How to Reconcile Your New Optometry Practice Bank Account Every Month
Learn step-by-step how to reconcile your optometry practice bank account monthly, with practical tips, common pitfalls, and a FAQ.
Reconciling your optometry practice bank account every month is a non-negotiable financial habit. It ensures your records match the bank’s, catches errors or fraud early, and gives you a clear picture of your cash flow. For a new practice, this is especially critical because you’re building financial stability. Here’s exactly how to do it, step by step.
Why Monthly Reconciliation Matters
Reconciliation is the process of comparing your internal records (from your accounting software) with your bank statement to ensure they match. For an optometry practice, this matters because you have multiple revenue streams: eye exams, glasses, contact lenses, and sometimes medical services. Each has different billing cycles and payment methods (insurance, credit cards, cash). Without monthly reconciliation, you might miss discrepancies like a missed insurance payment or an unauthorized charge. It also helps you spot trends, like seasonal dips in revenue, and keeps your books accurate for tax time.
Step-by-Step Reconciliation Process
1. Gather Your Documents
Start by collecting your bank statement for the month (or download it from your bank’s portal) and your accounting records from software like QuickBooks, Xero, or even a well-maintained spreadsheet. Also have your receipt book, credit card processor statements (e.g., Square, Stripe), and any loan or line of credit statements.
2. Compare Beginning Balances
Check that the beginning balance on your bank statement matches the beginning balance in your accounting software. If they don’t match, you may have missed a prior month’s reconciliation or made an error. Fix this before proceeding.
3. Match Transactions Line by Line
Go through each transaction on your bank statement and find the corresponding entry in your accounting software. Mark them as matched. For each transaction, verify the date, amount, and payee. Pay special attention to:
- Deposits: Ensure all patient payments, insurance reimbursements, and other income are recorded.
- Checks: Verify that all checks you wrote have cleared and match the amounts.
- Debit card and ACH payments: Confirm these match your recorded expenses.
4. Identify Discrepancies
For any transaction that doesn’t match, investigate. Common issues include:
- Timing differences: A check you wrote may not have cleared yet, or a deposit may be pending. These are not errors, just timing.
- Bank fees: You may have monthly maintenance fees or transaction fees that you didn’t record.
- Errors: A transposed number or a duplicate entry.
- Fraud: An unauthorized charge. If you find one, contact your bank immediately.
5. Adjust Your Records
Make necessary adjustments in your accounting software. For bank fees, add them as expenses. For timing differences, note them as outstanding checks or deposits in transit. For errors, correct the entries. Always keep a paper trail of adjustments.
6. Confirm Ending Balance
After adjustments, your accounting software’s ending balance should match the bank statement’s ending balance. If it does, you’re reconciled. If not, go back and recheck your work.
Tools to Simplify Reconciliation
You don’t have to do this manually. Many accounting software options offer bank feeds that automatically import transactions and match them. Here’s a comparison of popular tools for a new optometry practice:
| Tool | Price Range (per month) | Key Features |
|---|---|---|
| QuickBooks Online | $30-$100 | Bank feeds, reconciliation tool, invoicing, expense tracking |
| Xero | $13-$65 | Bank feeds, reconciliation, invoicing, inventory for contacts |
| Wave (free) | $0 | Basic accounting, bank feeds, but limited support |
| FreshBooks | $17-$55 | Invoicing, expense tracking, but bank reconciliation is less robust |
| Bench (bookkeeping service) | $249-$399 | They do the reconciliation for you, plus monthly financials |
For most new practices, QuickBooks Online or Xero are solid choices. If you want to outsource, Bench is an option but costs more.
Common Pitfalls to Avoid
- Skipping months: Reconcile every month without fail. Skipping leads to a backlog that’s overwhelming.
- Ignoring small discrepancies: A $2 difference might seem trivial, but it could indicate a larger issue.
- Not separating personal and business accounts: This is a huge mistake. Always use a dedicated business account.
- Forgetting to record cash transactions: Cash from walk-in sales can be easy to miss. Record every sale, no matter how small.
- Not reviewing credit card processor statements: These often have fees that don’t hit your bank account directly but affect your net revenue.
When to Reconcile: Best Practices
Set a specific day each month, like the 1st or the 5th, to reconcile. Block out 30-60 minutes. If you’re using accounting software with bank feeds, the process can be faster. Also, consider reconciling more frequently, like weekly, if you have high transaction volume. This catches issues early and reduces month-end stress.
FAQ
How long does reconciliation take for a new practice?
For a new practice with modest volume (say 100-200 transactions per month), expect 30-60 minutes if you’re using software with bank feeds. Manual reconciliation can take longer, up to 2-3 hours.
What if my bank statement and books don’t match after reconciliation?
First, double-check your work. Look for missed transactions, transposed numbers, or unrecorded fees. If you still can’t find the difference, consider asking a bookkeeper for help. It’s worth the cost to ensure accuracy.
Should I reconcile if I have a bookkeeper?
Yes, even with a bookkeeper, you should review the reconciliation report monthly. It’s your responsibility to understand your practice’s finances. A bookkeeper can prepare it, but you should verify.
Can I use a spreadsheet instead of accounting software?
You can, but it’s riskier. Spreadsheets are prone to errors and don’t have bank feeds. For a growing practice, invest in proper accounting software. It will save you time and headaches.
The Bottom Line
Reconciling your bank account monthly is a simple but powerful habit. It keeps your finances accurate, catches problems early, and gives you confidence in your practice’s health. Start this month: set a date, gather your documents, and follow the steps. Use accounting software to streamline the process. Your future self will thank you.