Before computers were commonplace, accountants had to manually record financial transactions into a physical general ledger using double-entry bookkeeping, where transaction is recorded in at least two accounts. Debits were entered on the left side of the ledger and credits on the right. This made it possible to see both sides of every transaction, maintain balanced books, and provided a clear trail in case of audits.
Now, with the invention of computerized general ledger programs, double-entry bookkeeping is no longer done manually. So what is a general ledger? It is a record of all financial transactions that have been made by a business, including those not yet posted to journals or other subsidiary accounts.
In the context of long term care, the nursing home software system will contain a general ledger program that relieves the financial team of the burden of manually posting transactions to the appropriate ledger accounts and preparing financial statements. In the financial suite of nursing home software, one will find five different types of general ledger accounts:
- Assets: These are items of value owned by a long term care business, including cash, inventory, and equipment.
- Liabilities: This refers to the money that a business owes to other entities, including suppliers, banks, and shareholders.
- Owner’s equity: This is the worth of a company after the liabilities are deducted from the assets.
- Revenue: This is the income generated by a long term care provider through its normal business activities.
- Expenses: These are the costs incurred by a company to generate revenue.
General Ledger programs can also generate reports, such as trial balances and income statements, which can be used by businesses to make informed decisions about their finances.
Some of the benefits of having a general ledger program in long term care include:
- Time: A general ledger program can automate tasks that were previously done manually, like posting transactions and preparing financial statements. This can free up time for long term care staff to focus on other important areas of the care plan.
- Accuracy: With a general ledger program, there is less chance for human error when compared to the manual recording of financial transactions. This improves the accuracy of financial reports and the filing of taxes.
- Easier access to information: With a general ledger program, businesses can quickly generate reports and access information about their finances. This helps long term care facilities to make informed decisions about their finances.
- Money: A general ledger program can help businesses save money by automating tasks and improving efficiency. This can lead to lower accounting and administrative costs.
- Fraud prevention: Skilled Nursing Facilities (SNFs) need to carefully track all their finances to prevent fraud. An effective general ledger program can help prevent fraud through its reporting, tracking, and flagging capabilities.
5 Tips for Choosing Accounting General Ledger Software
Having discussed broadly what a general ledger is, we can now look at some tips for choosing an accounting general ledger software. When choosing between long term care EHR vendors, it is important to consider the following:
1. The Needs of the Facility and the Accounting Skills of the Financial Staff
The accounting needs of long term care facilities may differ depending on the services provided. For example, an assisted living facility will have a general ledger with vastly different inputs from that of a nursing home.
Of course, the accounting skills of the financial staff should also be taken into account. Suppose the staff is not highly skilled in accounting. In that case, a simpler general ledger program—a program with a more user-friendly interface, user prompts, user suggestions, and guided tours—would be more suitable.
2. The Cloud Computing Capabilities of the General Ledger Program
Cloud computing is an important consideration when choosing a general ledger program. With cloud computing, businesses can access their financial information and reports from anywhere, at any time. This is very beneficial for long term care facilities that have staff members—or affiliated physicians—who work remotely. Cloud computing offers a number of benefits such as:
- Automatic software updates
- Cost reduction
- Increased data security
- Ease of scalability
- Data backups
- Unlimited storage capabilities
3. The Nursing Home Budget
The nursing home budget will always come into play when choosing software, including a general ledger program. General ledger programs are available at a variety of price points. Facilities struggling with census numbers may want to look into investing in a long term care EHR that offers value-based pricing.
4. Add-ons and Integrations
Many general ledger programs offer a variety of add-ons and integrations that automate tasks and improve efficiency. Some of the most popular add-ons and integrations for general ledger programs include:
5. Feedback From the Accounting Staff
The accounting staff uses the program on a daily basis, which is why their feedback should be valued. One financial accounting supervisor, Megan Tucker, recently shared that her EHR provider, Experience Care, holds monthly user meetings that give her and others the opportunity to voice their opinions. “They show their screen and ask if there’s anything we would like changed,” she said. “And then the next meeting, they would incorporate our feedback and show the changes on the screen and ask if it was what we had in mind.”
When considering feedback from the accounting staff, it is essential to evaluate both the positive and negative feedback to identify the features that are appealing and identify areas that are lacking. You can then decide if the former outweighs the latter.
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General Ledger vs Subledger: What’s the Difference?
Before we conclude, it is worth discussing general ledger vs subledger and how they relate to a general ledger program. As previously stated, a general ledger is a record of all the financial transactions within a business. This includes income, expenses, assets, liabilities, and equity.
A sub-ledger is a subsidiary ledger that provides detailed information about a specific aspect of the business. For example, a sub-ledger might provide detailed information about the accounts receivable or accounts payable.
Therefore, in a long term care facility with a general ledger system and financial reporting system, the sub-ledger is a part of the general ledger. The key differences between the two in an accounting general ledger software are:
- A general ledger is a part of the nursing home’s chart of accounts, while the sub-ledger is information that feeds into the general ledger and thus lacks its own chart of accounts.
- A general ledger contains only one specific account for each category, while a sub-ledger can have an unlimited number of account transactions.
- In a simple general ledger software, the general ledger accounts provide summaries of transactions, while the sub-ledger accounts provide detailed information on transactions in the long term care facility.
Why Long Term Care Facilities Should Consider a General Ledger Program
A general ledger program automates tasks, improves efficiency, and provides detailed information about the financial transactions that take place within a long term care facility. When choosing a general ledger program, it is important to get valuable feedback from the accounting team who will be using the program daily. The administrator needs to understand what key issues the accounting team is having, so they can decide on the most appropriate general ledger program.
Administrators should also remember that the most appropriate general ledger program for one long term care facility might not be the best fit for another. Therefore, they must demo enough systems and ask enough questions in order to find a long term care software that meets the facility’s specific needs.