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Keeping Tabs on the Bottom Line

Posted By Christine Shupe, Saturday, February 10, 2018
 

Financial loss in a practice can be attributed to a number of causes and it is not uncommon for 5-10 % or more of total revenue to be lost. Losses take many forms: discounts, missed charges, employee theft and more and they all impact the bottom line. VHMA’s January Insiders Insight survey examined how practices are responding to financial losses and the factors that are considered to identify the cause and extent of the loss.

 

Most practices perform some type of audit to control financial losses. The majority (62%) conduct either regularly scheduled audits and spot checks (43%) or regularly scheduled audits only (19%)  An additional 34% noted that they perform spot checks only. The remaining 4% said that they did not know how financial loss is monitored.

 

Managers can employ a wide array of audit procedures to scrutinize practice finances and respondents were given a list and asked to select all that they use. The most commonly used procedure is the reconciliation of bank and credit card accounts, and close to 90% rely on this simple yet important task.

 

The following were also selected:

88%    Conduct inventory counts

86%    Compare items received to packing lists

86%    Count front door cash and compare to PIMS

83%    reconcile all inventory order paperwork

78%   Count petty cash drawers and compare to what should be there

 

Respondents were least likely to view camera footage (22%).

 

Most have written policies to cover financial loss (67%), but 27% do not.  Those who do not have formal written policies are more likely to rely on spot checks to find financial loss (52%).

 

Financial loss is part of the reality of doing business but ensuring that appropriate systems are in place to prevent loss and regularly reviewing them for effectiveness can help to alleviate the impact of loss on the practice.

 

 

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