Reconcile or Reckless - You Decide!

Episode Transcript

Auto-generated transcript: Reconcile or Reckless - You Decide!

You are listening to the dental practice owner's podcast. Brought to you by Prosperident From our unique perspective as dentistry's and bezel-lit experts, Prosperident's team can bring you the information that is important to practice owners. The dental practice owner's podcast brings you strategies, tools and tips that you can use, and dentistry's thought leaders as guests. So sit back, relax, and listen to Prosperident's Amber Weber, and listen to Prosperident's and let's listen to the videos I mean,

Ph.D., when they ask us and David Harris talk about the issues that matter to you. You are listening to the dental practice owner's podcast. Brought to you by Prosperident. From our unique perspective as dentistry's and bezel-lit experts, Prosperident's team can bring you the information that is important to practice owners. The dental practice owner's podcast brings you strategies, tools and tips that you can use, guests. So sit back, relax and listen to

prosperity, amber, weather, Wendy Askins, and David Harris. Talk about the issues that matter to you. Good day to all family. Thank you for joining us for the prosperity and C.B.

19 webinar series. This particular webinar is going to talk about reconcile or reckless. You decide which one you want to be. I'm joined today by Amber, the amazing amber. The first day said in our beloved CEO, prosperity, David Harris.

And with that, you can take it away, David. Let's start with a couple of definitions. And I don't think you're going to find these in the dictionary anywhere, but these are the way we're going to talk about fixed.

So we talk about two different activities. And one is balancing and balancing is what's left. And you can see what it's trying to do. The primary purpose is to make sure that the bank deposit agrees with. And I assume we all know this, but I'll say, PMS here refers to practice management software,

not the other thing. So we want to make sure that the deposit agrees with the software and that no treatment has been missed or left out. And there are also some procedures that staff do at the end of a month to close that month out in your software and elsewhere. So when we talk about balancing, we're talking about the staff activities. And when we talk about reconciliation,

we're talking about normally to practice on, and in some cases in a really large practice, this might be the office manager who's doing this stuff. And also some things that could be outsourced. So here we're talking about the supervision of the activities as opposed to doing them. And we're not really intending here to teach doctors how to do their staff job,

because that'll just make a huge mess in every practice. What we're really talking about is how to supervise that job. And that's going to be a lot of our focus today. And really, Brian terms, there are two kinds of investment. And the first one, I call reconciliation death. So this happens if either there's no reconciliation being done in a practice, or there is, but it's incomplete or it's ineffective. If I'm a staff member and I realize that nobody other than me

is taking an interest in whether the bank deposit blinds up with the practice management software, stealing is really easy. All I do is short the bank deposit. So the practice management software says that $2,400 should be going in the bank today. And I deposit some lower number. This is easy theft.

And it happens when there's no oversight. If the balancing activity is supervised, now what I have to do is what I call concealment theft. And that means that I have to do something to individual patient accounts, so that today looks like it's going to balance. This is a lot more sophisticated. So I guess what I'll say is really the primary purpose

of that oversight or reconciliation process. If I can be a little fesciest about it, is to weed out the stupid thieves or the lazy ones. And make it so that at a minimum, if somebody's going to steal from you, they have to work a little higher at it. One thing I want to tackle specifically is that I hear a lot of doctors when they call me initially, and they're talking to me about the possibility

that their practice is being enveloped. And one thing they say to me is, but I protect myself because I take the deposit to the bank myself. And I could tell you that that activity is not nearly as valuable as people think it is. The question I ask a lot of these doctors next to kind of some of them is, okay, but how do you know that the amount that you left the practice with was the right amount?

And that's where the shoulders kind of get shrugged, and somebody's at all, I guess when you put it that way. To me, it's what's more important than who carries the money to the bank is that the practice owner can confirm that the amount that left the practice was the right amount. And the amount that showed up at the bank was the right amount. So you don't need to do the deposit to do that. All you need to do is have online making,

and have a concept of what the right amount should have been. And that's what we're going to talk about with you minutes.

The other danger I'm going to caution people on is relying on daily data and not looking at monthly data.

I know a lot of doctors, for example, who will look at the merchant account. And the merchant account just to make sure everybody knows what we're talking about is that the facility in the practice for incoming credit card payments. So that's why we're shooting at half, that's tied to the merchant account. So people will look at the daily tape from the merchant account and compare the interest of the practice management software. And if those two line up as far as they're concerned, they're fine. The problem is your practice is not open 24 hours a day,

and it's not open seven days a week. In fact, right now it's probably not open at all, in normal times. So you can look at a tape that comes out of that machine and balance it to the practice management software. And then somebody else can... come in and do more transactions and then. So we really need to look at monthly stuff as well as daily stuff because things can happen outside of when the practice is open. So there's

a definite danger in daily in relying on daily stuff. So let's say back to about 30 years ago, it used to be a lot more simple when we needed to track what happened in our business on a daily monthly basis. This makes me think back to my first job I had, helping at a restaurant back in the 80s, where you swipe the credit card and you thought you were really cool because you were running that swipe and at the end of the day all of the different types of payments that you had received were separated in a paper amount, you know, your seats for credit cards cash, checks, everything was a paper trail and you took that physically to the bank. And so that's how you were able to track what went on on a daily basis. We were able to look at everything in a physical

paper trail. Now, fast forwarding 30 years to current day, things have gotten a lot more multifaceted. There's so many different ways now that we are able to take payments in our business, credit card, which is electronic insurance companies, not all insurance payments now are in a chat. Patients can pay online and different ways to pay. So now when you go to reconcile and look at your business on a daily and monthly viewpoint, there's so many different ways things that you need to look at in the details. And because of this, we see a lot of owners who want to ignore those electronic deposits or the ways that they don't see physically on paper. So that's what we want to really highlight on today is look at that. And that's what I'm going to do and focus on all

this small detail. As I mentioned, you know, 30 years ago, with much more simple, a lot of owners and it's that will have objectives to reconciliation or they may not really object to it. They just may seem that it's too complicated or there's too much to look after. But having these systems of looking at everything on a day-to-day and a monthly basis helps you and your staff know they're doing their jobs correctly. It helps you make sure that all the errors were caught early on and will ensure the integrity and preservation of your information moving forward. So that you have a great reference point to look back on when there are areas of concern in your practice. And you and your staff can work together as a team and make sure that this is a good systematic way.

