By Diane Palombi, OD
We may tell ourselves that we became optometrists to help the public see better; but we have to admit that making a good living doesn’t hurt. It is important to keep track of those dollars coming in and out; otherwise, you might as well be flipping burgers at McDonalds.
A major decision that needs to be made is whether to delegate your financial responsibilities. If you delegate, you need to decide to whom and how much. I feel that you should do as much as you can yourself. If you delegate, pick a spouse or close family member to be responsible for your finances. If you are forced to use an employee, be very careful. You are giving someone a lot of power. You have to trust them 100 percent. Even a normally trustworthy employee can be tempted to embezzle, especially if their financial situation changes or they feel under-appreciated or under-compensated for their work
For the same reason, I always did the banking myself. I would make my own deposits and get the petty cash money. The petty cash money was kept in my office. I would then give petty cash to the employees for expenditures as needed. Only $100 in cash was in the cash drawer at the front desk. This was to deter losing a lot of money by theft, either by the employees or even patients. I also verified the proper amount of cash was there at the end of the business day. In addition, I handled balancing all bank statements.
I believe that budgets are necessary for a business, just as they are for your personal finances. If you know how much you spend each month for rent, utilities, loan repayments and other monthly bills, you know how much is available for frames, contact lenses and other purchases. Periodically review your budget and make any needed adjustments.
You need to review your bills yourself. An employee can compile the rough data for you, but you need to know the final dollar amount. I compiled a list of all my labs and frame and contact lens vendors. Then I wrote down how much I spent with them each month. That also lets you know if your optician is ordering too much inventory. Surplus frames can be easily hidden.
Insurance checks need to be verified by you. I sometimes did the actual individual patient entries, but I usually would also delegate this task.Insurance companies do make mistakes in paying you, and it is usually in their favor. Pick an employee who is detail-orientated to do insurance EOBs. A non-dedicated employee may not want to do the extra work to make sure that you were paid correctly.
I liked to compare the gross and net income of my business by the month and by the year.I kept a journal where I recorded these figures so I had a quick reference. In addition, I kept a separate journal that went into more detail which included what I spent with each vendor and revenue generated by exams, glasses and contact lenses. I calculated my net/gross profit percentages from that information.
Keeping track of your finances is a lot of work. You alone can judge your comfort level with delegating these important tasks to an employee. However, I feel the more that you can do yourself, the better. It is your money and you are the best person to keep track of it.
How much of your practice’s financial management do you delegate? If you delegate, who do you delegate to, and how do you ensure all finances are properly accounted for?
Diane Palombi, OD, now-retired,owned Palombi Vision Center in Wentzville, Mo. To contact her: email@example.com