7 Tips to Better Medical Bookkeeping

Strong bookkeeping is essential for running a profitable, well-managed medical practice. When your bookkeeping is clean and accurate, BAS and tax reporting become easier, cash flow is clearer, and practice owners can make confident decisions based on reliable numbers.

Below are seven practical tips that form the foundation of effective medical practice bookkeeping.

1. Don't Mix Business with Personal

   Clean bookkeeping starts with having bank accounts and cards set up in the name of the business. A well-run medical practice will usually have a clear structure: a revenue account for patient receipts and other practice income, an operating account for day-to-day expenses, and a separate savings or tax account for BAS, super, or future liabilities.

   Spending should be controlled through business-linked cards for key personnel. Even better, many practices now use spend management platforms such as Weel, which allow digital cards to be issued, limited, or switched off instantly as roles change.

   What matters most is consistency. Personal loans or personal expenses running through the practice quickly contaminate the books and make reporting unreliable.
   

2. Reconcile Bank Accounts Daily

   For busy medical practices, daily bank reconciliation is best practice. Smaller practices should still reconcile several times per week.

   Frequent reconciliation keeps cash flow accurate in real time and allows errors or duplicate transactions to be picked up early, rather than becoming a problem at month-end or BAS time.

   It’s also important to periodically confirm that your Xero bank balance matches your actual bank statement. While bank feeds are generally reliable, they can occasionally fall out of sync due to timing issues or incorrect entries.

   Pro Tip: At the end of each month, running the Bank Reconciliation Report in Xero provides an extra layer of protection by highlighting unreconciled items or incorrectly entered transactions.

   
   

3. Use a Chart of Accounts Designed for Medical Practices

   Medical practices are not standard businesses, and your bookkeeping structure should reflect this.

   A medical-specific chart of accounts clearly separates practice income sub-types, clearly identifies service and facility fees, separates payments to registrars and employee doctors from nurse and admin wages, and isolates key cost categories such as medical supplies, rent, software, and professional fees.

   When your chart of accounts is set up properly, your reports become genuinely useful management tools rather than just compliance documents.

   
   

4. Track Doctor Payments and Service Fees Accurately

   Doctor service fee invoices and fee collections are one of the most sensitive and complex areas of medical practice bookkeeping.

   Whether your practice operates with contractor doctors, employed doctors, service entity arrangements, or a mix of all three, consistency is critical. Billings and service fees must be documented and calculated consistently every period and clearly reported.

   Many medical practices use tools like Cubiko Calculate to help calculate doctor service fees accurately and efficiently. Purpose-built tools significantly reduce errors, disputes, and reliance on error prone spreadsheets.

   
   

5. Attach Receipts and Invoices to Every Transaction

   Clean bookkeeping is well-documented bookkeeping. Every transaction in Xero should ideally have a source document attached.

   Using tools such as Dext and Hubdoc make this much easier by allowing receipts and invoices to be captured digitally and fed directly into Xero. This approach speeds up BAS and tax preparation, reduces back-and-forth with your accountant, and creates a strong audit trail for verifying transaction or any future ATO enquires.

   
   

6. Review Reports Monthly

   A monthly review is a critical control in medical practice bookkeeping. This review should include at least the Profit and Loss and the Balance Sheet. Particular attention should be paid to payable accounts such as wages payable, superannuation payable, PAYG withholding, and GST balances. Reviewing these accounts ensures payroll and super obligations are correctly recorded, liabilities aren’t understated, and the practice is genuinely meeting its compliance obligations. This step is often overlooked but is one of the most important for practice owners.

   
   

7. Lock Periods After BAS Is Lodged

   Once your BAS is finalised, the period should be locked in Xero. Locking periods prevents accidental changes to reported figures and protects the integrity of your bookkeeping data. This is especially important when practice managers, admin staff, or external bookkeepers have access to the file.

Why Medical Practice Bookkeeping Matters

Clean medical practice bookkeeping isn’t about perfection, it’s about clarity, control, and confidence. When your bookkeeping is done properly, you trust your reports, understand true profitability, reduce compliance stress, and make better decisions for your practice.

Need help keeping your books clean and under control?

The GrowthMD bookkeeping team specialises in medical practices and understands the complexities of doctor payments, service fees, and healthcare compliance. As a Platinum Xero Partner, GrowthMD has deep expertise in setting up and managing Xero for medical practices, ensuring your bookkeeping is accurate, compliant, and genuinely useful, not just at BAS time, but all year round.

If you’d like support with your medical practice bookkeeping, reach out to the GrowthMD team to see how we can help.

Disclosure: Kelly Chard is a director of Cubiko Holdings Pty Ltd and Cubiko Calculate Pty Ltd. Cubiko Calculate is mentioned in this article as an example of a purpose-built tool used by some medical practices to assist with doctor service fee calculations. The inclusion of this tool does not constitute financial advice or a recommendation that it is suitable for every practice.