To do this. Also, you know, our practice management software is a separate type of record keeping that are actual banking. And so having this system allows you to close that gap and make sure that, you know, there's less room for error and you don't hit a big bump in the road. And as they said earlier, this allows us to detect certain types of embhevelment from the type of feed to our not as talented mentally to hide a more simplistic type of hiding money from you. This is the thing that a lot of people miss. You kind of have these two independent processes going on it once. And on the left side of your screen is your practice management software. And you can see the inputs for that are our treatment adjustments and payments. And while practice management software is

capturing your revenue at the same time your expenses are being tracked using a counting software. And there are two inputs into a counting software being those expenses and what happens in your bank account. So by counting software, I'm not talking about something like brick books, which is what most practice is used. So we've got these two things going on at once and you can see the wall in the middle. They're not talking to each other. And we talked in a previous webinar about why so little of embhevelment is caught by somebody's accounts. And it's not because your accounts are bad accounts or lazy or anything else. It's simply because what happens on the left side of your screen is invisible to. So one of the purposes of writing solution is Amber's name is really

to bring these two things together. And when we reconcile practice management software against the bank, for example, now we've crossed over that wall and we like the two sides. So that's a really important outcome of the process. Otherwise these two are not agree with each other and nobody including your CPA is like you can notice. Hey, that is such an important point that we actually have two systems that are completely independent of each other. They're not dependent on each other. And so that's how transactions or how funds can be hit from one system or the other. So what information do you need and where do you got to get it from? The very first most important thing is, look, if I'm an ambassador, do you think I'm going to give you the reports and the information

that I want you to see, because that you can catch me? What I'm going to do is give you the information that I want you to see. That's why it's imperative that when we talk about reviewing reports from your practice management software that you generate those reports on your own. Another issue we have is that many people don't realize that your software can sometimes lie to you. So we know that data lies to, so we really don't understand for the 100% fake end. So what we need to do is we need to go to third party sources. Now basically what that means is that we need to get statements from the companies that are outside of our own business outside of our own practice, because that's what's going to tell you exactly what was deposited. So for example, your bank statement, your

merchant statement, your care credit statement, your lending tree statement, your ortho bank, or bank, or ortho-vice statements, all of those needs to come to the business owner directly so that they can't be manipulated in any way. And while I'm on that subject, I'll say if they're going to come to the business owner, the business owner needs to open them up and take a look at them. Yeah, you might not know exactly what it says or what it means, but just open them and look at them. Then put them back in their envelope and send them off to whoever needs them for reconciliation. We also need to have a checklist.

We're talking today about some reconciliation processes that can occur on a daily basis and on a monthly basis that there are bi-monthly checklists or bi-monthly tacit need to be done. There are annual reports that need to be done. We recommend that you have a checklist so that you don't accidentally forget what needs to be looked at. And then finally, we need to verify and trust our employees and the actions that are happening that are going on. But one thing that we know is that we can't prevent investment. The only thing that we can do is we can catch a bit of when it happens and we can put ourselves in a good position and a secure position so that if we notice something that doesn't look quite right,

we'll be able to go back and gain access to those resources. And the way that you do that is that you keep your reports, which you've generated yourself and counties electronic happens of your statements in a secure storage. Be it at your home or a locked cabinet in your office or if you choose to store it digitally, that's a great way to do it too. Anyway, so it's important for us to verify what our trust employees are telling us. And for those of you that are with us last week, you'll remember our friend, Dr. Pigsaw, there's an excellent business man and an excellent clinician. He gave us a few words of advice because of his situation and his investment that occurred in his office. So here's some relevant information about why we always need to verify what we're

controlled is actually true. Well, I'll take a look. I'll see what's going on. So I ended up ring busy with our financial coordinator. I just heard, you know what? Let me take a look at it. I'll figure it out. So all right, just let me know. A couple days past, I went back and I said, so do you find anything out on our tip? Yeah, you know, they just forgot to enter it at the front desk. I got it entered. It's all taken care of no problem. I thought I could write thanks. The same person who initially visited me, I was back to me says, so what did you find out? I said, well, I talked to her and she said, they just forgot to post it and everything's fine at a contract center. And she said, was there a deposit slip? I said, I didn't ask. So I go back.

I said, you know what? They're patient we talked about with our financial coordinator. They're that patient we talked about. You have an deposit slip for that. And she said, yeah, okay. Because I'm thinking she's not going to lie to me. She's not going to be so brazen as to say, yes, I've got a deposit slip and they're not able to show. So I said, that time, great. For a third and time, this, and you said, boy, you've initially approached me says, so what did you find out? I said, yeah, she said she's got a deposit slip. And then this simply look at me kind of cocker head. I just said, look at it. And I felt at this point like, you know, when your mom's told you to do something and you know, you're going to go through all these steps to

do. You know how to do the job. But you're kind of like, well, I just want to do enough to just get by and maybe we'll find out there's nothing to this. That's what I was doing.

