Accounting Management

1. How to control the finances in the practice?

A receipt must be issued for all payments received. 

Receipts must be in chronological order.

Payments received and made are administered by cashbooks.

Monitor cash flow on a daily basis.

Stay on top with invoicing, receipting and payments - Debtors and Creditors.

Accelerate income by making use of mobile systems.

Get policies and procedures in place.

Do recons of control accounts - Debtors, Creditors, Cashbooks

2. Types of cashbooks

There are two types of cashbooks, namely:

• Main cashbooks
• Auxiliary cashbooks.

3. Main cashbooks

The main cashbook is used for the reporting of all transactions that go through on a bank account. Each bank account in the practice will have one main cashbook.

Exact duplicate of a bank account. Will always have an opening balance and a closing balance. The previous period of closing balance will be the next periods opening balance.

Examples:

• Bank Accounts (Saving / Cheque)
• Loan accounts (Personal / Home / Vehicles / etc.)
• Petrol and Credit Cards
• Petty Cash

4. Auxiliary cashbooks

An auxiliary cashbook is used to control specific types of money received and paid out in a practice. All transactions that were received from your Creditors and Debtors. The closing balance must always be a Zero at the end of the financial period.

Examples:

• Cash / Cash register receipts
• Credit card receipts
• Debtor receipts (patient and medical aid) / Electronic receipts
• ERA receipts
• Creditors cheques
• Petty Cash

5. Reconciliation

The main cashbook must be reconciled to the specific bank account.

An auxiliary cashbook will normally balance back to zero (daily and monthly) except in the instance where cash was received and not banked on the same day. The same will be with credit card receipts. (Debit and credit documents must match.)

6. Opening of cashbooks

For each bank account, the main cashbook must be opened, together with its auxiliary cashbooks. Practices can open the auxiliary cashbooks that they prefer.

Example:

Some practices open ONE receipt cashbook and ONE cheque cashbook, while others split their receipt cashbooks between the different ways of collecting money from their Debtors.

7. Typical cashbook structures

An example of a typical cashbook structure that is used in GoodX:

KAS1 - Cash register or cash receipts

KAS2 - Credit card receipts

KAS3 - EFT (Electronic fund transfers) from Debtors

KAS4 - ERA receipts (Electronic remittance advise) from Medical Aids

KAS5 - Petty cash

KAS6 -  Cheque cashbook -Payments made by Practise to Creditors, sundry expenses and refund of patients

KAS7 - Main cashbook - (Bank recon Cashbook).

8. The preferred process of cash control in a practice

a) The preferred process is to start off with the main cashbook. 

b) Import the bank statement daily into the main cashbook. (KAS 7)

c) The template for the main cashbook is set up according to the CSV file of the bank. 

d) The imported batch is then split into a "deposit" batch and a "cheque" batch. (open batches)

e) The user imports these two batches into the system by using the correct function (deposits or cheques). The user must choose the default cashbook or ledger (INC or EXP) account before posting debit and credit batches.

f) Examples of possible splits on a deposit batch:

• Cash deposits are allocated to the cash register cashbook (KAS1)
• Credit card deposits are allocated to the credit card cashbook (KAS2)
• Patient EFT receipts and Medical aid EFT receipts to EFT cashbook (KAS3)
• ERA receipts are allocated to ERA receipts (KAS4)
• Interest received and other sundry income the correct (INC) ledgers.
  

g) Examples of possible splits on the cheque batch:

• Creditors cheques are allocated to the cheque cashbook (KAS6)
• Salary cheques are allocated to the salary control account
• PAYE cheques are allocated to the PAYE control account
• Medical fund cheques are allocated to the medical fund control account
• VAT cheques are allocated to the VAT suspense account
• Bank costs are allocated directly to the ledger account.

9. Cash control continues

After the two batches have been posted into the system, the user can go to the receipts cashbook to post receipts to the debtor accounts.

There is a very powerful function where the user can browse into the posted receipts from the cashbook and work through the list to post each individual receipt to the correct debtor. The user double click on a receipt and it will import all the information on the receipt to the screen. The user has to identify the correct debtor from the bank description OR browse into the debtors to choose the correct debtor if only a name is available. The user then links the receipt to the correct invoice(s) of that specific debtor.

This process is exactly the same for the creditor cheques.

Take note that this process results in incorrect amounts that are directly posted from the bank statements. The user only has to ensure that the debtor and creditor accounts are identified correctly.

As the user chooses the receipts and cheques and posts it, it will automatically be reconciled with the matching documents from the main cashbook.

10. Reconciliation of all the cashbooks at the end of the period

At the end of the financial period, all the cashbooks must be reconciled back to the bank statements of each bank account.

The auxiliary cashbooks must be reconciled to zero. (Debit and credit documents must match.)

Any unreconciled items must be verified and can be brought forward to the next financial period.