In the world of small business management, particularly in dental practices—cash handling might seem like a mundane task. But when it’s done casually or inconsistently, it can quietly open the door to devastating financial loss. One of the most common, yet overlooked, vulnerabilities? Failing to properly secure cash.
You may think you’re saving time or keeping things simple by setting aside cash for office use or minor expenses. But what you’re doing is setting yourself—and your business—up to be the perfect victim of embezzlement. Even worse, you might unknowingly be enabling it.
What Does Securing Your Cash Mean?
To secure your cash, two things must happen:
- Exclusive control. Depositing it in the bank is the easiest and safest way to do this, but putting it in a safe you have sole access to, or taking it off site, are other alternatives. What matters most is that access is limited and controlled.
- Accurate tracking. You must confirm the amount of cash turned over to you against the cash collections recorded in your practice management software.
Are You an Accidental Accomplice?
Some practice owners withhold cash from bank deposits to use for business-related purchases or convenience. But unless that cash is secured as outlined above, your practice is left exposed. Failing to secure cash doesn’t just bypass best practices —it creates the perfect conditions for theft to occur with little to no risk.
When you normalize handling cash informally, you signal to your team that oversight is lax and accountability is optional. In many ways, it’s an open invitation for someone with ill intent to test the limits.
The Hidden Costs of Not Tracking Cash
Neglecting to secure cash affects more than just your bank balance. It distorts your practice’s financial health and leaves critical gaps in your audit trail. Here’s what’s at stake:
- Inaccurate financial records: Your daily deposit summaries and end-of-day reports will no longer match your actual revenue, making bookkeeping unreliable.
- Skewed P&Ls: Profit and Loss statements become unreliable, making it harder to gauge practice health or set realistic financial goals.
- Tax issues: The IRS expects businesses to report all income, including cash. Gaps in cash documentation can raise red flags and trigger audits, fines, or penalties.
- Poor valuation: If you ever plan to sell your practice, inconsistent financial records will undercut your true earnings potential and can reduce the appraised value.
- Broken audit trails: A lack of records makes it impossible to establish patterns or identify when something went wrong—or who’s responsible.
But perhaps the most serious consequence of all is one most people don’t consider until it’s too late: when you stop tracking cash, you create the perfect cover for embezzlement.
No Tracking, No Concealment, No Consequences
The most damaging fraud doesn’t always involve complicated schemes. Sometimes, it’s as simple as opportunity. When cash is left off the books or withheld casually, it’s easy for an employee to slip it into their pocket—because there’s no audit trail, no red flags, and no obvious need for concealment.
In one recent case I investigated, a practice owner admitted to routinely withholding cash for business expenses but did so without proper tracking of the cash received. Unfortunately, this opened the door for an employee to begin stealing—without leaving behind a trail of suspicious activity. She simply followed the doctor’s lead.
When the employee eventually resigned under suspicious circumstances, the owner began looking into the matter. A quick phone call to a former employer revealed similar concerns in the past. That prompted a formal investigation by Prosperident.
What we discovered was troubling: the practice had cash entries logged in Dentrix, but there was no cash whatsoever deposited in the bank, nor documented outside of Dentrix, for 9 out of the 12 months investigated. There were no voids, no deleted transactions, just no deposits or documentation of cash withheld. For three months, however, every dollar was deposited correctly. That window gave us a glimpse of how the system should operate.
Because the doctor had been receiving cash without keeping any records, it became impossible to distinguish what the employee took versus what the owner had kept. My intention was to link the missing deposits to the employee’s arrival, but the doctor had a prior pattern of not tracking cash, weakening any clear “before and after” comparison. With no effort to conceal the missing funds and no consistent documentation, the situation devolved into a classic case of “he said, she said,” leaving no way to prove that the employee did steal cash.
From a legal standpoint, this is where things fall apart. Without concealment, intent is difficult to establish. And if the accused can simply say, “The doctor kept the cash,” the case goes nowhere. No conviction. No repayment. No justice.
It Was the Perfect Crime—And It Could Have Been Prevented
The most frustrating part of this story is how easily it could have been prevented. Simply securing all cash and consistently reconciling reports would have created a strong layer of accountability. With proper records in place, any theft would have required manipulation of the documentation, leaving behind discrepancies that could be identified during an audit.
When concealment is necessary, it becomes traceable. That’s your best defense.
How to Protect Your Practice from Cash-Based Fraud
Here’s how to create a system that prevents fraud—and strengthens your financial integrity:
- Secure All Funds—and Always Document Their Existence
Cash must be securely stored and clearly documented. Record the amount, date, and purpose in a dedicated log. Whether deposited or retained, every dollar must be accounted for to prevent loss, errors, and liability.
- Reconcile Monthly
Compare your practice management software’s records against actual bank deposits and cash log monthly. If something doesn’t match, investigate immediately.
- Ask Questions
If something looks off—question it. Whether it’s a delayed deposit, unbalanced totals, or a sudden change in procedure, follow your instincts and dig deeper.
- Create a Culture of Accountability
Make it clear that financial procedures matter. This not only deters theft but also empowers honest employees to speak up if they notice irregularities.
DOCTOR: Don’t Make It Easy
The simplest mistakes often carry the most risk. Failing to secure cash may feel harmless in the moment, but it creates a wide opening for fraud that is nearly impossible to trace or prosecute.
Don’t set a thief up for success. Create clear systems, hold everyone accountable—including yourself—and protect the future of your business.