One more time I want to get the shout out to Dr. Scott for being right enough to come forward and share his story with us. And unfortunately, he found out too late that there actually wasn't a deposit slip and he was being lied to. And his cases in another prosecution right now. So again, we was wishing the best of luck and thank him for speaking out for us. I'm going to show you a little trick here that will make one party your life and your staffs like, well, hold on. What we're talking about is how to deal with cash in the practice. And the thing that a lot of dentists do, and this is kind of on a separate debate with the way that most other businesses function and it gets them into trouble, is they have a cash word, two things happen in that cash word. Money comes in from patients,

and sometimes money goes out because you've got to pay an expensive cash. And that always makes the reconciliation of the cash into the job. So here's what you do instead. I'm going to introduce two concepts in the first one I call float cash. And float is used for only one purpose and that's to receive money from patients and I guess to make a change for them when they don't have the right change. So float cash starts at a constant amount. I'm just used $500 or maybe if it's a bigger practice that needs to be more. But there's some amount that the practice starts every day with. And then two things happen. Cash comes in and cash gets removed into positive. And the important thing is that those two are the same amount. So today, if we receive $ 1300 in cash,

$1300 gets set aside to be deposited. And we're left with the same amount we started with $500. And this is kind of foolproof. As I say, what messes it up is when, you know, somebody in the practice doesn't have enough money to buy lunch and they end up taking $20 out of it and putting an IOU in. Because now you don't have $500. You have $400 in any plus an IOU. Until that IOU just paid back, which might be payday, you've got a account for that every single day. Here's what you do. But let's have a separate place and we're going to call this penny cash. And the way penny cash works is really simple. Same kind of thing. We start with a constant amount. And here I've used the number of $200. So there's $200 in penny cash this time. Now, if our stuff happens.

Like we do a pizza lunch and it's $6.00. And we pay in cash. What that means is at that moment, the penny cash has $140 in cash plus a $60.00 received from the pizza. And the important thing about penny cash is it always adds back up to $200. There's no other way to do it. So then a patient's car breaks and they're going to miss their hygiene requirements so we tell them we'll pay for a tax. And that's another $35.00. So same thing. Now we're down to $105 in cash and we can... 95 receipts. It always adds up to 200. And at some point, the petty cash gets low and we need to restart. And the way that that happens is the receipts get sold back to the doctors and that there's a custodian normally for petty cash. This really needs to be one person. So the custodian gives Heather her receipts

back to the practice owner and the practice owner makes a check to the custodian for the same amount. So in this case, it's $95. And where do we end up? Exactly where we should be. We've got $200 in petty cash. So the custodian is responsible for always having either $200 in cash or a combination of cash and receipts that end back up to $200. And if we separate these two, that is petty cash from Cloakash, life gets a whole lot simpler. You only have to reconcile the petty cash. Probably once a month, the full cash really needs to happen every day. So that's a simplified way of handling cash. And it will save you many, many headaches in your practice. And the rule is really simple. We never, ever, ever, this first full cash to cover any of the whole.

David, I love that analogy how it simplifies everything. So moving forward, let's talk about keeping your end of date simplifies. As the practicing hygienist and the office manager, one of the main things that I think is really important is that you have each provider of your team look at their own day and report. So that they can see that everything that they completed for the day is accurate and has been entered into the system the way that it should. When I was a hygienist, I had a lot of days where I had an assistant helping me. So at the end of the day, it was a great closing conversation that I would have with my team and make sure that every time I complete it on patients, had been posted to their ledger and had been submitted to insurance. And so created a

good team environment also. And then when we were able to double check that we knew as a team that that information was going to relate to the doctor or the owner in accurate way. And it allows everybody of the team to have that good cross reference, have that good system. And then I was, you know, I would find also on that report. And it would make me feel like I was really invested in the health of financial business part, how I was contributing to the practice. So that's one thing that I would recommend is to allow each provider, doctor or hygienist and the assistant's good help to have a part of closing duty that focuses on the details of what happened in Gordard Day. Anyway, shout out to my other friends. You know, we generate production a little

bit different or a bit differently. And we travel production quite a bit differently as well. But when Amber's talking about checking to make sure that the procedures correct and that the fees are correct, we and with it on us can do the same thing by ensuring that all of our new start contracts are put into the computer correctly that we've got our down payment represented, that we got our bet of treatment fee in the computer correctly, our down payment correctly, and any discounts or anything is listed on that. So when Amber talks about individual procedures, that translates to mutated starts production in Gordard. And my pizza, right? Yeah. So let's talk about, let's say about what your staff does or what his staff members do at the end of the day. Now that we've

made sure that our production is correct, we need to make sure that our collections are correct. So at the end of the day, the manager, like I said, I have to be your office manager, it can be someone that assumes that responsibility, a treatment coordinator or receptionist, you know, they print out the day sheet at the end of the day, make sure all payments are posted and then print out the day sheet at the end of the day. And I'm going to suggest a really old fashioned way to do it, which always works perfectly. Take the payments that you have in front of you, the physical payments. And separate them into categories, payment categories, insurance checks, patient checks, credit cards, how ever many payment methods you have is to on that particular day sheet for that

day. And for the physical payments that are in sitting in front of you, you're going to pick them up and you're going to just start adding them together manually. Once you get a total from that particular payment method, then you look at your deposit slip that's been generated from your day sheet and you make sure that they match, right? We don't just automatically trust that those numbers are correct. There could be a human error instead of, you know, a hundred dollars it could have been a hundred and ten dollars and we accidentally tied it in incorrectly. So we're not only looking for theft, but we're also looking for accuracy and transparency between each other. So once the office manager person has done that balancing, then they're going to give it to someone else to do it,

because four eyes are better than two, right? So we also want someone else to look at it. Let me just say in here, Wendy. Well, you know. We want someone else to look at it just so we shouldn't describe. And after that person has corrected it, it has looked and it makes sure that it's correct. Then both employees need to sign all of on it, right? Just additional it, sign your name, or whatever. In case there are any questions in the future, we want to know who we can go back to to to get the answer for those questions. And then lastly, the person, acting is the office manager or the person responsible for printing the day sheet in the first place, put the owners package together, which is any specific reports that the business owner request. The end of day production

reports that each provider has signs. The end of day batch, record from your merchant terminal, from your merchant terminal, a copy, a caveat, the computer generated slip. I see a lot of doctors who will just look at the hand printed slip deposit slip that comes from the bank that's filled out by a staff member. That's not good. enough. We want to see or you want to see as a business owner, the actual computer copy that comes out of the practice management software. And then if you are a business owner that likes to take funds to the bank yourself, that's when you would also take custody of those payments. Right? So then that underscathed the OCD business owner. The day is closed by the office manager,

the merchant terminal is closed and we are done for the day. It's really important that you look at what happened today today.

