are not being appealed accordingly to Explanation of Benefits
  • Providing services without the proper authorization will cause the claim to be rejected.

Three basic steps to improve the billing department:

Doctor – Staff Meeting. Schedule a meeting with the officer manager, receptionists and billing staff to review patient files and claims, and discuss ways to improve billing and reduce errors. Everything starts from the front (receptionists) when they take down information, to office manager and billing.

Incentives. Offer performance incentives/bonuses to key employees that are responsible for generating income for your office. Take care of your employees and they’ll take care of you.

Invest in practice management software. Find the best Electronic Health Records (EHR) system for your practice based on actual and desired needs. The EHR software should  adapt to the billing system you use which can provide comprehensive functions including:

    1. Patient demographics
    2. Charge entry
    3. Coding
    4. Electronic/paper claims submission
    5. Payment entry for all payers
    6. Account reconciliation
    7. Claims question assistance for patients
    8. Patient collection

This is only basic information regarding billing departments for dental/medical offices. I am not a specialist in billing and coding but I do the accounting for the dental/medical industries, and can provide insight from the accountant’s prospective.

 

If you need assistance with your office finances or taxes feel free in contacting us at Business Solution Center | Eeliffee@bsctexas.net | 956-466-4503 in Brownsville Texas.

The importance of an income statement.

The importance of an income statement.

The income statement (Profit & Loss report) is a financial report that tells management, self-employed or shareholders how the business is performing in terms of revenue and where the money is being spent. The income statement is important to have on a monthly, quarterly or yearly basis in order to make important decision. Not only will this report help the business owner be organized but in tax season there won’t be a need to hassle over all your receipts and invoices since you already have that one report that can answer the questions to your company’s tax return. If you’re self-employed that would be Form 1040 Schedule C, if you’re in a partnership then its Form 1065 or if you’re a corporation then Form 1120 or 1120s.

There are three sections to the Income Statement or P&L report:

SECTION 1: REVENUE

A) Sales. This shows how much the business has sold of its products/services .

B) Cost of Goods Sold. This includes all the costs that are directly related in the process of generating revenue:

  • Cost of merchandise
  • Freight & delivery
  • Additional fees in acquiring product for resell.

C) Gross profit. The differences between sales and “COGS”. The gross profit should be a positive number, unless you are selling your product/service for less than its costs.

           Example: Sales – COGS = Gross Profit.

Special Note: Learning to manage your inventory is important. Check out our previous article on controlling inventories costs.

 

SECTION 2: EXPENSES

Administrative and operating. This will include most expenses that keeps your business running, EXCEPT for loan repayments, owner draw and “other” payments that are reported in another report called the “Balance Sheet”.

Free QuickBooks Template. Download this template for a list of most common business expenses and a guide to creating your own income statement.

 

SECTION 3: NET INCOME

The difference between Gross Profit and Expenses.

Net income represents the profit generated during a specific time period that the business has operated. If net income is negative, this means that the expenses of the business are more than the generated sales. Again, if the business owner or manger is not looking at the income statement, he/she will have no idea that they are losing money despite their “great” sales.

 

If you need assistance with your business finances or taxes feel free in contacting us at Business Solution Center | Eeliffee@bsctexas.net | 956-466-4503 in Brownsville Texas.

Are you managing your employees efficiently?

Are you managing your employees efficiently?

Is having employees leaving a dent on your profits? It is time to look into your accounting to evaluate performance.

There are two popular business expenses that greatly affect revenue; payroll and inventory. Keeping adequate control of both expenses will keep your profits in good shape.

The following are steps to consider when managing your employees:

Corporate Organizational Chart. Small businesses should take for example these types of structures even if your business is not a large corporation with a tall flashy building. These charts work well with any small business with employees in order to better structure job duties, responsibilities and identify unnecessary positions.

 

This structuring is done to help establish policies, rules and ways of working. It also helps in reaching business objectives by maximizing workflow. Without this chart, employees will basically be all over the place and consequently will cause the whole workforce to be slow, causing an unnecessary economic leak.  Organizational structure improves efficiency by providing clarity to employee regarding their duties, responsibilities and reporting to the right superior.

Think Outsource. Depending on the type of business you have, sometimes it will be more cost effective to hire an independent company to deliver a specialized service at an affordable rate as an alternative to having an employee with a full salary. For example, you can outsource your accounting to a local firm and meet with your accountant monthly or quarterly to discuss your finances. If you’re a healthcare practitioner you can outsource your billing to local or online companies specializing in billing and coding. Before taking such action be sure that this won’t negatively affect your quality of service or product for your clients or business objectives.

Minimize Overtime Costs. By having an organizational structure in place along with a time and schedule system, businesses could save a lot of money by avoiding paying overtime. According to the Fair Labor Standard Act (FLSA ) the overtime pay rate for eligible employees is one and one-half (1.5) times their regular working hour rate of pay. A time and schedule system is an effective way organizing employees.

There are more methods available to improve employee efficiency however, I am not a specialist in human resources but I do recommend hiring a consulting HR firm that can help structure your company to improve efficiency and save money.

If you need assistance with your business finances or taxes feel free in contacting us at Business Solution Center | Eeliffee@bsctexas.net | 956-466-4503 in Brownsville Texas.

Post by Eeliffee Garcia

5 things to consider before doing your own accounting.

5 things to consider before doing your own accounting.

Using an accounting software does not replace the accountant.

Small businesses owners, especially those that have just started their business think that software is all they need to manage their financials correctly.  Why even bother hiring an accountant or bookkeeper when you can save money, right?

Then one day you receive a letter from the IRS requesting for your balance sheet information such as asset depreciation, owner’s draw, or perhaps they want to inquire about a tax deduction you took as “political contributions”. Yep, have fun with that.

