Fundamentals of Pharmacy Accounting
Fundamental accounting is a key component to financial success in independent pharmacies and provides a clearer picture for you to understand how your pharmacy is performing. In this video, Megan Perry, CPA, and Kathy Blanchard of Sykes & Company, P.A. share how fundamental accounting supports successful and proactive pharmacy operations. They discuss:
• Why it is critical for a pharmacy to “have their books in order.”
• Steps that support a strong financial position.
• How to make sure that pharmacy accounting and bookkeeping stays on track.
• How Sykes & Company, P.A. can help independent pharmacies with this.
Our accounting and advisory team can help you create a strong accounting foundation in your independent pharmacy. Learn about how our pharmacy advisory services support you in serving your community.
If you prefer to read this content, the video transcript is below.
What does it mean for a pharmacy to, “have their books in order” and why is it so critical?
We want to make sure that the information that the pharmacist or the owner of the business is using to run the business is as accurate as possible, and that means having daily, timely accurate information so that we can manage the receivables, make sure their third party adjudication information is up to date. And as far as accounts payable, we want to make sure that what you ordered, you’ve actually received. So we want to look at that balance sheet from top to bottom and make sure that everything on that balance sheet is as accurate as can be on a monthly basis. As far as inventory goes, you want to make sure that you’re getting your downloads daily from your wholesalers so that that information for inventory is accurate as it can be. We want to make sure that staff are running cycle counts so that anytime you have excess inventory on the shelves, you’re getting it out of the store and you’re monitoring those out-of-date or the expiration dates on stock so that you get them returned timely.
Right and by tracking these areas daily and knowing your current financial position is easier to make real time decisions like investing in new equipment or hiring a new employee or investing in a growth opportunity.
So what other steps will support a strong financial position?
There are a number of areas the pharmacy can address to improve their financial position. The balance sheet acts as a roadmap for what’s going on in the pharmacy and what the pharmacy can do. It links directly to the P&L or profit and loss statements.
And once the books are in order, the owner can address debt management. The pharmacist needs to ensure that debt is being paid back timely, and this helps improve other lending opportunities, as well as managing interest expense that the business is incurring.
So what steps should be taken to make sure that all bookkeeping and accounting is on track, but that the pharmacist can also serve patients?
So you can have a qualified clerk or technician looking over the script of audit logs dispensing summaries at the end of each day. You want to make sure that you’re getting the best value from the adjudicated claim. And that can take just a few minutes each day. Putting that process in place to make sure that you’re getting paid the optimum amount of money for each script you’ve done that day.
The pharmacy owner can also outsource bill payment and payroll management processing. That way the pharmacy owner is handling the approvals and the monitoring of these processes rather than the time consuming paperwork involved in them.
So how can you and your team at Sykes & Company, P.A. help with this process?
We assist by keeping the information up-to-date, on-time and accurate on a daily basis. This allows the pharmacist to not only have good information, but it allows him to spend his time loving his patients, taking care of them and growing his business; not necessarily dealing with the day to day operations of the cash management functions.
So that’s right Kathy, our team takes away some of that time consuming things that a pharmacy owner might step into without our help we do that for them. Which allows them to have more time to think about what they want to do next in their pharmacy.