If your dental practice is operational, you are a potential victim of embezzlement. As a dental accountant, let me say that your best defense is to anticipate and safeguard against. You may be saying to yourself, “How can that happen in my practice? I know my team, they would never do that!”. Unfortunately, there are a dizzying number of ways embezzlement can occur. Since becoming a dental CPA, I have seen it all. Front office staff taking checks or cash from patients, assistants or hygienists taking cash payments chair-side, a business manager or CPA diverting funds, you name it! Three out of every five dentists will be a victim at one time or another. Scary isn’t it? The purpose of this blog is not to scare you (well, maybe a little) but to inform you of some best practices to protect yourself:
USE your passwords: So many of us go through our day to day seeing our passwords as more of a hindrance than a necessary security feature. Honestly, how many of us use “password1”, “1234”, our phone number, practice name, or some other mindless variation to protect valuable information from would-be criminals? The answer is too many of us. As the dentist, you are the CEO, CFO, and CIO of your practice. You and only you should have administrator rights and accessibility for all of your in-house computer terminals. Don’t write your password down anywhere that is easily accessed by everyone or anywhere that can be easily accessed (top desk drawer, a sticky note, a note or ever-note on your desktop or smartphone, etc.). Create unique passwords that no one would know or could possibly guess. Don’t use children or family member names, family pets, special dates like a birthday or anniversary, or anything that carries a possibility of being guessed by someone who knows you well. Often times, embezzlement can occur between family or close friends, so it is important to just anticipate the worst and provide solutions for the best possible outcomes.
Internal controls provide the greatest security: Checks and balances are an important concept here. I recommend a monthly closing with your business manager. Having this meeting monthly does two things:
- It allows you to nip any fraudulent activity in the bud quickly before any serious damage can occur.
- It promotes a culture of accountability if your staff is aware that each month, their activities are going to be scrutinized.
Furthermore, have the doctor, and only the doctor, open bank statements, and credit card statements. Lock away the checkbook and require the checks to have your (the dentist’s) signature, not an authorized signer. Have your accounting firm reconcile your accounts monthly. Schedule time to review deposit slips as soon as the depositor returns from the bank. Ideally, have the deposits split amongst two or three people. If you’re using our Profit First methodology to manage your cash-flow, this will be even easier as you will already have your business accounts spread over multiple banks.
Limit to win it: Delegate and segregate office duties. Create a master “to-do” list for your office staff. Then, delegate those tasks to a specific person. Clearly identify with each person what their specific job functions are. Then, hold them accountable for each specific piece of the puzzle they control. This allows everyone to be on the look-out for shading processing, mistakes, and can and will catch fraudulent behavior almost immediately.
When all else fails, read the manual: How many times in life could we all use a step-by-step guide to tell us what to do? I know I could sure use one from time to time. Draft an employee code of conduct and have the staff sign it. Clearly, state and outline what is expected, what is tolerated, and what is not tolerated in the workplace. You are the boss, so be the boss. Also, set up a financial checklist or manual for each employee that clearly outlines the tasks and procedures for handling practice funds. Ensure your staff understand the accounting and practice management software and always have some time available to answer questions or provide continued training to ensure your staff is always ahead of the curve.
Are you ready for less stress, less tax, and more profit? You can retire a millionaire! Chat with a Profit Advisor on our homepage today to learn how Engage Advisors is helping dentists all over the country do just that!