Things to consider before doing your own accounting:

1. Expenses. Not everything is a business expense. Your loan repayments for auto, business mortgage or credit card payments are not business expenses and should not be registered the same way you would register inventory or office supplies. Loan repayments, along with personal expenses are recorded on the balance sheet.

2. Balance sheet. What in the world is a balance sheet? This is the place where you register everything your business OWNS and everything your business OWES  (bills, loans, taxes, etc), plus personal expenses and personal withdraws you make from your business account. This information is used to complete a business tax return, and or by bankers when you need a loan.

3. Sales Tax. Paying sales taxes is not an expense because you are basically “collecting” sales taxes from the consumer (your customers or clients) and turning it over to the government. Sales tax is NOT a tax on your sales!

4. Tax Planning. Your accounting software will not give you tax advise based on your current financial circumstances. What if you’re a sole proprietor and you need to convert to an S-Corporation in order to save taxes? Or perhaps you need to pay someone and you need to decide between a w-2 employee versus an independent contractor.  Having the input of an accountant is never a bad idea.

5. Owner’s equity. Is the money you put IN and the money you take OUT of your business. Keeping track of both things will help calculate your “net worth”. It’s important to keep track of these figures for banking and tax purposes.

So, are you ready to take on your own accounting? Consider hiring an accountant that is willing to train you to use your accounting software and you can do most of your accounting. For the tricky and most technical transactions you can have your accountant step in plus review the rest of your work. This is an affordable way of keeping your accounting records secure. Check out our previous 5 tips on hiring an accounting professional.

 

If you need assistance with your business finances or taxes feel free in contacting us at Business Solution Center | Eeliffee@bsctexas.net | 956-466-4503 in Brownsville Texas.

Investing is not only for the rich

Investing is not only for the rich

Post by Eeliffee Garcia

Many people think of the term “Investment” as a financial activity for the rich, some imagine Wall Street films. But the reality is that investing can be done without millions of dollars in your bank. Can you save $100 a month?

Why consider investing?

1.     Future goals. Most people have goals, for example buying a house, children’s education or even save up to invest in a business venture.

2.      Passive income. This is money that you receive through an investment in a business or financial account such as; rent, dividends from a business or stock, interest income from a retirement/life insurance account or better; go global and sell an e-book or an online course. These activities don’t necessary require you to be active in. And if done properly with the right amount of investment; in your retirement you’ll just sit back, sip a nice cold drink with a beautiful beach front in the Yucatan, Mexico.

3.     Retirement stability. In 10-15 years from now we are not certain about the stability of the federal government. Every year more and more retirees are starting to notice less in Social Security benefits. Will you have enough money to live decently during retirement?

How to start?

1.     Review your budget. First set up a budget if you haven’t’ done so. Review your cash inflows and outflows and see where you can improve to save money.

2.     Talk to an expert. An expert in finance is a professional dedicated to advising clients on how to manage or invest their money for their future well-being. And if you’re a business owner then talk to your accountant about the possibilities of investing.

3.     Banks and independent firms. Most major banks have investment advisors that can help. It may be easier to manage all your finances under one roof. However, there are independent investment firms that work with national companies dedicated to retirement, life insurance and investments. I personally like independent firms because I enjoy the personalized customer service and I stick to the same professional for the longest of time.

DISCLAIMER: I am not a registered financial adviser/broker with any investment company, but, as a business and tax advisor part of my work involves helping my clients invest for the sole purpose of saving taxes and maximizing their after-tax wealth.

 

If you need assistance with your business finances or taxes feel free in contacting us at Business Solution Center | Eeliffee@bsctexas.net | 956-466-4503 in Brownsville Texas.

Controlling inventory costs leads to healthy profits.

Controlling inventory costs leads to healthy profits.

Post by Eeliffee Garcia

Are your business profits low? It is time to look into your accounting to evaluate performance.

There are two major business expenses that can dent your profits; inventory and payroll. Keeping adequate control of both expenses will keep your profits in good shape.

For a small business such as a retail shop or restaurant; their inventory includes all items that you purchase for resale. That includes all the shipping costs along with any other costs associated with the whole process of getting the items to your shelf or restaurant kitchen.

For example, in the restaurant business it is NOT easy to have adequate control over inventory without the use of technology. It is important for a restaurant to have some sort of inventory management/POS system that can count for every item of food before it is cooked, count plate portions and number of plates being made along with the selling price for each plate. This will generate reports that will allow the business owner and the accountant to make important business decisions. Without the use of technology or by not having a professional look at your numbers the restaurant could be losing money on wasted food and/or other inventory.

A good accountant or bookkeeper will help you analyze your transactions by creating financial statements and interpreting these statements to you which in turn will help you make vital decision for your company. There are formulas that are used to evaluate inventory and sales performance such as the Inventory Turnover Ratio or margin on sales. These analysis will help you better price your product/service, help you buy the best quantity of inventory, and help you reduce inventory costs. A business owner or manager must not forget that not only are inventory costs are important but that administrative and operation costs should also be considered when evaluating your business. You don’t want to have high inventory costs and high administrative/operating expenses. Speak with your accountant to discuss your inventory to see if there are any improvements to be made.

My advice for your small business is the following:

  1. Use technology to keep track of inventory.
  2. Count every item
  3. Don’t over or under stock
  4. Research different suppliers and negotiate price
  5. Train your employees well.
  6. TALK TO YOUR ACCOUNTANT

 

If you need assistance with your business finances or taxes feel free in contacting us at Business Solution Center | Eeliffee@bsctexas.net | 956-466-4503 in Brownsville Texas.