Today’s Veterinary Business provides information and resources designed to help veterinarians and office management improve the financial performance of their practices, allowing them to increase the level of patient care and client service.
Issue link: https://todaysveterinarybusiness.epubxp.com/i/856474
10 Today's Veterinary Business Business through crime. The one thing these practices shared: the false belief that "it could never happen here." As a small business, veterinary practices may not be able to totally prevent theft, but they can take aggressive steps to deter employee deceit. The secret is to not become too trusting. The typical embezzler seems an unlikely candidate: a long-time employee who appears to be loyal and trustworthy. Practice owners should always exert healthy skepticism, espe- cially toward those they trust most. Establishing and adhering to strong internal controls is not costly, diffi- cult or time consuming. Fritz Wood owns a Kansas City, Missouri, consulting practice serving veterinarians and animal health companies. He serves on the Today's Veterinary Business editorial advisory board. Cures for the Common Fraud 1 THE CASH DRAWER RAID This is the most serious and urgent risk because cash is quickly and easily stolen. No one person, however much trusted, should han- dle all phases of a transaction. For example, entering the transaction, collecting the money, recording the daily receipts, making the daily bank deposit and reconciling the bank statements should never be one person's responsibility. The cure: • The cash drawer must start and end the day or shift with the same amount (say $50 or $100). The morning reception- ist should count the drawer before the first client transac- tion. The evening receptionist should close the drawer with the same amount. Cash over- ages or shortages must be reported immediately. • A practice owner, not a man- ager, should review the end- of-day report and ensure it agrees with the daily deposit. • Every transaction must gener- ate a receipt, including those for employees and in-hospital use. Consider terminating any employee who fails to do so. • Conduct random checks. Randomly add or subtract an odd-dollar amount to or from the cash drawer. That amount should show up as an over- age or shortage. • A practice owner, not a manager, should make the daily deposits. • A practice owner, not a manager, should compare deposits on the monthly bank statement with the daily deposit slips. 2 THE VOID, CREDIT, RE- FUND, DISCOUNT, AD- JUSTMENT OR WRITE-OFF SCAM The client pays and receives a receipt. Later, the thief creates an exception — void, credit, refund, discount, adjustment or write-off — and pockets the equivalent in cash from the drawer. Everything balances at the end of the day. The cure: • An owner should review the end-of-day report every single day, looking for unex- plained exceptions. • Password-protect these func- tions so only practice owners can initiate exceptions. 3 YOUR PHARMACY IS MY PHARMACY Does every item purchased make it onto the shelf, or is a "trusted" employee a big seller on eBay? The cure: • Use the inventory module of your practice management software system. • Periodically conduct surprise counts of high-dollar items to ensure the quantity on hand agrees with the quantity per the computer. • Consider installing video cameras. • Over time, monitor your drug and supply expense as a percentage of gross income. Increases should be investi- gated and explained. 4 PURCHASING SHENANIGANS Are games being played with your checking account? The cure: • Only practice owners are authorized to sign checks. • Sign checks only when adequate proof exists for the disbursement. • Don't pay for what you don't receive. A trusted employee should ensure you're invoiced for only those items actually received. • Never pay an unknown vendor. • Have bank statements mailed to an owner's home address. • Review the signature line of each cancelled check. If your bank no longer encloses hard copies of cancelled checks, consider hiring a bookkeeper to prepare your monthly bank reconciliation. • Never, ever, allow the person who prepares checks for the owner's signature to balance the checkbook. More Cures • Require employee vacations and be extremely wary of anyone who refuses to take time off, including your partners and practice man- ager. Many frauds can't be perpetuated when the criminal is absent. • Consider a thorough background check on all current employees and future applicants. Those struggling financially are far more likely to embezzle. Confirm the legitimacy of a payment before a check is written. Business VACCINATE AGAINST FRAUD