Accounting and Billing: What’s the Difference? by Julie Herres of Green Oak Accounting
Is there a difference?
You know that accounting and billing work hand-in-hand to manage the movement of money in your practice. But what you may not know is that the work is separate and typically done by two different companies or individuals.
Billing focuses specifically on accounts receivable. Or in other words, the money coming in; whether it’s private pay or through insurance. A billing specialist can help verify benefits and handle month-end reporting. Practice Solutions oversees the billing systems of a practice including out-of-network billing and dealing with insurance claims. Keep in mind that each practice will have their own needs–there’s no one universal way to handle billing.
Accounting examines the big picture of your financial health. It encompasses all parts of the financial operations of your practice: income, expenses, loans, assets, cash position, taxes, etc.
Accounting pulls all of the pieces together, analyzing the data to make sense of your financial story. This is why maintaining accurate, detailed, and updated records is the hallmark of good accounting practice.
That being said, there is certain information that only billing should manage. All HIPAA protected information should stay safely within the EHR and billing world–and out of accounting software. Also, most therapy practices are cash-basis taxpayers. This means they only pay taxes on funds when they are received. So again, billing handles this and there is no need to duplicate accounts receivable into the accounting software.
Tried and true accounting systems will make it easier to be aware of the cash flow in a practice and to make financial goals for the future. When you have a handle on where the money is going, big decisions about upgrading office space, hiring a new employee, or knowing where to cut costs seem less daunting. When it comes to these long-term strategy choices, the guidance of an accountant is indispensable.
In Graduate school there is no special training on how to run a business. Yet as a practice owner that is exactly what you are undertaking! Most practice owners have a handle on some form of tracking finances or bookkeeping. However, there is so much more to accounting than just income and expenses.
Even if the administration tasks come naturally, as a therapist your time is best spent working at the top of your license. If a practice isn’t profitable, just working harder won’t necessarily change that. Until the right systems are in place, it doesn’t matter how much you’re making or how much time passes–you’ll still be losing money.
If you are interested in working with an accounting firm that has experience in your field of work, start with GreenOak Accounting. This firm specializes in therapy private practices–they’ve helped over 100 practices increase their profit. They already understand the financial patterns of private practice, so with them, you reap the benefits of their focused interest and skill set. Practice Solutions is your resident billing expert. GreenOak Accounting adds value to that by analyzing the current systems and strategizing to increase profits now and in the long run.
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