Monday, December 31, 2018

EMBEZZLEMENT

DON'T LET IT HAPPEN IN YOUR OFFICE

Did you know that more than 15% of dental practices experience embezzlement during the owner's career, with an average loss of $100,000? Beyond the financial losses, these practitioners also suffer the gut-wrenching anguish of betrayal by a trusted, often long-term member of the practice team. They cannot understand what would have led an employee who had been like family to commit such a crime.

Prevention is the key to keeping this criminal act from devastating your practice. Talk with your accountant or practice management consultant about preventive measures to make theft of money impossible. Either of these advisers should be familiar with the ways embezzlement can occur, such as taking cash as it comes across the front desk, posting payments incorrectly, writing bogus accounts payable or patient refund checks, colluding with supply vendors, etc. They will help you implement the safeguards needed to protect your practice.

Several years ago, while consulting with dental offices in two different cities, I found two methods of embezzlement. In the first office, a patient had come to the office to pay the balance of her account in cash. The account was flagged "Paid" while the cash was pocketed. At the time, the dentist did not check that day's production and collection printout against the daily bank deposit, so the money was not missed until the patient happened to come into the office again to ask why she had received another statement when her bill had been paid in full. I overheard the conversation, and with further checking found the problem. What a sad day for the doctor and other team members.

The second case involved paying bills for the practice. Twice monthly, a trusted staff member wrote checks to cover accounts payable for the practice. She would bring the dentist a stack of checks to sign with billing statements or copies of statements attached. The dentist, trusting all was in order, would sign the checks as quickly as possible, without checking payees or amounts paid. Once he began reviewing each check to see if it matched the attached statement, two things stood out. Some of the checks were made payable to fictitious suppliers whose company names he did not recognize and some checks in the second set written that month were identical to checks included with the first set written earlier in the month. The embezzler had simply deposited the checks into accounts she'd opened in fictitious names.

So please implement safeguards against embezzlement if not already in place. Don't let this ugly crime affect your practice.

Be sure to check out our Free Resources for Your Practice for additional insights, information, and practice management tips.

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