If you wait and sell some more or you know you're a practice that is closed on Fridays and you don't look at Thursday's stuff until Monday, what happens is what you remember on Monday morning or Monday afternoon about what happens last Thursday is pretty small. Everybody has that same temptation or five o'clock or whatever your practice conditions. It's like the little blows and you want to get it. But as soon as you post form taking a look at the end of the day, stuff gets dropped. And that's something that is one reason that we're doing this. Another is stuff just gives us, I mean, there were actually taking today that for whatever reason didn't get entered into the practice management software. And you know, x-rays aren't

huge dollars but if that's happening with some consistency and certainly adds up. So you've got to make yourself stay that few extra minutes and do this.

When you talked about the necessity of printing your own reports or generating your own reports and not simply allowing somebody put a reporting front of you. That's really important. If somebody's feeling one of the techniques that they'll get into is called selective reporting they will basically teach your practice management software to life. When you print your own reports, you prevent that. One of the important things is was on the screen and it's called a roll-off report. What I mean by a roll-off report is this. If it's five o'clock Wednesday afternoon now, the report that I print shouldn't be for Wednesday. It should be for Thursday, night and all of Wednesday. In other words, I want to catch your

if somebody has come in after hours last night and put transactions. So we want to capture everything since the last report that I printed, which probably would have been flag-aplock history. The other thing I'm reporting, most software is, sometimes it has a different name, but most software will keep two different dates for a transaction. Let's call the entry date, which is always the date that it's entered. Software will also allow you to have it sometimes different procedure date. I can be entering something today that actually happened yesterday. That's true of clinical constrict treatments. It's also true of things like payments and adjustments.

When we print a report, we want to see both dates because what that will show us is if they're different from each other and that's not an normal occurrence. When I look at the production report for the practice, what I'm looking for is a stop that's an almost, we're things that lead it. And more to the point where they deleted it, there wasn't a key entry point yet.

We're entries modified later, where they backed it and that's the difference between entry date and procedure date that I talked about before. Another thing I want to look at is a pointless where there was no charge. These things happen for various reasons and I think of a patient coming in for an argument check as an example where there might be a no charge point. But they deserve a little bit of extra attention from the doctor because most of the time when people leave your practice, they should have a patient. And when they don't, there's something wrong. We want to look at adjustments and we want to look at why they're happening. I think I can't remember whether it's a major hammer has a slide in a one more detail on this. I'll let

them talk about what's going to be looked at when you're looking at adjustments. And the other thing I'll mention I call receivable scarpnuity and here's what I mean by that. You're ending a receivable yesterday. It should mean the same as you're starting with the rules today. If they're not, I'm back to what I said a minute ago. Something happened between 5pm last night and 8am this when a lot of software devices that will report on the daily production report will report the starting receiving the walls of the end. So what you need to do is really make sure yesterday's ending from yesterday's report is the same as today's starting with the schools. And when I talk about continuity, that's really why they. It's important that the amount of money that goes into the bank

and also each individual component of that deposit match the report. So Wendy was talking about separating things into different piles for cash and cash and cash and patient checks and insurance checks and so on. You can report gives you detail on all that stuff and you need to look at each component. Looking at the total wheelcouching problems. And when I say the bank deposit matches the report again, I'm not talking about how much money left your practice. What I'm interested in is how much money went into the bank and there's only one reliable way to find that out. And that's to go on your online making the next day and see what the deposit actually looks. That's how to do it.

Another thing that you need to look at is that all patients who are checked out. So most practice management software has this concept that when a patient appears at the front desk they get checked in by its mouth. And when they leave they get checked out. If they're not checked out what you really have is an appointment for which there's no charge because the only way to charge somebody is checked out. So you have a no charge appointment and it doesn't show up on your report as a new charge appointment. So you need to go back to your appointment book in your software and normally the appointments are called code different layers. There's some differentiation from patients who are considered by the software to still be in the practice versus those who have left. So we want to

make sure we're not missing any patients there. The other little complication and this goes back to something Amber mentioned a few minutes ago. You know that the first dental office I ever worked in was in 1989. And in those days when patients pay back. credit card. You use that machine ever was talking about, you know, I used to call it a knucklebuster. And you've got a, you've made the imprint on a sub-a paper and this is an important part. A sub-a paper used to deposit into the bank like it was a check. That's not what happens anymore. Now we have a merchant turmoil of swipe machine whichever way you want to call it. And what the swipe machine does is, it creates a tiny

difference. So when a patient pays by credit card today, you practice management software records that as received today. But it's definitely doesn't need your bank account for a couple of days. And what that means is that as the, as the, as the practice owner, it's not enough to see revenue in your practice management software. You need to come back to your bank account a couple of days later and make sure that credit card deposit actually didn't make it in your, your, your bank account. So you need some system for these deferred deposits. And we, we mentioned at the beginning that we have a spreadsheet called the monthly monitoring spreadsheet. One of the things it's really helpful for is cracking those deferred deposits. But if you don't use that, you need some kind

of system. You can't just forget about these things of a suit that they're going to come into your, in your practice later because if you do it all bite you in a sensitive period of your county.

And the final thing to do is enter the production of collections into that monthly water expression. One of the things to the monthly monitoring spreadsheet does is it totals all the days you enter. And that's what gives you a chance to sit there at the end of the month for the month end report and say, okay, it does that out after the totals call them on my spreadsheet. And the report you look at, but you're initials on it and secure it and buy that. I mean lock it off somewhere where you have access and nobody else does. Or if you're using electronic reports, then they need to be in a, in a secure electronic place. And your IT people should certainly set up a card if you're networked. You have access to and nobody else does.

