Dear Dangerously in Love with Your Finances,
I am the owner of a Seattle alternative medicine practice. I employ myself (a naturopathic doctor), one medical assistant, and one patient coordinator. Not only do we provide medical services, we also sell supplements. The inventory of supplements has been an issue; usually, patients leave with 3-4 bottles of supplements. We can’t seem to get a handle on what is in stock, so we tend to over-order certain inventory items. Do you have any suggestions to help us with our healthcare inventory management system?
~ Too Much Inventory for a Naturopathic Doctor
Dear Too Much Inventory for a Naturopathic Doctor,
It sounds like your alternative medicine practice needs an alternative to the current inventory methods! Creating a new system may seem daunting, but you’ve already put in the hard work it takes to establish a thriving practice – now it’s time to ensure that stock issues don’t hold you back.
Unfortunately, I can’t pinpoint the problem without reviewing your inventory’s accounting flow. However, I can share with you the most common challenges that most medical providers face regarding bookkeeping their inventory supplements:
- Not using the inventory function within the accounting software: With the amount of inventory you sell, your health care accounting software should track your inventory. I do not recommend keeping track of inventory using a spreadsheet because this tracking method takes a significant amount of time.
- Not having an inventory process: Recording, maintaining, and monitoring inventory must be part of your accounting process. The inventory process should include reviewing inventory levels per item, which could detect what supplement is moving off the shelves and how quickly it is being sold.
- Not recording ordered inventory: It is essential to record all received supplements into your accounting system. The packing slip should match what was received, and the quality and cost should be entered into the accounting system to reflect the most up-to-date inventory. Recording of ordered inventory should be a fundamental step in your inventory process, not only to help you track needs for future purchases, but to check that you are getting what you already paid for.
- Not doing a physical inventory count: It is best practice to perform a physical inventory count either quarterly, bi-annually, or annually. I recommend quarterly until the inventory process becomes seamless. The physical inventory numbers should match what is in your accounting software. If it does not, an adjustment needs to be made to your accounting software to match the physical count. We are all human, and sometimes mistakes can be made, especially when trying out a new way of doing things. Inventory counts give you opportunities to find errors now rather than, say, if you were to offer a supplement to a patient and realize you are out of stock.
Bookkeeping for inventory within a medical practice is not a complex task, as long as an inventory process is developed and implemented. Having the right healthcare accounting software can play a major role in this, allowing you to easily keep up with the inventory numbers and not be weighed down by them.
Finding the accounting tech solution that clicks with your team and specific business model is key, especially since inventory has already been challenging. There are many types of software out there. If you need help discovering and implementing new accounting technologies, please contact me so I can understand more about your particular situation.
– Lozelle Mathai
Your Accounting Technology Specialist
This article is designed to provide information only and should not be considered legal or tax advice. Because of the complexity of the law and the variables in your own personal tax and accounting situation, you can’t rely on our advice specifically related to your unique circumstances. In order to get the best tax savings and legal advice available to you, you should consult with your own accountant, attorney or advisor regarding your particular facts and circumstances. Healthy Bodies of Finance is an accounting firm that specializes in working with health and wellness providers. We provide monthly accounting & bookkeeping services and financial education. For more information on our specialized services for health and wellness providers please contact us at [email protected]