The shelf is full. The profit and loss thinks you already spent it.
Medications, food, and supplies on the shelf are things you own until you use them or sell them. If every distributor invoice is an expense on the day it arrives, a restock looks like a loss and the following quiet week looks like a triumph. Neither is the practice. Wellness plans add the opposite timing. The client paid for future visits and future doses. The cash is real. The work is not done. And for controlled substances, there is a third record that is not optional in spirit even when the software is messy: the log of what came in and what was used has to tell the same story as the purchases and the patients. When those disagree, you do not have a bookkeeping difference. You have a drug-log difference, and that one is not theoretical.
Purchases go onto the shelf first. Cost moves when the item is dispensed, sold, or wasted. That is the whole difference between a supply-house total and a cost of goods. You do not need a perfect retail inventory system on day one. You need the big categories, a count or a serious estimate at month end for the items that matter, and a habit of not expensing a pallet of food because the invoice was easy to code that way. Beginning shelf, plus purchases, minus ending shelf, is what the month used.
Lab work you send out is a cousin of this, not the same thing. The outside lab bills you. You bill the client. Those are two numbers, and the difference is your margin or your loss on that test. Netting them into one line hides whether you are marking the lab up, passing it through, or losing money on a panel you thought was profitable. Keep the lab bill and the client charge visible.
For controlled substances, what you bought, what you logged in, what you administered or dispensed, and what should still be in the lockbox have to agree. The books are not the log. The books are the purchase side of the log. If the distributor bill says you bought a quantity and the log never received it, or the log shows use that no patient invoice explains, the file is telling you to stop and look. Do not 'true up' a controlled item with a journal entry so the month closes. Find the bottle or find the patient.
This page will not recite a form number or a storage rule from memory. Your compliance process already has those. The bookkeeping piece is narrower and strict: purchases of those items are identifiable, waste is identifiable, and nobody expenses the purchase into a generic medical-supplies bucket where it cannot be tied to the log.
A monthly or annual plan that covers exams, doses, or dental work is cash now and service later. Taking the whole payment into sales when the client signs up makes that day look strong and makes the day of the actual exam look like you worked for nothing. Hold the unearned portion until you perform the covered service, on a schedule you can point at. If the plan is monthly and the service is monthly, say that plainly and keep them in the same month. If the plan is paid up front for a year, do not pretend the year happened on Tuesday.
Refunds and cancellations reverse what you were holding or what you had earned, in that order. A refund of a visit you already did is different from a refund of a visit you never did. One is a reversal of a sale. The other is a return of money you were holding. Using one bucket called refunds for both will confuse the month the next time you look at it.
Send distributor statements, a shelf count if you have one (even a partial count of the expensive items), the drug log for the open months, the wellness-plan roster, and bank access. The first product is a month where purchases are not pretending to be the cost, the log and the purchases do not obviously contradict each other, and plan cash that is still unearned is labeled as unearned. Patient invoices still have to match what left the shelf for those patients.
You will be tempted to start with the categories on the profit and loss, because that is the page everyone argues about. Start with the shelf and the log instead. The profit and loss gets honest after those two are allowed to be what they are.
Not if the drugs are still on the shelf. The order is an asset until you dispense, sell, or waste it. Expensing it on delivery makes a restock look like a loss.
Stop and reconcile the quantity before you close the month. A journal entry that forces the books to match, without the bottle or the patient, hides the only difference that matters.
When you perform the covered work, or as the covered period passes if that is the honest schedule. The day the card is charged is the day you received cash, which is not the same day.
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