Thank you Dave. That brings certain topics, especially that spreadsheet. And I would like to talk about one thing now that truly always matters to me and that's adjustments. As I mentioned earlier, I recommend you have a team member do their own report if you're a provider. And the reason that matters is not only what you completed for the day, but also what you're adjusting. And the main reason I see an issue with adjustments is a just as for a common session with the insurance companies that we are networked with or we take from patients. But we need to make sure those adjustments are detailed and specific. So if you are a practice owner or a provider or an office manager, whatever your role is in the office, you want to really pay

attention to those details because if every adjustment just says miscellaneous or PPO discount, when you go back and you look at what really happened, you don't have the details. So we recommend the detailed explanation. If it was a frequency issue that insurance wouldn't cover, we really want you to go into detail and understand why you're doing those adjustments. And why that money may not be collectible. The other thing is how large are your adjustments? Are your adjustments small amounts? Or you have big huge amounts. And that way you and your team can come together and get more details and make sure your insurance and your business is running smoothly and efficiently and you're verifying and you know all the details of what you're able to do for patients.

And then the other thing is finding, we want to make sure that those adjustments are not all done at once at the end of the day. Sometimes we recommend that a adjustments only be understood to the practice owner because they want the owner to understand what's going to happen. So when we're talking about timing, it's hard to talk about the 15 or 20 times a day to do those adjustments. But if everybody in the practice has to contribute and have to decal then understand what the adjustment came from, why is happening and really have documentation of it. It helps protect you more efficiently. Amber, if I can jump in for a second, the thing that doesn't dawn on all staff members in your

practice is that there's a bigger purpose to adjustments than simply bringing somebody's balance down to the amount of money that's actually going to come in. I mean those adjustments are used for all kinds of other things. For example, to look at your bad debt collection policies that I think when you're going to have something to say about a minute, to decide whether you're going to stay with a certain people or go out of that review. To look at, if you run any kind of marketing discount programs to evaluate how it works, I mean adjustments get used for a lot of other purposes other than just kind of fixing somebody's balance. So when Amber says it's important that they're classified, that's really why because then you can aggregate make decisions face on.

Right. And that's where I talked about categories matter. So you know the exact reason. Are you doing, is it a membership discount? Is it an insurance adjustment? What is the true meaning of that insurance adjustment? We should not say everything fall into just miscellaneous all the time. Miscellaneous is not our friend. And if you are making a lot of miscellaneous adjustments, probably you need more categories. My rule is always that if there's a miscellaneous adjustment, there needs to be a detailed explanation of notes and a lot of other things that, if you enforce that, that'll discourage staff from going to that one too quickly. You know if they have to write a no-each time to do it. And as we talked about, you know,

a lot of these adjustments we recommend that they be in the practice owner have to approve these and that's the specific reason we want these categories to matter. So that at the end of the day, when it owner takes a look at these reports, you know, they can talk to the staff who initials their report and say, I want to detail the why this adjustment occurred and they know realistically if it's done in the right way or not. Well, it's webinar Wednesday and my name is Wendy. So I get to talk about the dreaded ride-offs. The first thing that we need to realize about ride-offs is exactly what Amber was saying. In that, there is a difference. I don't need to go really into accounting terms.

I want to make sure that we're clear on this. There is a difference between a discount and adjustment and a right off, right? And the timing of when they happen. So a discount, a senior discount, a civil discount, whatever you want to give. That needs to occur at the time. The treatment fee is presented or entered

onto the patient's ledger car, right? So you enter it in at the net, or I'm sorry, at the gross value. And then you enter it at the gross value, and then take a discount off so that you get your net value. That's the beginning. If sometime between the beginning of treatment and the ending of treatment,

you need to make an adjustment for whatever reason. Let's say you need to make an adjustment for insurance for PPO allowance, or fee for service allowance, or a patient is upset about something and you just want to give them a courtesy and take some money off of that. That's an adjustment.

Right off, it needs to be specifically reserved for money that is owed to you for services that you have already performed, but you are not going to get that money because you have to write it all due to non-payment. Speaking of money that's written off due to non-payment, you know, one interesting thing is, I have a case right now where the client was just

100% sure that investment was occurring in his practice because the right officer was so high. Well, as the examiner once I got into all of the specific run-offs and doing my forensic audit, I really found that his right house really works that high. And here's the best news about that. Every patient chart that I visited and every patient measured that I visited

had co-beous amounts of notes regarding the collection activity that the staff member had done before they had written it off. Going back to types of adjustments, we figured out what was happening in this gentleman's practice was a disinvestment, rather it was that his staff member was using the term right off bad debt, just strictly to remove money obligations account instead of using an adjustment.

Right? So there's a lot, there's a lot of reason why it's important to know the difference between these different types of money, obviously at the type of accounting category, so there's been taken off of a patient's account. So the cause and the cause, it should definitely have documentation

to collection activity, should be detailed, the reasons why conversations should be done as well or should be documented as well. And then as Amber said, of course, we recommend that the business owner do the right us personally. So we also understand that there's some hindrances with that regarded in regards to practice software and the way that some of the right should get together.

And also some of these examples saying, I literally don't have time for out the game to sit down and write off bad debts and do the research on. They don't have to be done immediately. But a time you're getting ready to write off or pass to do account, it's been read in behind and then I'm gonna look 90 days, right? So you don't have to do it exactly right at that moment.

You can take some time later. And one of the best things about a practice owner or business owner, either doing the right else yourself or reviewing the right office on monthly basis is that it can tell you exactly how your systems are failing. What area did we fall down? So here's a good way to think about right offset. My friend Debbie Long, who's also an examiner at cost fair.

