Ch 15 Financial Systems Accounts Receivable

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Financial Systems:
Accounts Receivable
Chapter 15
1

Learning Objectives
Lesson 15.1: Financial Systems:
Accounts Receivable
(Slide 1 of 2)
1. Define the key terms in this chapter.
2. List and describe four of the financial reports in a
dental business office.
3. Understand basic mathematical computations.
4. Discuss different types of bookkeeping systems.
5. Identify special bookkeeping situations that can
occur in a typical day and identify their solutions.
6. Explain the production of patient statements.
7. Understand the definition of identity theft.
2

8. Discuss the importance of establishing
financial arrangements.
9. Discuss the function of a credit bureau.
10. Discuss rules for collecting past due payments.
11. Discuss the function of a collection agency.
3
Learning Objectives
Lesson 15.1: Financial Systems:
Accounts Receivable
(Slide 2 of 2)

Financial Reporting
 Four financial reports used in a dental
business office:
 Balance sheet
 Profit and loss statement
 Accounts receivable
 Accounts payable
4

Understanding Basic
Mathematical Computations
 Administrative assistant must be familiar with
basic addition, subtraction, and calculating
percentages
 Resources to learn basic mathematical
computations are available online, through
local classes, or basic math skills books
5

History of Bookkeeping Systems
 Until the 1990s, most offices used a variety of
paper-based bookkeeping systems, including
the pegboard or “write it once” system
 Majority of dental offices have now replaced
paper-based systems with practice
management computer software
 There is a wide range of ways individual
practices have integrated their practice
management software
6

Computerized Bookkeeping System
 A single entry can be transferred to:
 A financial record
 A patient statement
 An insurance form
7

Backing Up Data
 Prevents loss of information
 Use external hard drive, cloud-based system,
or other storage device
 Use off-site backup service through the
Internet
 Backup should be done at least daily,
monthly, and yearly
8

Tasks Required to Maintain
Accounts Receivable
 Select correct patient for data entry, or add a
patient into the system
 Update incorrect patient data
 Enter new services performed
 Enter payments
 Enter adjustments
 Generate accounts receivable report
 Send statements
9

Select Correct Patient for Data
Entry or Add a New Patient
 Open patient list and select correct patient
 Verify that you chose the correct patient
 Use the date of birth and address
 If patient does not appear on patient list, he
or she can be added as a new patient
 Certain basic patient information is common
in most software systems
 Special notes may also be included
10

Update Incorrect Patient Data
 Editing patient information
 Always review and edit any patient information in
system because patients may have moved or
acquired new dental insurance
 Inactivating a patient
 May need to be inactivated because patients have
moved, found a new dentist, or passed away
 Transferring a patient to a new account
 For example, when a child grows up and becomes
responsible for his or her own account
11

Entering Services Performed
 Once patient is selected and the patient
information is verified, transactions can be
entered into account
 From Account screen, software provides
access to enter American Dental Association
(ADA) code for treatment rendered, provider
who performed treatment, and amount to be
charged
12

Entering a Payment
 Debit and credit card payments
 Terminal is used to perform transaction
 Patient enters his or her debit card PIN when
prompted
 Healthcare financing program
 These programs provide a card similar to a credit
card for patient to use for healthcare charges
 Dentist must sign up to be participant in such a
plan
 Patient uses his or her card to pay for services
and practice gets paid from program (less a fee);
patient makes payments to plan
13

Entering Adjustments
 Debit and credit adjustments
 Patient discounts
 Discounts may be given at discretion of doctor
 Follow state or federal guidelines and how they
affect any associated insurance submittal
 Nonsufficient funds checks
 Checks returned to office for lack of account funds
 Require debit adjustment to account
 May be necessary to charge account for any
charges from bank
14

Generate an Accounts
Receivable (A/R) Report
 In the Reports section
 Line item information on:
 Who owes money
 Who is owed treatment or refund (credit balance)
 How old balances are
 How much estimated to be paid by insurance
company
15

