Pharmacy owners quickly realise that one of the key areas to success in business are making good decisions based on accurate data. Documented systems and procedures and how well they are implemented by the business are a focus when preparing financial data. If you think about it, most decisions that get made by business owners will have a financial impact so your internal financial systems must be one of the core items that should be reviewed on an ongoing basis.
That is why we asked our Pharmacy Specialist Victoria Le, to share her three top tips for pharmacy bookkeeping. Enjoy!
Bookkeeping Tip #1 – Have good systems and procedures
Implementing strategic systems and procedures will help you achieve the end goal of producing your financial reports. How well your systems and procedures are will translate in the final set of accounts. Planning ahead and implementing strong systems and procedures will pay off in the end and save you the headache, time and any costs to rectify any errors.
Getting started can seem daunting however you know what your end product is going to be, your financial report. So this makes it easy knowing how to tackle this on. A simple way to get started is to consider the following:
1. Breaking down the tasks that are required to achieve your final product.
2. Order the tasks on a timeline when they need to be completed by.
3. Once you have worked out timeline of tasks, consider what system and procedures need to be in place to complete these tasks.
4. Finally, consider who should and can undertake these tasks and how frequently.
This will help you plan out and work towards your deadlines. Once you have set the groundwork for your system and procedures, continue to review this on a periodic basis to see whether any changes are improvements are required.
Examples of Systems and Procedures:
- End of Day Till Reconciliations for cash and eftpos – Have someone each at store level and someone at accounts level reconciling as this task will cross over to pick up any errors.
- Check stock received, enter data into POS system, scanning/uploading invoices and authorizing invoices for payment.
- Reviewing inventory – Take note of any stock in consignment and consider when to undergo stock takes during the year in order to determine inventory levels are correct. We recommend doing this twice a year
- Reconciliation of data to a source document – Your POS system is a great source of data to determine whether your financial reports make sense. Review your POS reports to determine what reports you need to assist with reconciling your data.
- Ensure your POS set up and data input by staff are done correctly – POS reports will only be as accurate as the information you put into it.
- Where you are not in control of a particular task, make sure there are various touchpoints where the tasks can overlap and a contingency plan for people to be back ups on the task. This builds into your system the ability to double-check and ensure that everything is tracking correctly. Allowing one person total control has its positives and negatives. This includes delegation issues and the system stopping if that person is not available.
- Review your financial reports for accuracy – Review your data against POS reports and budget forecast to confirm data makes sense and to keep track of your business goals.
Bookkeeping Tip #2 – Consider and Embrace Technology
Technology has evolved so rapidly especially during the COVID-19 era. Consider what tasks are taking the longest to do every month. I can guarantee you there is another procedure or technology out there that can help! It takes a lot of time to do things manually so there is no need to spend days doing paperwork. If the hours you are putting in can be put to better use, consider outsourcing your tasks to someone else or through technology.
At a minimum, I highly recommend having the following in place if you don’t have this already:
1. Using a cloud-based accounting software to maintain your accounts – Not only is this in a program that you can easily give access to your bookkeepers and/or accountants, you can access your accounts at any given time and have multiple people collaborate on the file at the same time. You won’t be chained to one access on one computer.
2. Save your documents (invoices, statements and reports) on the cloud or a form of electronic storage – Don’t use your pharmacy or home to store physical boxes of papers. You can utilize that space for a better purpose.
Examples of Technology:
- Understand the technology you use to incorporate into your systems and procedures. Make sure you understand the product and how you can make the most of your product. Not only will you get value from the expense of the products, the product features are there to help you capitalize on the time efficiencies and assist with data accuracy.
- Your cloud based accounting software is always evolving to provide efficiencies to save you time. Keep up to date with the latest feature releases. Common items used include:
• Connecting bank feeds – Your bank can flow through bank and credit card transactions into your accounting software saving you time from logging into online banking and downloading bank transactions and entering them in.
• Bank rules – Once your bank feeds are set up, create rules on frequent recurring transactions to ensure transactions are allocated to the correct account with the right tax code. As a guide, 70-80% of your bank feeds transactions for pharmacy can be automated by setting up rules.
• Upload photo receipts – Some accounting softwares allow you to take photos of receipts so you can send it through your phone and straight into your accounting software. If you are always purchasing items on the go and forgetting where you left your receipts, this is perfect for you.
- Schedule POS reports - Your POS systems may have the ability to schedule the reports you want emailed to multiple emails. You are therefore not reliant on a person to download the reports especially if your pharmacy is not trading on a particular day or the person responsible on downloading the reports is not there.
- Remote Logins – There are programs you can use to access your POS data from home. You don’t need to be physically in the pharmacy so it will give you the flexibility to access your data wherever you may be.
While technology has its many advantages, don’t forget to have the right security on your computer, train up your staff on cyber security and always maintain your records and keep backups. It’s one of those things that we all put off but can be a lifesaver in an emergency.
Bookkeeping Tip #3 – Understand your numbers
A simple but critical aspect of creating financial reports is data accuracy. If the data is correct, it will show you trends which can then lead to opportunities and improvements. Always ensure accuracy when entering transactions, even if that means triple checking. If you are confident in your data, you will know how to answer the following questions:
• Per Bookkeeping Tip #1, do your tasks overlap to ensure your data has been reviewed at multiple touchpoints by various people?
• Does the person preparing your accounts understand how to treat transactions?
• Has the correct tax codes been taken up?
• Does the data make sense?
Numbers tell a story, so you need to review and understand what is happening as you need to be confident with the data that is in front of you to make sound business decisions. The consequences if you get it wrong are:
- Making poor decisions on unreliable data.
- Missed opportunities.
- Doubts from third party reviewers. This will make it hard for others to understand how your pharmacy is performing and may raise more questions and concerns.
- Extra time and cost to fix up accounts.
- Penalties from the ATO for not being compliant.
Conclusion
I view financial reports as a complete jigsaw puzzle. Each piece is unique and important in order to create a clear picture. The pieces are the tasks and your systems and procedures for your tasks will help you to complete your jigsaw puzzle with ease and accuracy. Once you have connected your pieces together, you can then see the complete picture to work out your business needs.
Would you like some guidance on your pharmacy’s bookkeeping? Simply book a suitability meeting below.
