Embezzlement in the practice is something that most dentists prefer not to think about. Your team members often feel like an extension of your own family and it can seem like a betrayal to consider that they could be capable of stealing from you. However, over the course of their career, it’s estimated that between 20%-60% of dentists will be affected by fraud.
Best Card, the endorsed credit card processor of the Wisconsin Dental Association and the ADA Member Advantage Program, works with thousands of dental offices and, unfortunately, every year we uncover embezzlement in some of our member dentists’ practices. We know that dentists are busy and may not have the time or experience to know where to start in preventing embezzlement in the practice. With that in mind, we’ve compiled some tips that every dentist can implement TODAY to minimize the risk of becoming a victim of embezzlement.
The nature of fraud changes constantly, but the steps that you can take to minimize your risk also accomplish two very important things: you get to verify financial details in areas of the practice that can be high risk, AND show staff that those high-risk areas are being monitored to minimize the perception of opportunities to commit fraud. To accomplish these goals, let’s review some steps to implement in your office.
What should I have done YESTERDAY?
Utilize the security functions of your practice management software.
Dental software can be very helpful in running your business and making sure that finances line up correctly, however, the number of offices that do not use their software capabilities to protect themselves from fraud is staggering. When looking at your dental software, you should always have two different settings in place. First, you, as the owner, should be the only person with highest-level user permissions. Second, you should use those permissions to set up audit logs for all data entries and changes made to records in the software. Audit logs (or audit reports) are a record of activities performed by the users, so it makes it MUCH easier to track if fraud is occurring.
- Example: If you had a person in your practice who was pocketing cash payments made by patients and then deleting balances due so that the patients weren’t double charged, turning on an audit report would show receivables being adjusted or written off without being paid!
What should I do EVERY DAY in my practice?
Check every day to see if there were any returns run to patients in cash, check, or credit card, and scrutinize those returns to make sure they are legitimate.
The vast majority of payment activity in your practice will be patients paying you for providing dental services, while you should rarely be paying your patients via refunds. Since returns can be fraudulently exploited, this is a great area to review on a daily basis.
- As a rule of thumb, returns owed to the patient should always be made with the same payment method as the original payment. For example, a credit card payment should be returned to the same card as the original transaction. Any returns that don’t fit this rule should be well documented.
- Verify that all returns correspond to off-setting sales and are consistent with expected balancing for the practice.
- The average dental office nationwide runs 0.5% of transactions as returns – so on average you should have 1 return for every 200 sales. If you have significantly more returns than this, it may be worth checking on your billing practices and the legitimacy of those returns.
What can you do on a WEEKLY basis?
Weekly audits should include a high-level review to make sure that the practice finance numbers are consistent. While it’s true that any inconsistencies could be a sign of fraud, it’s a great reason to talk to your front office or finance staff and get a better understanding of the normal procedures and systems in place in the office. Remember, the perception that you understand the practice operations well enough to prevent fraud is, in itself, a huge deterrent to embezzlement!
- Pick at least 1 day of the week and make sure that your payments received (cash, credit card, check) balance to your daysheet, and that all bank deposits match your daily credit card settlement reports and accounts receivables. Be sure to follow up on any inconsistencies.
- Review any vendor invoices to ensure payments match and supplies/services ordered are not excessive.
Summary
While micro-managing every aspect of your practice might not be practical, getting into the habit of taking just a few minutes a day to keep an eye on things could save you from potentially serious losses down the road.
Best Card is the endorsed credit card processor of ADA Member Advantage and the Wisconsin Dental Association and saves the average dental practice $4,221 (28%) per year on their credit card processing fees while also offering outstanding customer service and streamlined solutions that can auto-post payments to a variety of dental software. If you’re interested in what they can do for your practice, call us at (877) 739-3952 or email them at [email protected].
