Not only are accurate records required to show how many patients you are seeing and how much you are owed but they are also required by your accountant. They want them because HMRC want them!
Not only does a failure lead potentially to payment of incorrect tax amounts but it also leads to an increased accountancy fee when the situation requires rectification. This blog is concerned however only with the records you should keep regarding the amounts you invoice:
First item must be – Do you have easy access to your invoices and are they complete? If you have say £20,000 on a sales ledger you should be able to show how the £20k is made up. In other words, produce either in paper form or electronically, copies of the invoices. Too many times, MHM have taken a new client only to be presented with, on one infamous occasion, carrier bags stuffed full of paper which were not in order and did not reconcile back to the sales ledger. The sales ledger itself was actually a copy of the consultant’s own paper diary.
So. The client didn’t KNOW how much he was owed; he just thought he knew. He couldn’t prove the amount he said he was owed anyway. Took me a week to sort it all out!
What didn’t help was the lack of an invoice reference number. Many think this is not that important. Quite the reverse. For example: the consultant had seen Mr. Smith (the patient) and allocated as an invoice reference – Smith/Sept14.
Fine, but not when he saw Mr. Smith for surgery in Sept and allocated the invoice reference Smith/Sept 14 again. Which invoice was outstanding and which had been subject to excess? – I had no idea. I did know the new client had overstated his fees and would therefore be paying too much tax eventually.
To make matters worse, when all the invoice values in his paper diary were added up and cash payments (recorded in his diary) taken away, it appeared he was owed about £8,000 LESS than he thought he was!
This explained why he was of the opinion he didn’t get paid very often, he was right.
Be aware however, this particular blog is concerned ONLY with keeping records relating to your invoicing. There is much more to it relating to keeping other records for additional tax and audit purposes.