And this is what Debbie says. Debbie's husband is a practicing dentist, so she totally gets it. And Debbie says, if you're gonna do a right off of money, that your other research is that you're performing, or have already performed, you may as well reach around, take out your wallet and take your money from your wallet and hand it to somebody,

because that's exactly what you're doing, right? In theory, yes it is. We need to understand why our systems are failing, why do we have that past too many? So for example, you're writing off a whole lot of insurance 90 that's not paid. Well, possibly your staff members could be overestimating what insurance is going to pay,

to your pay before your patients. If you have a lot of right observations, then are just a late plant, a question might be, why didn't we get that payment from that patient when they left the office? So if you look clue on areas that are weak in your office, that need to be green and forced. But you gotta remember that just because you write off a balance,

doesn't mean that it's completely gone, right? I mean, you could turn it over to a collection agency if that's what you choose to do. Another I think could be a patient could come in. So what years from that point after it's been written off and they're making free future treatment, and then that would be an option for you to write that back on. I remember when I worked in a working on a office,

I was at the Brut desk working with someone during lunch, and it walks this patient. Ooh, I'm afraid to say it. It's a little bit of a big credit. She walked in the office, and she had been in in eight months. And in looking at her, looking at her, everything was documented precisely. The letters were sent, the certified letter

to protect her abandonment was sent all of that. There was just no response. Well, she looks at about eight months later, and she's got $3,000 in cash in her hand, right? And she's saying, I want to finish my treatment, and so sorry, I disappeared. So there's over so much that money can come back to you. But one thing that we do need to be very aware of

is that each individual... full state has their own laws governing collection policies within your business. And when you can collect and at what limit you have to just cut that patient off and write off of that. Let's talk about when you send money to collection. And how you treat it in the practice management software? Because that's something I think a lot of officers are a little bit unsure. The first thing is the obvious, you need to flag that chart.

You feel kind of stupid in like you end up treating some patients who just got a balance from three years ago that's been sent to collection. So we need to flag that chart. Most practice management software will let you color code the patients file when it comes up so that you don't end up doing this by accident. The second thing is if you're not going to allow the patient to re-point with you, you really need to tell them that in most states kind of want you to send some kind of certified mail to the patient to let them know that they're not eligible for re-appointing your practice.

This is the one that a lot of people don't do. And I think it makes your life a lot similar. When you send money to a collection agency, typically they work on a percentage of what they recover. So if they're percentages 40% for example, as soon as you send it to the collection agency, you've lost that 40% in the unit that the collection agency gets full payment from the patient. They're only ever going to see 60%. So my suggestion is when you send something to collection, make the right off of the collection

agency speed. And that's just acknowledging really the best use in there. I don't like writing a whole thing off because then it's starting to get forgot about in that patient. May get reapplying. We want to know next time we touch their chart, they still have a balance. But to me, it's a whole lot easier just to recognize the target. Now I know it's never going to happen.

And as I say, we've already made our own books. So now we've talked about the daily system and what we need to do to look at all the details and what how to know what it sends and buy collections. But the final piece of this puzzle is we still have to keep the system going and have a month in system. The main thing that we recommend for your manager or your staff or team members is at the end of each month that closes all of the statement out, the month out, and your practice management system, this allows you to know that everything is done and completed.

And then the other thing is we want to make sure you're generating and sending statements electronically and even physically if patients don't have electronic communication methods to your patients. Like a day was saying, there's a lot of states that there's certain requirements on when you can send them to collections. So you want to make sure you have a good monthly system to keep that account to people who will help me and make sure that's going to be able to reconcile on that one daily and monthly basis.

Then you want to look at your overdue insurance claims and determine the follow-up action so that when you look forward in the future, you don't have a lot of adjustments that could have been prevented. Sorry, I have a busy answer to the question there for you. The owner has a few things to do as well. I'm giving you some reports that I think are green ones for you to look at. And I'm using generic names here. They may have slightly different needs in your practice management software, but we want

to look at receiveables and I suggest looking at it too, with credit balances included and then filter them out. And sometimes especially if somebody is in bed like, they will create a lot of credit balances behind what's really going on. You get a very different window of the practice when you turn off credit balances and you only look at debit balances in other words when patients owe you money. We should look at deleted transactions and modified transactions in a distance. So those are three reports that your practice management software can only produce for you.

We also, of course, want to look at our monthly production collection report from your practice management software. And assuming you're working with a collection agency, they send a monthly report and you want to look at that and compare it to your practice management software to ensure that the stuff's being treated properly. So to me, that's what you look at at the end of a month. There may be other things you want to look at. We're not really talking here about what are sometimes called KPIs or key performance indicators.

This is just, that's the most reports from your practice management software. And Amber talked about staffing required to close the month in your software. What you need to do is check that. Here's the significance of closing a month. So a month is closed in most software. You can no longer close transactions into that month. So you can't adjust stuff. You can't delete stuff.

You can't do anything to that month once it's closed. That's kind of like putting a big patloch on. If staff are in bed. One thing they're often reluctant to do is to close past months. So Dr. you need to look at this. How do you tell a month is closed? It varies a little bit from software to software. If you're not sure, this is a great question to ask a trainer from your software.

Different software shows a different base, but you can always tell if a month has been closed. So that's something you need to please. And the other question is, do the daily totals articulate to the monthly total? And our spreadsheet will do that for you really nicely. There's certainly other ways to do it, but that monthly spreadsheet. And I get all remind people on the follow up email, which is going to come out in about 22 minutes. You will get a link to download the monthly monitoring spreadsheet.

And the other thing we do with that spreadsheet is we cross off the process, including those deferred amounts that we document when the communication pays by a credit card today. And it doesn't drop in your bank account for two days. The monitoring spreadsheet helps you with that, because basically there's a space for you to check off and just deposit as it appears. So that's what you do at month. There's not a lot of time in all this, believe we're not. I mean, this is probably our activity.

