A Bookkeeper's Guide to Dental Practice Reconciliation

You just landed a dental practice client. Their revenue cycle is different from anything you have worked with before. Here is what you need to know.

Welcome to Dental Accounting

Dental practices are attractive clients for bookkeepers. They generate consistent revenue, have predictable expenses, and typically need ongoing accounting support. Many bookkeepers actively seek dental clients as a niche specialty.

But dental accounting has a learning curve. The revenue cycle involves multiple payers, complex insurance rules, and practice management systems that operate parallel to traditional accounting software. Reconciliation that seems straightforward for other businesses becomes surprisingly complex.

This guide covers what bookkeepers need to understand about dental practice reconciliation. Whether you are taking on your first dental client or looking to improve how you serve existing ones, these fundamentals will help you provide better service.

The Dental Revenue Cycle

Understanding how money flows through a dental practice is the foundation of effective reconciliation.

Production vs Collections

Dental practices track two key numbers that other businesses do not distinguish as clearly:

Production: The value of services provided, based on the practice's fee schedule. When a dentist completes a crown, production equals the crown's fee, regardless of what will actually be collected.

Collections: The money actually received. This is always less than production due to insurance adjustments, patient portions not collected, and write-offs.

The gap between production and collections is normal in dental. A healthy practice collects 95-98% of adjusted production (production minus contractual adjustments).

As a bookkeeper, you work primarily with collections since that is what hits the bank account. But understanding production helps you evaluate practice health.

Three Payment Sources

Dental practices receive payments from three main sources:

Insurance companies: Typically 40-60% of revenue. Insurance payments arrive as lump sums covering multiple patients and require detailed matching to patient accounts.

Patients: The remaining 40-60%. Patient payments cover copays, deductibles, non-covered services, and full fees for uninsured patients.

Financing companies: CareCredit, Sunbit, and similar platforms pay practices for financed treatment. These payments have their own reconciliation requirements.

Each source has different timing, documentation, and reconciliation challenges.

The Practice Management System

Dental practices use specialized software called practice management systems (PMS). Common platforms include Dentrix, Open Dental, Eaglesoft, and Curve Dental.

The PMS handles:

• Patient scheduling and records
• Treatment planning and charting
• Insurance billing and claims
• Payment posting and patient billing
• Production and collection reporting

Here is the critical point: the PMS operates separately from QuickBooks or whatever accounting software you use. Data does not automatically sync. Reconciliation means ensuring these two systems agree.

Payment Types and How They Flow

Insurance EFT Payments

Most insurance payments arrive electronically via ACH/EFT (electronic funds transfer). Here is how they work:

1. Practice submits claim to insurance company
2. Insurance processes claim (days to weeks)
3. Insurance sends electronic payment to practice bank account
4. Insurance sends Electronic Remittance Advice (ERA) explaining the payment
5. Practice posts payment to patient accounts using ERA details

Reconciliation challenge: The money arrives as a lump sum. One deposit might cover 20+ patients. Without the ERA, there is no way to know how to allocate it.

What you need to verify: Every insurance deposit has a matching ERA. Total ERA payments equal total deposits. Payments were posted to correct patient accounts.

Insurance Checks

Some payers still send paper checks with paper EOBs (Explanation of Benefits). The process is similar to EFT but with manual handling:

1. Check and EOB arrive by mail
2. Front desk deposits check
3. Staff posts payments using EOB information

Reconciliation challenge: Paper checks can be lost, delayed, or deposited without being posted. EOBs get separated from checks.

What you need to verify: All deposited checks were posted. Check amounts match EOB totals.

Patient Payments - Credit Card

Credit card payments go through multiple steps:

1. Patient pays at checkout
2. Terminal processes the transaction
3. Staff posts payment to patient account in PMS
4. Practice batches out terminal at end of day
5. Processor deposits funds (1-3 business days later)

Reconciliation challenge: Timing gaps between processing and deposit. Fees deducted from deposits. Multiple transactions batched into single deposits.

What you need to verify: PMS credit card payments match terminal batch totals. Batch totals match merchant deposits minus fees.

Patient Payments - Check and Cash

Cash and check payments:

1. Patient pays at checkout
2. Staff posts payment to patient account
3. Money goes into deposit
4. Deposit goes to bank

Reconciliation challenge: Cash can be miscounted or mishandled. Checks can be lost. Payments might be posted incorrectly or not at all.

What you need to verify: PMS cash and check totals match deposit totals. Deposits match bank credits.

Patient Financing Payments

When patients use CareCredit or similar financing:

1. Patient applies and gets approved
2. Practice submits transaction for approved amount
3. Financing company pays practice (minus merchant fee)
4. Patient repays financing company over time

Reconciliation challenge: Different fee structures, timing varies by platform, need to track which cases were funded.

What you need to verify: Approved financing was actually funded. Funded amounts match deposits minus fees.

