Bank Deposits Don’t Tell the Whole Story
A dentist told me recently that her CPA only wanted to see what went into the bank—that the practice management reports didn’t matter. I was stunned. Bank deposits are a small piece of the financial puzzle, reflecting only the 15% of data that flows through accounts payable software. Ignoring the other 85%—accounts receivable and practice software reports—leaves a gaping hole in oversight and creates a prime environment for embezzlement.
It reminded me of a personal story. My parents loved jigsaw puzzles, and whoever was nearby would get drawn into the search for missing pieces. The rule in our house was that if you found a piece that fit, you tapped it three times so everyone knew you’d scored a win. My mom, though, had a funny habit: she always wanted to place the final piece. She’d slip it into her pocket to make sure she got that satisfaction. Sometimes it went through the laundry, and we’d end up with puzzles missing the last piece. After she passed away, I found a pile of stray pieces tucked into the pocket of her recliner.
Without those pieces, the puzzle was incomplete. Maybe the missing piece was insignificant, or maybe it revealed a crucial part of the picture—but you’d never know until it was in place. That’s exactly what happens when practices rely only on what is deposited in the bank and ignore practice management data. Without all the pieces, you’re left with an incomplete—and often misleading—picture of your practice’s financial health.
Insurance Reimbursements Make Dentistry Unique
Unlike other businesses, dental practices operate under the weight of declining insurance reimbursements. Insurers often fail to cover even the hard costs of providing care, leaving dentists to absorb the shortfall. When credit card fees are tacked on top of that, the financial strain grows.
This is why relying only on the bank deposit data is so misleading. A reimbursement might look like income on paper, but if insurance covered only a fraction of the cost, the deposit hides the true financial picture. Without reviewing production, adjustments, and collections, dentists can’t see how much of their work is actually profitable—and how much is being done at a loss.
The Embezzlement Risk
If there’s one lesson I’ve learned in decades of fraud examinations, it’s this: embezzlement thrives in the shadows of poor oversight. I’ve investigated cases where hundreds of thousands of dollars vanished before anyone noticed—all because no one was reviewing any reports, practice management or accounts payable.
When CPAs dismiss practice management reports as “unnecessary,” they inadvertently open the door wider for theft. The staff member who handles collections or adjustments knows whether someone is watching. If no one is reconciling those reports to bank deposits, it’s like leaving the back door of your practice unlocked.
Every dentist I’ve worked with who faced embezzlement wished they’d taken a couple of hours a month to put basic safeguards in place.
The Path to Oversight
The solution is simple, though it requires discipline. At a minimum, dentists should:
-
Review monthly collection reports from the practice management software.
-
Compare those collections against bank deposits.
- Understand the potential differences may NOT mean your practice is being embezzled.
-
Involve the CPA in reviewing both sides of the financial picture—not just what flows through the bank.
These steps take a couple of hours each month, yet they can prevent devastating losses.
Closing Thought
Oversight is like finishing a puzzle. Every piece matters. Bank deposits are just one corner of the picture, but without the rest—your practice management reports—you can’t see the full image. The cost of ignoring those missing pieces could be your profitability, your peace of mind, or even your livelihood.
Don’t leave your financial puzzle unfinished. Gather all the pieces, tap them into place, and ensure the picture you’re looking at truly reflects reality.