In a busy medical practice, paying a bill can feel like one of the simplest administrative tasks. The more important question comes first: How does the practice know it is paying the right amount for something it approved and received?
Internal controls connect the purchase request, approval, order, delivery and invoice. A thoughtful process gives physicians and practice leaders appropriate visibility without requiring them to manage every transaction personally.
Start before the invoice arrives
Accounts payable controls should begin before a purchase is made. Define who may request an item, who may approve it and who has authority to place the order.
For routine purchases, a standardized request form can create a consistent record. For unusual or higher-cost purchases, the practice may require additional documentation or a different level of approval.
Core Principle
Authorization should happen before spending, and payment should follow verification.
Connect approval, receipt and payment
A reliable process should answer three basic questions:
- Was the purchase approved?
- Did the practice receive the goods or services?
- Does the invoice agree with the approved purchase and what was received?
Order confirmations and packing slips help create that record. When the practice receives a shipment, the contents can be checked against the order before the expense proceeds through accounts payable.
Document exceptions while they are current
Substitutions, partial shipments, backorders, returns and damaged items can complicate payment. Documenting those exceptions promptly gives the person processing the invoice better information and makes vendor follow-up easier.
A short note attached to the applicable order, packing slip or invoice can be more useful than trying to reconstruct the situation later.
Give owners appropriate financial visibility
Appropriate system access and review procedures can help practice owners understand financial activity without disrupting the normal workflow. Access should fit each person’s role, and the practice should coordinate its processes with its accountants and other advisors.
Track expenses consistently
Consistent expense coding supports clearer financial reporting. It can be particularly important when practice expenses interact with physician compensation arrangements or when leadership is evaluating changes in overhead.
The practice should work with its accounting professionals to determine how expenses should be classified and reported. What matters operationally is that the same types of transactions are handled consistently and supported by appropriate documentation.
Keep controls practical
The goal is not to bury the practice in approvals and paperwork. It is to establish enough structure that leaders can answer reasonable questions about spending without reconstructing each purchase after the fact.
A practical accounts payable process documents:
- Who requested the purchase
- Who authorized it
- What was ordered
- What was received
- What was invoiced
- How the expense was recorded
Build stronger financial information
Good controls support more than accurate bill payment. They also produce cleaner information for financial reviews, performance discussions and planning. Kassouf Healthcare Solutions works with medical practices on the business infrastructure behind patient care, including accounting support, bill paying, practice assessment and ongoing advisory services.
If a practice has grown faster than its administrative processes, reviewing purchasing and accounts payable together can be a useful place to begin.
Take a closer look at your financial processes
As a medical practice grows, the processes behind purchasing, accounts payable and financial reporting may need to grow with it. Headquartered in Birmingham, Alabama and serving clients nationwide, Kassouf Healthcare Solutions works with physician practices to evaluate the business side of their operations and provide ongoing accounting and practice management services.
If your current processes are becoming difficult to manage or provide limited financial visibility, our team can help assess what may need to change. Contact us to get started.