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Practice Finances and Quickbooks

Customers will often ask me, “Why can’t I just use Quickbooks for tracking patient balances?” Well, the answer to that question highlights the key distinction any practice should understand between Quickbooks and a Practice Management Solution (EHR): Quickbooks is an application that will give you the tools to better understand your practice at a Macro Level, and an EHR will provide you with tools to better understand your practice at a Micro Level.

What is a Macro Level of understanding of your practice?

This is a level of information that does not go into specifics about client balances. Instead, it focuses on Revenue & Expenses that hit your practice’s bank account. So, Quickbooks will enable you to better understand your Profit & Losses, what your liabilities are (credit cards), and a general understanding of what your margin is as a company at large. Quickbooks will help your practice make key decisions about what revenue sources yield the highest margins, what expenses need to be potentially decreased, and what trends need to be tracked over time.

What is a Micro Level of understanding of your practice?

Specific, or micro-level, “client-based” data sources (such as copays, coinsurance, or deductibles), should be entered into an EHR, where you can track patient balances, and better understand collection ratios. Once patient payments are entered into an EHR, the amount of the aggregate collections should, then, be entered in Quickbooks. That “deposit” amount should always match the amount listed by the bank in your monthly bank statement, which further allows for the most accurate practices in bookkeeping by reconciling your bank statement with the amount listed in Quickbooks – each and every month.

With Quickbooks, a practice can take all the credit card transactions for the day (sum them up) and all the checks/cash received in a day (sum them up), and will make a couple “entries” into Quickbooks as deposits into “revenue” accounts. However, not every check that was received in a given day should be entered into Quickbooks, as it’s not designed to be able to receive and track such complex billing categories.

Understanding both the macro and micro levels of your practice finances will help you stay on top of your bookkeeping, making changes to areas of your practice as necessary. However, it is important to keep in mind that they are distinctly separate processes that require distinctly separate tools.