Modern Bookkeeping: Part 1
It’s 4:30 PM on Wednesday it’s time to spend your weekly 15 minutes on completing all the bookkeeping for the practice. The checks have already been signed and sent even though the signer is on a boat in the Atlantic. Invoices are entered into your system despite never opening the relevant envelopes. You are reviewing your cash forecast for the rest of the month. You’ve paid your vendors at the last possible second on purpose. Wait!!! Does this accounts payable process sound too good to be true?Let me guess your Accounts Payable process:
- Invoice is received by snail mail and added to a giant pile of paper on your desk
- You open the invoice and confirm the charges
- The invoice details are entered into bookkeeping software (extra points if you scan the invoice and attach it to the bill)
- The invoice is placed in a folder for all the outstanding bills sorted by due date
- Periodically you look at that folder to see which ones need to be paid in the next week or month
- When a bill is unpaid, you find the stack of blank printable checks and feed it into your printer
- In your bookkeeping software, you see the bill, print the check, and enter the check number
- The check is paper clipped to the invoice
- A pile of checks is added to a collection of work on the Physician/Owners desk
- When the signer can get around to it, they sign all the checks and ask questions about the invoices they don’t recognize
- The checks and invoices are returned to you
- You take each check, remove the bottom stub, and staple it to the invoice before filing it away in some convoluted storage system
- The check is placed in an envelope, sealed, stamped, and ready to be sent
Countless obstacles are implicit in this system, such as:
- The Check Signer was out of town and therefore couldn’t sign the checks
- Storage and management of these invoices wastes space and time
- Embezzlement is too easy and there isn’t an audit trail
If this process is similar or the same as yours, you’re not alone. When I was an Office Manager this was my process as well. As a Consultant, every practice except one has had a process very similar to this. The good news is that with a few changes you can adopt a modern bookkeeping platform that takes all of this off your shoulders.There are programs that help with this subject that have so many features that it would be impossible to cover them completely and if I did, they would probably have more features by the time I finished. Even if you didn’t find a program that you liked, you could train a Virtual Assistant to do these mundane and robotic tasks on your behalf (I did). Let’s skip to the finish line and outline a bill payment process after you use one of the platforms as mentioned above:
- Invoice is sent to a specific email address or fax number that coincides with your practice
- That invoice is automatically entered into your system (vendor, invoice number, due date, amount, account, memo, etc….)
- You review and approve the details
- While waiting for their coffee to finish brewing or while they’re in a Taxi on their way to the airport, the Check Signer loads an app on their cell phone, and just swipes left to approve the bill. If they want to investigate, they just click on the invoice to see the invoice, past bills from that vendor, vendor notes, when it was received, ect….
- The approved bill will then be paid at just the write time by sending a check or ePayment on your behalf
Each party involved, the Bookkeeper and the Physician, have spent a completely negligible amount of time doing a process that is superior in every fashion. There are detailed audit trails and complex bill payment arrangements to ensure embezzlement is nearly impossible. The system integrates directly with your bookkeeping software so that you aren’t entering bills or marking them as paid anymore. The system allows the Bookkeeper and Check Signer to operate anywhere in the world as long as they have a connection to the internet.What’s the cost? Again, negligible. From a sample size of 42 clients that have adopted one of these platforms, we found that all clients saved a huge amount of time and benefited immensely from the added features. Most of these platforms charge a monthly fee per user, a fee per bill, and another fee for automatically populating the invoices. Here is are some common client comparisons for the proposed Accounts Payable process:
- The cost is approximately 19% of the original. Our clients had an associated cost that was between 15% and 23% their original.
- Time associated was about 6% the original. Our clients had an associated cost that was between 5% and 9% their original.
In conclusion, taking a step toward modernizing your bookkeeping will save you and your practice time and money. The benefits you gain from these accounts payable programs are endless, but most notably, they allow you to manage your accounts payable from anywhere in the world, and they render your filing cabinets of receipts, check stubs, and invoices obsolete. If you think you have an excuse as to why an accounts payable program like this won’t work for you – please check them out anyway. One practice tried to stump us by stating that their process required three Physicians to sign a check, they received invoices from twelve offices, and they used a ‘class’ system that categorized the bills in complicated ways; the accounts payable platform didn’t even break a sweat in such a convoluted process.