The Reconciliation Framework

Daily Reconciliation (Practice Responsibility)

Well-run practices reconcile daily. This involves:

• Matching credit card batches to PMS totals
• Verifying cash drawer counts
• Identifying insurance EFTs and matching to ERAs
• Ensuring all payments are posted

As a bookkeeper, you benefit when your client does this well. Problems are caught early and trails are fresh.

Monthly Reconciliation (Your Responsibility)

Your monthly close should verify:

Bank to PMS Agreement

• Total bank deposits equal total PMS payment reports
• Each deposit can be traced to specific payments
• Variances are identified and explained

Insurance Payment Accuracy

• Insurance deposits match posted insurance payments
• No unposted EFTs sitting in the bank
• Take-backs and adjustments properly recorded

Credit Card Accuracy

• Merchant deposits match PMS credit card totals
• Fees are properly recorded
• Timing differences are documented

Cash and Check Accuracy

• Deposit records match bank deposits
• PMS cash/check totals reconcile

Quarterly Deep Dive

Periodically, go deeper:

• Review accounts receivable aging and collectability
• Analyze credit balances and recommend action
• Compare collection rates to prior periods
• Identify trends or anomalies in adjustments

Common Issues You Will Encounter

Unidentified Deposits

Money in the bank that nobody can explain. Usually caused by:

• Insurance EFTs without posted ERAs
• Payments posted to wrong patients or dates
• Non-revenue deposits (loans, transfers) not documented

Resolution: Work with the practice to identify each deposit. Check ERA sources, review patient accounts, trace transaction details.

PMS to Bank Variance

The PMS shows more (or less) payments than the bank received. Causes include:

• Posting errors
• Timing differences
• Payments recorded but not deposited
• Deposits made but not recorded

Resolution: Break down by payment type and reconcile each category separately. Look for specific transactions that explain the gap.

Credit Balance Accumulation

Patient accounts showing credit balances that grow over time. This represents:

• Overpayments needing refunds
• Posting errors needing correction
• Unapplied payments needing allocation

Resolution: Review regularly, recommend specific actions, track until resolved.

Insurance AR That Never Clears

Claims that remain unpaid indefinitely. Usually caused by:

• Claims never submitted
• Rejections not addressed
• Denials not appealed
• Payments received but not posted

Resolution: Help the practice establish follow-up procedures. Identify claims that should be written off.

What to Request From Your Dental Clients

To serve dental clients effectively, request:

Monthly Deliverables

• Bank statements (all accounts)
• Merchant account statements
• PMS payment reports by type
• PMS deposit report
• Production and adjustment reports
• AR aging report
• Credit balance report

Access You May Need

• Read-only PMS access (if possible)
• Bank feed integration
• Merchant portal access
• Clearinghouse access for ERA verification

Established Procedures

• Who reconciles daily at the practice?
• Who is your contact for questions?
• What is the deadline for delivering month-end reports?
• How are discrepancies communicated and resolved?

Building Dental-Specific Expertise

Learn the Terminology

Dental has its own language. Key terms to know:

• ERA/EOB: Payment explanation documents
• UCR: Usual, Customary, and Reasonable fees
• Write-off: Amount removed from patient balance
• Contractual adjustment: Insurance discount per contract
• Take-back/Recoupment: Insurance reversing a previous payment
• Coordination of Benefits: When patients have multiple insurance

Understand Insurance Basics

You do not need to become a dental billing expert, but understand:

• How dental insurance works (annual maximums, deductibles, percentages)
• Why insurance pays less than billed charges
• What causes claim denials and rejections
• How EFTs and ERAs relate

Know Common PMS Reports

Each PMS generates reports differently, but these standard reports exist on all platforms:

• Day sheet (daily summary)
• Payment report (by date, type, provider)
• Adjustment report (with reason codes)
• Deposit report
• Production report
• AR aging report

Ask your client to show you how to run these reports or request them regularly.

Adding Value Beyond Reconciliation

Dental practices appreciate bookkeepers who go beyond basic number-matching.

Provide Meaningful Metrics

Track and report:

• Collection rate trends
• AR aging trends
• Production per provider
• Overhead percentages
• Key expense ratios

Identify Issues Early

Flag concerns proactively:

• Growing AR or credit balances
• Declining collection rates
• Unusual adjustment patterns
• Cash flow changes

Recommend Improvements

When you see process problems, suggest solutions:

• Better daily reconciliation procedures
• Improved documentation practices
• Tools that could help (like automated reconciliation)

The bookkeeper who helps the practice improve is far more valuable than one who just processes transactions.

Looking for an edge with your dental clients? Zeldent's multi-client dashboard lets bookkeepers monitor reconciliation across all their dental practices from one login. Automated daily matching means you get clean data without the manual work, and exception alerts tell you exactly where to focus. Schedule a demo to see why bookkeepers are adding Zeldent to their service offering.