Best Accounting Practices for Assisted Living Facilities
Regardless of the size of your assisted living facility, proper accounting can make or break your business. Gaining control of your assisted living facility’s finances should be a top priority so that you can reduce waste and promote growth.
There are many factors to consider, such as budget, data analysis, and accurate reporting–just to name a few. It can become overwhelming quickly, and before you know it, more time is spent on accounting than focusing on the core mission of your business. The good news is that if you follow these best practices, you’ll set up your assisted living facility for success.
1. Strengthen Internal Controls
Establishing and maintaining strong internal controls will protect both your assisted living facility and your residents from fraud and theft. There are several procedures you can put into place to safeguard your finances.
- Separate duties and responsibilities among your accounting department staff. For example, the person entering data should not be the same person making withdrawals.
- Use a single accounting platform that tracks user activity.
- Aggregate data into one location so discrepancies are easier to find.
- Attract and retain top talent in your accounting department.
- Standardize processes and document them. Keep templates and contracts, and have an effective filing system in place.
2. Keep a Chart of Accounts
A chart of accounts (COA) is an organizational tool that categorizes financial transactions that your senior living facility conducts during each accounting period. It also provides a clear overview of your assisted living facility’s financial health.
In a chart of accounts, there are five main categories:
- Assets – accounts receivable and cash on hand
- Liabilities – debts that your business owes to others
- Equity – the amount left after deducting liabilities from assets
- Revenue – the amount of income your business earns
- Expenses – the money spent to generate revenue
Establishing and maintaining a chart of accounts will help with the management of financial transactions and preparation of statements, and will give a clearer picture of money going in and out of your assisted living facility’s accounts.
3. Create a Budget
Budgeting is a key function for any business of any size, and it’s certainly important for assisted living facilities. One of the first steps in setting up your budget each year is to determine these three numbers:
- Projected expenses – How much do you expect to spend over the next year?
- Projected income – How much money will your assisted living facility make?
- Unforeseen expenses – How much should you keep set aside in case of emergencies?
4. Close Your Books on Time
Schedule time to routinely reconcile your books. Make sure you do it in advance so that it’s not an overwhelming last-minute task at the end of every month. Here are a few tips to make sure your monthly closing process goes as smoothly as possible:
- Choose a date each month to review and close your books–and stick to it!
- Always record daily transactions instead of letting them pile up.
- Create a monthly checklist with tasks assigned to dates as needed.
- Create a checklist for the end of the month of all closing tasks.
- Conduct an audit–check for duplications and discrepancies.
- Look for any inconsistencies between the current month and the previous month.
- Analyze how tasks are accomplished and improve efficiency wherever possible.
- Use technology and automation to your advantage.
5. Bring in an Outsourced Accounting Firm
Accounting is a vital function of your assisted living facility’s business, so you don’t want it to fall by the wayside because you don’t have enough staff or the proper experience and expertise to do it well.
By allowing an outsourced accounting firm to handle your company’s finances, you can be confident that qualified professionals will take care of your accounting needs so that you can focus on other priorities.
There are many benefits to outsourcing your accounting:
- Intangible cost savings – You will save money by not having to hire and train new employees.
- Not worrying about replacing employees – Losing an employee on your accounting staff, especially for smaller assisted living facilities, can make a big impact. Finding a quality replacement takes time and money. You can avoid this by outsourcing!
- Save space and supplies – Having back office activities in-house means creating space and providing needed equipment. You’ll reduce this need significantly by outsourcing your accounting.
- Allows skilled professionals to do what they do best. Accounting firms know accounting, so allowing experienced experts to handle your finances is a wise investment.
At BASS Accounting, we understand that accounting is challenging for assisted living facilities, but it’s what we do best. Instead of worrying about hiring full-time accountants, you can trust us to handle your business’s finances. Count us as an extension of your team!
We’ll provide easy-to-understand reports that you can access anytime, from anywhere. You’ll always remain in the loop on financial matters, but you can leave the details and burdensome tasks to us. Contact BASS today for a free consultation!