Common Pharmacy Accounting Mistakes and How to Fix Them
While some accounting mistakes independent pharmacies make can seem fairly minor, others can have a big impact on financial statements. Pharmacy accounting issues can be time consuming and costly to fix. In this video, Megan Perry, CPA, and Kathy Blanchard of Sykes & Company, P.A. discuss some of the most common pharmacy accounting mistakes and how you can fix them. Hear about:
- Some of the most common pharmacy accounting mistakes;
- How financing can impact pharmacy accounting; and
- Ways Sykes & Company, P.A. can help independent pharmacies avoid accounting mistakes.
If you prefer to read this content, the video transcript is below.
What are the most common accounting mistakes that pharmacies make?
I think one of the most common mistakes we see is when the tax return is being completed at year-end. The accountant has made additional year-end adjustments. We just need to make sure those year-end adjustments end up back in the pharmacy so that the bookkeeper can record those adjustments in her books, so that the new year starts off with the correct beginning balances.
Right, and another mistake that we see is when a pharmacist doesn’t properly review their wholesale orders before hitting the submit button. Reviewing these orders for accuracy and ensuring that you actually need the inventory can save you a lot of time later, because if you don’t review them then you can end up ordering inventory you don’t really need and later you have to go through the process of either returning that inventory or you lose the money because it ends up expiring on your shelf.
We also run into opportunities for the pharmacy to participate in 340B contracts. These can be great opportunities for the pharmacy. But you need to make sure that the contract is written to benefit your pharmacy. Sometimes you can get out of those contracts with a 30 day or 60 day clause for termination. But it’s easier upfront to have a partner look over that contract on your behalf to make sure that you are getting some benefit out of it before you sign.
How can financing affect pharmacy accounting?
Bad financing arrangements can have a negative impact on pharmacy accounting. Some arrangements have very high interest rates, others have a large balloon payment at the end of the term where you may not necessarily have the money to pay that. It’s a good idea to be proactive in looking at refinancing options to better term out the debt so that you can pay it back.
We can also look over these agreements prior to signing them, to help you determine if this is the best option for you and your store, and what kind of cash flow you can afford.
In addition to reviewing financing, how else can Sykes & Company help pharmacists avoid mistakes?
With the vast number of independent retail pharmacies that we assist on a daily basis, we’ve seen a little bit of everything. We have great partners in the industry that help us, help our pharmacies, be successful, maintain their wealth, and to grow in this industry.