So let's talk about a little audit. Now, we love for an auditing at cross-bearded, but realize you really don't like that. Very much. But a great idea is every now and then to select 10 patients per provider in your office. And follow through exactly the financial processes that have gone on with that patient. Love these patients that you select. Of course you'll want to. selects the patients that her past did. Because you want to figure out what exactly happened

with that patient, why they have an overdue balance? Why they have an overdue balance? Where that balance says help from? Is it failure? Just to collect the money, when the patient leads or did something else happen with that particular patient or their insurance balance? Because of insurance also, we want to select patients that are in correct treatment. And grab an EOB from just a random patient's, grab it, and then follow the process through that EOB through their treatment through the EOB making sure that the EOB's correct, that the adjustments are correct, that the payment that was posted is correct, and that follow up is done on any insurance claim that is outstanding. So now for a general dentist, this might be a good current treatment

patient who looked up might be a high-dollar volume appointment say like a grant. Before you see that grant, let's follow the process and make sure that everything is in place for that or for and orthodontist, it might be taking a look at a couple of patients that are set to be debonaged within the next month. Looking at what's their account look like? Is there a account paid off or if you've extended payments beyond their ECD? Is that patient set up in the proper way to make those payments even after you remove the braces from at the debonement? So now we're going to talk about one of my favorite favorites of decks, it's Reconciliation, and it's true. One of the reasons why I love reconciliation and I believe it should be incredibly detailed is because

in almost every single case where I have confirmed investment, it always showed up on the Reconciliation report somewhere, right? It always shows up somewhere if you're looking for it. Now I have a friend of mine who called me to tell me about this wonderful new reconciliation process that he had impermanent, it had implemented in his business and these are going to take him so much time. So I'm interested to hear this because I spend a lot of time doing forensic auditing. He tells me our new system is that we take what money is listed as deposit on the bank statement and on the merchant statement and we enter it into QuickBooks. Okay, well you guys know that Amber and I are both from Texas so I have some really choice works for him, but he was my friend so all I could say is

Garland Bless your card. And then we had a conversation about the right way to reconciling, right? Here's why that was such a bad idea and here's what you should do. You take what comes from your bank and you reconcil it to your practice management system. Just as Dave said earlier in our presentation there to these two systems are actually different, your practice management software and your accounting software. They don't link anywhere. So your reconciliation using your bank statement from the third party which would be your bank is actually the only link that you have to make sure that those transactions are correct, right? Also same thing with your merchant accounts and same thing with any third party lenders that you have like care credits,

was it care credit worth of that whatever. But I know this is a really arduous process and

there's just no easy way out of it. It is so important that does not mean that as a business owner you have to do it yourself. You can hire a bookkeeper to do it or you could hire, I mean there are so many companies that work with us and our practices were remotely now and they would be happy to do what keeping for you and it would just take them a couple of hours to go in and they could access your PMS and they sure that your accounting software matches your practice management system information as well as your third party statements. The thing that we don't want to happen is that the person who's doing your reconciliation for you should not be the person who's posting payments in your software. Nor should it be the person

who's responsible for the end-to-day procedures each day, right? Because I can manipulate any data to say anything I want. But without that double chat of a reconciliation, right? I have free range to do whatever I want. So be careful about who you have doing the reconciliation. It should not be somebody that has permissions within your software. The final point I'd like to emphasize is that I speak with a lot of business owners who are surprised when I confirm investment with them and they always say why didn't my CPA catch this for me? My CPA reconciles my records for me, they sure caught this. Let me tell you, take it easy on your CPAs because reconciliation is not what they do, right?

What your CPA does is they take the different accounting mechanisms within your business and they categorize them, your expenses, they categorize employee expense, marketing expense, office supplies expense. They don't reconcile. Now you can have asked your CPA to reconcile for you and have a special contract within so that they'll perform that work for you. But again, here's the key. If your CPA is only reconciling your bank statements to your accounting software, you're missing the most important piece of a puzzle. that can detect investment. If your CPA is reconciling for you,

which you need to have confirmed number one, but if they are number two, those daily day sheets need to be sent to your CPA every single day so that they can confirm their correct. Yeah, again, the important thing, I fully get that a lot of you right now are seeing, this seems to argue this

and I didn't go to dental school to do this. I agree. When we talk about outsourcing, as Wendy said, it's got to be somebody who is not in your practice every day. This should be somebody who has no access to the cash in your practice, no access to the incoming funds. If you delegate these duties

to your office managers, kind of like handing the FOX to the key to the annance,

we need to outsource this stuff as opposed to delegate. And Wendy said that, but I just really want to re-emphasize. So how much time does all this take? If you're organized and if the staff do their jobs right, it shouldn't be around 10 minutes a day

around half an hour of lunch. If it's taken a lot longer than that, something that is wrong somewhere in your system.

But I'll go back to what we said at the beginning, if your staff is not balancing, and you are not overseeing that process, you have left this big door wide open in your practice that money will fly out of. And the lady on the screen is from a case that Wendy did, and you can see the number that I'm flying out of that door.

So let's stop the easy path. We'll thieves try to evolve to more advanced stuff if they feel like they have a need from being just deal from you. Absolutely, they will. But we see theft that happens. We see that we see all that time. If theft that happens,

because there's no overseeing of staff in terms of the financial operation of the practice. So let's shut that there. I'm sorry. Dave, we got a whole bunch of questions about where to get the spreadsheet. Yeah, that. Just be a mellis and you can see my email on the top.

Just email me and I'll make sure you get it directly. So everybody who wants to spreadsheet will get it, no problem. Dave, we have a question. Do they want to know how we can visit a dentist to protect him or herself? What is the best way? I'll remind them that it's all about their wallet.

If you want to do dentistry for free, that's great. I have no concern about that. There are lots of dental missions that we love to have you. If you want to do it and get paid for it, now you have to treat it like a business and not simply out-permission. So that would be my answer. There was a good question that I gave a quick answer to,

but I want to, I'm just looking for it because I'd like to give a little bit more detail. And what somebody was asking me, was they said, okay, we have a multi-office, multi-dogged practice. And the stuff you're talking about, David, and Amber, when he kind of sounds like it really is oriented to a single location, a couple of doctor practice. And that's absolutely correct.