Credit Balance
 Can result from several situations, like when
payments for services are made in advance
or when the insurance payment is
underestimated
 Most computer software programs have
ability to track estimation of insurance
 If account has credit balance and no pending
treatment in near future, credit balance
should be refunded to patient
16

Aging of Accounts
 In most practices, balances are considered
current if under 30 days and past due after 30
days
 Some practices charge finance charges on
balances not considered current
 Generally accepted that the older the
balance, the harder it will be to collect
 Healthy A/R total would be less than average
monthly production of practice
17

Insurance Estimated Payment
 Very important to watch insurance claims so
they get paid quickly
 If insurance company pays lower amount
than estimated, the balance shifts into the
patient due category and will show on patient
statement
18

Statements
 Indicate the charges, payments, and
balances of accounts for the preceding month
 Usually sent once per month
 May be on the same day (first, fifteenth, thirtieth)
 May be on a staggered basis according to the
alphabet (suggested for large practices to
maintain a better cash flow)
19

Identity Theft
 Be mindful of unknown individuals
 American Dental Association information
 Online search for the latest information
20

Types of Payment Policies
 Cash only
 Payments made at or before appointments
 Submitting and accepting payments from
insurance plans
 Critical that the practice has a signed financial
agreement with patient stating how and when
remaining balance is to be paid
 Well-defined policies
 Extended credit to patients
 Must have understanding of Truth and Lending Act
21

Using a Credit Bureau
 When seeking information from credit bureau,
must submit complete data:
 Full name, including middle name
 Spouse’s name
 Current address and addresses for past 3 years
 Date of birth
 Place of employment for past 3 years
 Social Security number
 Three major credit bureaus: Equifax,
Experian, and Transunion
22

How to Collect Past Due Balances
 Well-defined policies and documented
financial commitments should minimize past
due balances
 Do not wait too long to follow up
 If an account is outstanding after 12 months,
the possibility of collection drops to less than
25%
23

Composing Collection Letters
 Keep letters brief
 Make sure data are accurate and complete
 Use simple words, uncomplicated sentences
 Use phrases that will motivate patient
 Do not make statements about actions that
practice has no intention of carrying out
 Set specific date by which payment is
expected
 Be firm and polite
 Include a “thank you” in letter closing
24

Process of Collecting
Past Due Balances
 10 days past due: Reminder process
 Reminder letter and telephone calls initiated
 30 days past due: Inquiry/discussion process
 Second letter and phone call requesting payment
 45 days past due: Urgency process
 Third letter and phone call stating payment is
required and expected immediately
 60 days past due: Demand process
 Fourth letter and phone call saying payment is
required immediately and if not received by a
specific date, account will be turned over for action
25

Collection Phone Calls
 Remember, privacy is required
 Be courteous, considerate, helpful, firm
 Do not call before 9 AM or after 9 PM
 Verify that you are speaking to person whose
account is overdue
 Biggest mistake: Waiting too long to follow up
26

Legal Process for Past Due Accounts
 Submit a claim in small claims court
 Follow process set in your region
 Turn the account over to a collection agency
 After every attempt has been made to collect
payment on an account
 Required when patient fails to respond to a final
collection letter or can no longer be located
27

Collection Agency
(Slide 1 of 3)
 Reputable
 Follows federal and state guidelines
 Make sure agency will not start legal action
without the dentist’s consent
 Make sure agency understands a patient’s
needs
28

Collection Agency
(Slide 2 of 3)
 Debtor’s full name
 Debtor’s last known address and phone
number
 Total amount owed on account
 Date of last entry on account (credit or debit)
 Debtor’s occupation
 Debtor’s business address and phone
number
 Any other pertinent information
29

Collection Agency
(Slide 3 of 3)
 Send no more statements
 Indicate the transfer to the collection agency
on the patient’s financial record, giving the
date of transfer
 Refer the patient to the agency if the person
contacts the office
 Report the amount to the agency when
payment is received in the office
 Rely on the agency staff members to do their
job
30

Questions?
31

Ch 15 Financial Systems Accounts Receivable

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