Your dental clinic could be at risk of embezzlement, let’s try to minimize it

Your dental clinic could be at risk of embezzlement, let’s try to minimize it

According to a recent article published in Profitable Practice, at least 60 percent of dental practice owners will be impacted by embezzlement. That’s a huge number!

Now we here at Shift Accounting are not forensic accountants nor do we claim to be experts in office embezzlement, but we do have a few tips and tricks to pass along for preventative measures.

Unfortunately, the majority of the risk for dental practices comes from your staff. But lucky for you, being proactive and taking easy-to-implement but important preventative measures can help mitigate some of the risk of falling victim to embezzlement.

The payments you accept could put you at risk

Your practice most likely accepts the following payments: debit, credit, cash, and insurance payments via direct deposit and/or checks. If your clinic accepts all of the above, that’s 5 different ways to get paid! And unfortunately, contrary to popular belief, cash is not the only payment type at risk of embezzlement.

To take preventative measures against embezzlement and/or fraudulent activities at your dental practice, it is important that you understand the risks associated with your payment methods. So, let’s take a look at those:

Debit & Credit Card Risks

When it comes to debit and credit card payments there are two major risks to keep top-of-mind. The first comes into effect with credit or debit refunds. Fraudulent refunds occur when a staff member “refunds” a patient cost, but refunds it to their personal credit card. Fraudulent transactions can be mitigated, at least in part, by conducting daily reviews of your clinic’s bank account and patient management system. Watch for repeated unauthorized refunds (you can see refund reports from you point of sale terminal)

The second risk involving plastic payment occurs when a staff member runs a second terminal. With smartphone capabilities and the ease to obtain POS software, this isn’t out of reach. For example, a fraudster might use their phantom terminal to run every 5th patient transaction, benefiting from the payment personally instead of it ending up in your clinic’s account (where it’s supposed to be). To lessen the chances of this occurring, conduct daily reviews of your bank statements and patient management system, watching for missing payments from clients you saw that day.

The use of fraudulent terminals can also occur around patient write-offs where a portion of the payment is written off on paper, but the payment is still accepted and deposited into a personal account. To mitigate the risk, regularly review your write-offs to ensure each one is pre-approved.


It is easy for most to understand how cash is a serious risk when it comes to doing business. Until it’s deposited, it can easily go unaccounted for.

Cash embezzlement occurs when a staff member pockets cash prior to it being deposited. To mitigate or lessen this risk make sure your cash is counted,  reconciled and deposited as soon as possible. Preferably on a daily basis. It is also pertinent that you review all receipts and ensure that they are present.


The best safeguard when it comes to insurance payments is sign up for direct deposit. This way your payments go into the correct account and no one actually touches the funds.

That said, there is one small downside to this. Some dental embezzlement horror stories tell of insurance companies being contacted to change the account that the funds deposit in to. Instead of being deposited into the clinic’s accounts they end up in the personal bank account of a staff member. So make sure you regularly review your bank statements to ensure that all of the payments are making it into your account.

When it comes to insurance payments made via cheque, you can risk the possibility of someone taking the cheque and deposit it in a personal account using an ATM. While banks are diligent about monitoring cheque deposits, they are less likely to catch the mistake if the deposit is made at an ATM as opposed to a teller.

To help reduce the risk of this, update your cheque process to accept only electronic cheques. It is also best practice to set up internal controls surrounding cheque deposits, such as ensuring you are the only person that receives and deposits cheques. That way you can ensure they make it into the right account. You should also complete regular reconciliation between your patient management system and your bank account to stay on top of your payments.

Prevent fraud: hire the right people

The biggest step you can take to prevent fraud is to start hiring the right people. While we can’t tell you what kind of people will fit best within your clinic culture, we can give you a few tips on what to do when you feel like you’ve found the right person. Before offering someone a coveted position at your clinic, make sure you do the following:

  • Call all of their references, and make sure you actually talk to other dentists.
  • Make sure you actually complete a criminal record check, especially in the case of people who are likely going to be handling money.
  • Verify their information and make sure you see an actual photo ID.

Having good, trustworthy and reliable staff is the first and best step you can take to preventing embezzlement in your clinic.

Spotting fraud

Preventing fraud comes with your hiring processes, your internal controls and your diligent monitoring of your various accounting practices. But when it comes to conducting your review it helps to know what you’re looking for.

When monitoring your accounts and patient system activities, the following signs should be seen as red flags:

  • Payment adjustments and write-offs are higher than usual or considerably eye-popping
  • Your accounts receivable (AR) is out of control and you have a huge AR balance
  • The person who manages your AR is very protective of their work (i.e. doesn’t take vacations or sick days and is always at work, and doesn’t want to train anyone else)

If you think you’ve spotted fraud in your accounts, don’t approach the suspected culprit yourself. You could be putting yourself at risk. Instead, hire a forensic investigator or a professional to look into the matter and deal with everything above board.

Taking preventative measures does not guarantee you won’t fall victim to fraud, but it does make it less likely. Mitigate fraud by being diligent and closely monitoring your AR, adjustment reports and bank accounts closely, and by working with an independent account or bookkeeper who can help keep an eye on things.


If you’re looking for a trusted accountant or bookkeeper to help you stay on top of your accounts, contact us at Shift Accounting today. We’d be happy to help and we’re always on your side.

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