Accounts Receivable Bookkeeping Jeff Steele, LDO, CPOT Spokane Community College

Objectives Define accounts receivable bookkeeping, transactions and posting State the type of information the patient needs, and that which the practice requires List the parts of the A/R bookkeeping system Know how to prepare a bank deposit

Overview Accounts receivable bookkeeping is the recording and management of all patient account transactions within the practice Accounts receivable (A/R) bookkeeping is not difficult, however, it requires accuracy and careful attention to detail These duties must be managed in a timely and business-like manner so that all of the appropriate records are accurate and current

Financial Transactions A transaction is any financial entry made to an account record The three types of transactions are: 1.A charge, which increases the account balance 2.A payment, which decreases the account balance 3.An adjustment, which may increase or decrease the account balance

Posting The act of entering transaction information into the bookkeeping system Often accompanied by codes (will explain later!)

Information Requirements The A/R system must generate records to fill two types of data requirements: 1.The information needs of the patient 2.The information needs of the practice

Patient Information The patient needs to know: 1.What services were provided and how much was charged 2.How much has been paid to the account 3.The current balance As a service to the patient, the account information should be provided in the form of a receipt, walk-out statement or completed insurance claim

Practice Information The practice needs to know how much is owed on each account In addition, the practice requires summaries of total financial activities and amounts owed, management reports and an audit trail These records must provide the data necessary to operate the practice in a business-like manner, and to meet govt. bookkeeping requirements

Bookkeeping Breakdown 5 Major parts to any bookkeeping system: 1.Patient account records 2.Charge slips 3.Receipts and walk-out statements 4.Management reports 5.An audit trail We’ll explore each in more detail

Patient Acct. Records Contain data concerning all account transactions plus the current balance owed on the account Usually maintained by family, and the record is always addressed to the person responsible for payment on that account

Charge Slip AKA superbills, encounter forms, routing slips, and transmittal documents Used to transmit account information from the business office to treatment area and back again to the business office (captures all fees accurately)

Charge Slip Guidelines 1.Numbered slips should be used for tracking and each number must be accounted for 2.A charge slip must be prepared for every patient 3.Needs to show account name and balance 4.Sent along w/ patient’s chart 5.New charges are added and presented to patient prior to leaving

Receipts and Walk-out Statements A patient must always be given a receipt for a cash payment If payment not received in full= walk-out statement Include a payment envelope, which helps speed collections

Management Reports Reports generated by the bookkeeping system: Daily Journal Record: reports total production, payments received, adjustments, balances outstanding, and accounts receivable totals Monthly statements: sent to all patients with a balance

The Audit Trail Helps insure all entries are being made accurately and honestly The basic elements of an audit trail include: Accounting for each patient visit Daily deposit of all receipts Periodic spot checks

Computerized Systems Although systems vary, the following are the basic steps to be followed throughout the day 1.Setting up: at the beginning of the day, turn on the system and verify the date. Print charge slips for the day’s patients 2.Posting: Use the appropriate codes to post charges, payments or adjustments. Print and give to the patient a receipt or walk-out statement 3.Closing: Print the daily journal report and double check for accuracy. Verify the amount of receipts matches amount of cash in the drawer. The computer will automatically add the totals to the end of month and annual reports

Charge/Payment/ Adjustment Codes Used to enter fees for treatment provided to the patient Charge codes are usually organized in a charge code file, which includes descriptions for accuracy Payment codes are usually organized by method of payment; cash, checks or credit Adjustment codes specify whether the amount was added or subtracted from the balance

Posting Payments Mail: payments received in the mail should be promptly credited to the patient’s acct. and a receipt mailed Insurance: payments received from carriers often do not cover the entire amount. If it is permissible to collect the remainder, a line-item statement should be sent to the patient which clearly indicates the balance and what the insurance paid Credit Card: Treated the same as cash. Once approval has been attained, patient should be given a receipt

Adjustments and Special Entries Discounts: usually a courtesy to a special patient or as a professional courtesy, discounts are adjustments made to the account in the form of a payment (w/ explanation given) Write-offs: A portion of the balance which cannot be collected, a write-off is treated like a payment and is subtracted from the balance. Sometimes this is a necessary part of doing business w/ a particular insurance (Medicaid) and sometimes it is due to non-payment. The decision as to whether to collect is up to the doctor or office manager.

N.S.F. Checks AKA “returned checks” Can be re-deposited, if funds are verified There may be an additional charge, as determined by the doctor or office manager Amount added back to patient’s balance

Collection Agency Collection agencies will charge a fee for their services. This amount must be written off from the patient’s balance

Stop-payments On occasion, a patient may request a stop-payment be put on their check (dispute over bill) It is handled like an N.S.F. check, as the bank will not honor the check

Bank Deposits All receipts should be deposited daily The total of the deposit should equal exactly the day’s receipts This is important because it is a vital part of the audit trail

Restrictive Check Endorsement It is advisable, as a protective measure, to rubber stamp all checks to be deposited with a restrictive endorsement, which prevents them from being cashed if stolen

Preparing the Deposit 1.Each deposit must be accompanied by a deposit slip, which is pre-printed w/ the acct. # 2.Slip should be dated and completed accurately and legibly in ink 3.A duplicate slip should be retained for the practice’s records 4.A single entry for cash 5.Checks are listed separately 6.Amounts are totaled, and the date and amount of the deposit are entered in the check register 7.Credit card slips are NOT included w/ the daily bank deposit, instead, they are “deposited” to a special account