A Bookkeeper's Guide to Dental Practice Reconciliation
Dental practices are not like other small business clients. The revenue cycle is more complex, the payment sources are more varied, and the reconciliation challenges are unique.
📚 Part of our reconciliation series: This article is part of The Complete Guide to Dental Practice Reconciliation, our comprehensive resource on closing your books accurately and preventing revenue leakage.
Why Dental Is Different
Bookkeepers serving dental practices need to understand what makes them unique. Revenue arrives from multiple sources including patient payments in cash, check, and credit card plus insurance payments via EFT and check. Each source has different timing and reconciliation requirements.
Production does not equal collections. Dental practices produce revenue through procedures, but collection happens later and often only partially due to insurance adjustments, patient payment plans, and uncollected balances.
The practice management system is a parallel financial record. Dental practices track production, billing, and collections in specialized PMS software that must reconcile to the accounting system and bank accounts.
Insurance creates complexity through claim submission, adjudication, ERA processing, and take-backs that do not exist in simpler businesses.
Understanding the Data Sources
Bank statements show actual money movement including all deposits into practice accounts and all payments out. This is ground truth for cash position.
The practice management system shows clinical and billing activity including production by procedure and provider, payments posted by patient and type, adjustments applied to accounts, and accounts receivable balances.
Merchant statements show credit card processing including transactions processed, deposits made, fees charged, and chargebacks.
Insurance ERAs show what payers say they paid including payment amounts by patient and procedure, adjustment codes explaining payment decisions, and total payment for each remittance.
Core Reconciliation Tasks
Bank reconciliation verifies that accounting records match actual bank activity. Deposits in books should match bank deposits. Payments in books should match bank debits. Outstanding items should be documented and reasonable.
PMS to bank reconciliation verifies that practice management system collections match actual deposits. Total collections per PMS should equal bank deposits for the same period. Variances require investigation.
Credit card reconciliation verifies that credit card payments match merchant deposits. PMS credit card payments should match merchant deposits after accounting for fees. Batch timing may create period-end differences.
Insurance payment reconciliation verifies that posted insurance payments match ERAs which match bank deposits. Each insurance deposit should trace to a specific ERA which should be fully posted to patient accounts.
Common Dental-Specific Issues
Unidentified deposits occur when bank deposits cannot be traced to specific patient or insurance payments. These accumulate when posting is incomplete or ERAs are not matched to deposits. Resolution requires research into each unidentified item.
Insurance payment timing creates variances because ERAs may arrive on different days than deposits, creating temporary mismatches that resolve when all items are processed.
Take-backs occur when insurance companies recoup prior payments by deducting from current payments. These appear as reduced deposits and require adjustment of original patient accounts.
Patient credit balances accumulate when payments are posted but not applied or when overpayments occur. These represent liability and require monitoring.
Production to collection variances are normal in dental because of contractual adjustments, patient responsibility, and timing. Understanding expected variance helps identify actual problems.
Working with Practice Staff
Establish clear communication about what reports you need and when you need them. Create a checklist the practice can follow.
Request specific reports including daily or monthly deposit reports from PMS, production and collection summaries, adjustment reports, and AR aging.
Ask questions when data does not make sense. Practice staff have context you lack.
Provide feedback when you find issues so the practice can improve processes.
Monthly Close Process
Gather all data including bank statements, PMS reports, and credit card statements.
Perform reconciliations by reconciling bank accounts, matching PMS to deposits, and investigating variances.
Review and analyze by examining AR aging, adjustment levels, and collection rates for reasonableness.
Document and report by preparing financial statements and noting any issues for practice owner attention.
Follow up on open items by tracking unresolved reconciliation items until they are resolved.
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