Dental practice accounting isn’t unlike other types of accounting in that it’s susceptible to fraud. Add money into any equation and people will find opportunities for dishonest behavior. Whether it’s skimming cash payments, falsifying insurance claims, or manipulating financial records, dental clinics are vulnerable on the inside and out. In this article, we’re highlighting some of the greatest risks to be aware of as a dental business owner along with must-know tips for fraud prevention in dental practice accounting.
Common Fraud Schemes In Dental Practices
As mentioned above, dental practices are in no way immune to fraud. Accounting-related schemes inflict small and large clinics alike; it isn’t necessarily a matter of how much money is at risk, but rather how your accounting processes are set up.
Some of the most common schemes we see in dental practices involve financial manipulation at various touchpoints. Front desk staff might pocket copays before they’re recorded in the system. Insurance coordinators could submit claims for procedures that weren’t performed. Office managers might create ghost employees on payroll or inflate supply orders for kickbacks from vendors.
The opportunities for fraud are unfortunately as diverse as they are creative. But it’s the simple schemes that often cause the most damage over time.
These can include basic theft like:
- Skimming cash from the daily deposit
- “Borrowing” petty cash without documentation
- Altering patient payment records
- Voiding legitimate transactions
- Adding personal expenses to supply orders
- Double-billing insurance companies
- Falsifying employee time records
If and When Fraud Happens
Fraud affects a surprisingly large number of dental practices each year, and to a significant degree. Even more concerning is that fraud typically continues for as much as 14 months before detection. By then, recovering stolen funds is often impossible, leaving practice owners to deal with both financial and emotional aftermath. Small practices are particularly vulnerable since they tend to have fewer controls and rely heavily on trusted employees.
Best Practices for Fraud Prevention In Dental Practice Accounting
The impact extends beyond just monetary losses. Fraud can damage staff morale, patient trust, and practice reputation. It can trigger costly legal proceedings and regulatory investigations. In severe cases, it might even force practice closure.
In other words, you have more than one reason to protect your practice. Luckily, we have more than one tip for fraud prevention in dental practice accounting to share:
Segregate Duties
No single employee should control multiple aspects of financial transactions from start to finish. For example, the person who collects payments shouldn’t be the same person who reconciles daily totals or makes bank deposits. Similarly, separate the duties of ordering supplies, receiving deliveries, and processing vendor payments. This creates a system of checks and balances that makes fraudulent activity much more difficult to conceal.
Audit and Reconcile Regularly
Consistent monitoring is just as important as consistent brushing. Audits and reconciliations help keep books clean and can uncover unusual patterns or discrepancies before they lead to costly crises.
Make a habit out of financial hygiene by implementing daily reconciliation of patient payments against appointment schedules and treatment records. Conduct monthly reviews of bank statements, credit card statements, and payroll records, and consider quarterly internal audits of financial records, including insurance payment reconciliation, petty cash counts, inventory levels versus purchase orders, employee time records, and adjustment and refund logs.
Practice Management Software Controls
As a twenty-first century business owner, you’re lucky enough to live in a time where computers can do most of the heavy lifting when it comes to preventing fraud. Your practice management software is one of the most powerful tools at your disposal. Modern practice management software comes with built-in security features that can help prevent fraud.
Take advantage of these by:
- Setting unique login credentials for each user
- Implementing role-based access controls
- Enabling audit trail tracking for all transactions
- Requiring supervisor approval for voids/adjustments
- Using electronic time clock systems
- Activating automatic logout features
- Regularly reviewing system activity logs
Remember to update these controls whenever staff changes occur and periodically review access permissions to ensure they remain appropriate for each role.
Employee Training and Policy Development
Clear policies and proper training are your first line of defense against fraud. Document procedures for handling payments, processing insurance claims, managing inventory, and other financial tasks. Make sure all staff members understand these procedures and the consequences of violating them.
Professionals Guarantee Fraud Prevention In Dental Practice Accounting
The team at Dental Tax specializes in dental practice accounting and fraud prevention. We work with practices in the Burlington area to implement robust financial controls, conduct regular audits, and provide ongoing monitoring of accounting processes. Use expertise to identify potential vulnerabilities before they can be exploited and ensure your practice maintains the highest standards of financial security – partner with us today.
Adam has an MBA from the Richard Ivey School of Business in London and also holds a Chartered Investment Manager designation.
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