What I will say is that exactly the same functions need to happen in a multi-practice office for a 500 practice DSL. The same stuff has to happen. It just may happen by different people. When you own multiple practices, no, you need to follow the same principle of not having the people who are in an office, taking in the cash and recording, taking that in,

doing the oversight. That's not gonna work. So you need somebody somewhere who is distinct from that office and has no access to the incoming funds or anything to do the oversight. So you have the same problem, the solutions might be a little bit different,

but thank you, that's a great question. David, I kind of have to, I'm just gonna wrap it forward and that you, and roll on this question and I jotted it down. So roll on if I don't get it right, you might wanna write me back and let me know. It says, how do you balance the changes in the numbers after the fact?

What I think he's referring to is if you run, maybe a double day sheet, these are referring to, or okay. Okay. Some things I think we might want to, no, might not want to discuss specifically here. Yeah, I think there are a lot of facets to that question. You know, a common complaint we get from people

is I print the month of April at the end of April and I print something pertaining to the month of April three months later and they don't line up with each other. We get that kind of thing a lot and it comes from a couple of different places. Sometimes in software and some software is more to see about this than others. Different reports use different assumptions.

And in one report, you may be looking at groceries and then another report, you may be looking at adjusted fees or something like that. And that of course is gonna cause the numbers on those two not to look like they line up with each other. The other issues, if past months are left open, then it's very possible to post transaction to a past month and that will cause exactly what we're talking

about where what is printed in April for April does not line up with what's printed in July for you. So that's where it's important to be closed months. We do not want transactions to be posted in the past months. I'm sure nobody made a mistake in a past month. What they really need to do now is post a correction in the current, not go back and rewrite history because that causes all kinds of problems.

And one question that somebody asked me that was kind of so large that we wanted to Wendy was, was talking about King with, you know, but if we closed months then we can't go and fix stuff in those months and my answer was exactly. That's what you want. If somebody's reached something up in April and it's now made, the fixed needs to happen and may not able.

And there are really very few exceptions about. Okay, then someone else, when you were talking about sending written off accounts to a collection agency, and you had said, go ahead and write off the collection agency fee to keep the remainder. I think it's a couple of people were all from off by that per bitch. Okay, so let's say you send $100 out of the collection. And you are a collection agency if they collect their money, we'll keep $40 in the words, they charge $40 per person. Okay, let's assume that, and then discuss that one. So what happens is when you send that to collection, you've immediately lost $40.

And to answer the question that I said, let's somebody ask, you cannot, you cannot recover that from the patient. In other words, you can't get the collection agency to collect $150, so that there's $100 left after. It doesn't work that way. When you send that to collection, you eat their fee. So when you send that $100 account to collection, the most you're ever going to get for it after that, if you know, the patient pays the collection agency. And the most you can get back is $60. So what I'm suggesting to you is when you send it to collection, right off to $40. And now let's left on the books is $60, which is really, you're absolutely not getting the scenario.

If the patient ends up not paying or they make a person pay, you may have a further right off, but let's acknowledge right now that we're never going to get. That's really what I'm suggesting. When I don't want you to do is right off the other $60, which is kind of tempting, because, you know, the dollars that come back when you send some of those collections, usually fairly small. It's tempting to write the whole thing off. How long is when you do that you serve for you about. And, and I don't think you should do that. So I'll hope that that clarifies when you are not sure. I really nailed it there, but that's that's what I was saying.

Take the hit that the collection agency is going to take from you right now. So Dave, here's a question. Someone was wondering if there are any systems that you like that are better for taking cash, chat credit cards, your services. You're not sure if there are any systems that you like that. So, I think COVID has given us the excuse to do something that probably a lot of us have wanted to do for all the time. And that is don't take cash. A lot of our cash is the first one that is the most tempting target for the agency. I mean, these will still check some fine ways to cash on the belt.

They'll, they'll enter some credit card gameings and they'll redirect the FTE deposit. They can do all of those things any form of payment to you can be stolen. But their first raise is cash. And it's also a hiring account for it. You saw that system that I gave you where you break cash into the two pieces. You know, penny cash looks to this for dispersion is in full cash that's for receipts. A lot of that goes away if you just don't take cash. So one, one thought that I am is that, you know, one of the problems with cash is that it is handled by a lot of credit cards.

And the question is that it is handled by a lot of people. You know, we could, we could debate for a long time how long COVID will have been on a service. But to me, it's really easy. And just to say, for the health and safety of our staff and the other patients in the practice, we don't understand cash. And let's kind of force people into one of the other payment forms. To me, the only really important thing about that is that people need to know about that advance. In other words, somebody should not be standing in front of you having just had treatment and learn at that moment that you don't take cash. This is something that needs to be communicated, you know, well in advance, so that people can be raised with.

But I know a very few people today who don't have, you know, a bank account with the debit card, when you have a credit card or something. The only exception we probably is, as you get our rural, you know, if you're in a community where there are a lot of, for example, migrant farm, or some people like that, they're the ones who really tend not to have a bank account, so at least that they can get out. So that might be a case where it's difficult to implement that, but you know, if you're in an urban practice and using. I personally don't think it would be all that hard for you to simply say, or we're just not taking cash anymore. Okay. I'd like to thank my wonderful coals to put a lot of work into this line, to see if somebody will happen every week. And I just want to acknowledge this for that.

And we'll see everybody next week. Have a great week. Thanks for listening to the dental practice on our spotcast. Brought to you by Prosperidant. You can contact Prosperidant through its website, www. Prosperidant.com, or by calling 888-398-2327. If you have questions about this podcast, if you would like to discuss your practice, or there is a topic you would like to see in a future podcast, we would love to hear from you. Amber, Wendy, and David will be back soon with another episode.

Thanks for listening to the dental practice on our spotcast. Brought to you by Prosperidant. You can contact Prosperidant through its website, www. Prosperidant.com, or by calling 888-398-2327. If you have questions about this podcast, if you would like to discuss your practice, or there is a topic you would like to see in a future podcast, we would love to hear from you. Amber, Wendy, and David will be back soon with another episode.