SPOILER ALERT: This is a sensitive subject. If you are a team member reading this article, we realize you have as much reason to want to prevent embezzlement in your practice as the Doctor/owner. Even one bad egg could ruin it for everyone! No dental practice is immune to embezzlement. Mindy Salzman, a certified fraud examiner with nearly three decades of accounting experience, explains that most dentists assume "It could never happen to me," and yet 3 out of 5 dental practices are hit with embezzlement! Unfortunately, many practices don’t notice the problem until it’s too late! The Dentist is wondering why he can’t pay his bills. Some declare bankruptcy long before discovering that a team member had been skimming money from the practice. What causes a team member to steal from their employer? Are people just inherently greedy or bad? Can you really trust anyone with your practice? The truth is there are many great team members in the dental profession, but, as Mindy explains to Gems family members … you can never be too vigilant.
Embezzlement can happen to anyone, and anyone can embezzle. You are entitled to the profits your practice produces. You’ve invested and worked long and hard to afford that lifestyle about which your team member may be jealous.
Watch for any combination of even just a few of these 16 red flags.
• AN INCREASE IN ACCOUNTS RECEIVABLE: This is where cash payments become a large issue. Cash is already notoriously hard to track. There’s no digital copy, and the only real “paper trail” is the physical cash being handed off. Team members can take advantage of this by recording the cash payment as occurring, charging an expense account, and keeping the money for themselves. An increase in the money you are owed could be a sign that a team member is keeping the money for themselves. • INCREASE IN PATIENT ADJUSTMENTS OR WRITE-OFFS: Let’s say a patient pays $1,000 for treatment. A team member embezzling from your practice can put $800 in the practice’s bank account and pocket the extra $200 by marking the patient as having paid for the treatment in your practice’s tracking system. Now, the patient has a zero balance, and you’re none the wiser. Why? Because according to your books, you were paid for that $1,000 treatment even if your bank account only shows an added $800. Why compare when the amount you’re owed equates to zero? And it’s not easy to track hundreds of dollars. Monitoring the number of adjustments or write-offs that are made each week or month can give you insight into whether this might be happening. I was the victim of embezzlement by a long-term team member who used this method to steal money from my practice. I took action to prevent this from happening again by recording my estimate of the cost of treatment I performed on each patient immediately after meeting with the patient. That evening, I would compare my numbers with the recorded totals in the end-of-day report. The action took seconds, and I caught any inconsistencies immediately.
"MORE = Motive, Opportunity, and Rationalization equals Embezzlement."
SEARCHING FOR MORE
Mindy describes embezzlement with the acronym, MORE: Motive, Opportunity, and Rationalization equals Embezzlement. Any employee can find motive and opportunity to embezzle from your practice, especially if you give it to them on a silver platter. If a team member has motive to steal money (they are severely in credit card debt), and they are given opportunities to skim money off your books (they are the only employee who handles cash transactions), then they can easily rationalize stealing from your practice. Giving your employees more responsibility and managerial positions gives them more exposure to your profits … and the totals stolen from you will jump, too! Heck, you roll into work every day in your brand-new Lexus and take your family on tropical vacations every winter. Employees figure you can afford to lose a few dollars and cents.
• INCREASE IN REFUNDS: Refunds are part of the business world, but, when these start becoming more prevalent, you have a
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