Common Dental Reconciliation Issues Bookkeepers Inherit

You just signed a new dental practice client. They said their books were in good shape. You open the files and realize you have inherited a mess.

The New Client Reality Check

Every bookkeeper who works with dental practices has experienced it. A new client assures you their finances are well-managed. Then you start digging and discover months or years of accumulated problems.

This is not unusual. Many dental practices operate without professional accounting support. Others have had bookkeepers who did not understand dental-specific challenges. Some have been through staff turnover that created gaps.

Whatever the cause, you are now responsible for cleaning it up. Understanding the most common inherited issues helps you assess the scope of work, set appropriate expectations with your client, and develop an efficient cleanup plan.

Unidentified Deposits: The Universal Problem

Almost every dental practice you take on will have unidentified deposits. This is the single most common reconciliation issue.

What You Will Find

Bank account deposits that nobody can explain. They might be labeled as insurance payments but have no matching ERA. They might be lump sums that could be anything. Some will be recent. Others will be months or years old.

Typical scope: $5,000 to $50,000 or more in unidentified deposits, depending on practice size and how long the problem has persisted.

Why It Happens

• Insurance EFTs received but ERAs never downloaded or matched
• Payments posted to wrong patients or dates
• Non-revenue deposits (loans, transfers) never documented
• Staff turnover losing institutional knowledge
• Nobody assigned to reconcile

How to Address It

Triage by age and amount. Focus on larger amounts and more recent deposits first. Old, small deposits may not be worth the investigation time.

Check ERA sources. For any deposit that could be insurance, search clearinghouse and payer portals for ERAs around that date and amount.

Match to PMS patterns. Look for payments posted around the same date that might match the deposit amount.

Document your investigation. For each deposit, record what you checked and what you found (or did not find).

Set a resolution deadline. Items that cannot be identified within 60-90 days should be discussed with the owner for write-off decision.

PMS to Bank Reconciliation Gaps

The practice management system and bank account should agree. They often do not.

What You Will Find

Monthly totals that do not match. The PMS might show $85,000 in collections while bank deposits total $82,000. Or vice versa. The variances may be consistent or erratic.

Typical scope: 2-8% variance is common in practices without regular reconciliation. Larger variances indicate more serious problems.

Why It Happens

• Payments posted but not deposited (lost checks, stolen cash)
• Deposits made but not posted
• Timing differences not tracked
• Credit card fees not accounted for
• Posting errors accumulating over time

How to Address It

Reconcile month by month. Start with the most recent month and work backward. Trying to reconcile everything at once is overwhelming.

Break down by payment type. Reconcile credit cards, insurance, and patient payments separately. This helps isolate where discrepancies originate.

Look for patterns. If the variance is consistent, it suggests a systematic issue. If erratic, it suggests random errors.

Accept some residual. Perfect reconciliation of historical periods may be impossible. Document the gap and establish clean go-forward processes.

Credit Balance Accumulation

Patient accounts showing credit balances represent either money owed to patients or posting errors. They should not accumulate, but they always do.

What You Will Find

Credit balance reports showing dozens or hundreds of patients with credits. Some small, some large. Some recent, some years old. Total credit balance may be $10,000 to $50,000 or more.

Typical scope: Credit balances often equal 1-3% of annual collections in poorly managed practices.

Why It Happens

• Insurance overpayments not refunded
• Patient overpayments not refunded
• Payments posted to wrong accounts creating credits
• Refunds processed in PMS but checks never issued
• Nobody reviewing or managing credit balances

How to Address It

Age the balances. Sort by how old the credits are. Recent credits are easier to resolve and more likely to require refunds.

Categorize by cause. Determine whether each credit is an overpayment needing refund or an error needing correction.

Verify refund obligations. For older credits, check whether the practice has an obligation to refund or whether escheatment rules apply.

Create a resolution plan. Work through credits systematically, processing refunds and corrections.

Establish ongoing management. Implement monthly credit balance review to prevent future accumulation.

Adjustment Chaos

Adjustments should be categorized, documented, and appropriate. Often they are not.

What You Will Find

Adjustment reports full of vague categories. Large adjustments without documentation. Patterns that make no sense. Adjustment totals that seem too high or too low.

Typical scope: Adjustment issues range from sloppy categorization to potential fraud indicators.

Why It Happens

• No written adjustment policies
• Adjustment categories not properly configured in PMS
• Staff taking shortcuts
• Insurance adjustments estimated rather than taken from ERAs
• Adjustments used to hide other problems

How to Address It

Analyze adjustment patterns. Calculate adjustments as percentage of production. Compare to typical ranges (usually 15-30% depending on payer mix).

Review large adjustments. Pull detail on any adjustments above a threshold amount. Look for documentation and approval.

Look for red flags. Round numbers, concentrations with one person, spikes at certain times, or vague categories warrant scrutiny.

Establish categories and policies. Configure proper adjustment reason codes. Create written policies for when adjustments are appropriate.

Implement approval requirements. Adjustments above threshold should require manager or owner approval.

Insurance AR That Never Moves

Accounts receivable should turn over. Old insurance AR suggests claims are not being worked.

What You Will Find

AR aging showing substantial insurance balances over 60, 90, or 120 days. Claims that have been pending for months. No evidence of follow-up activity.

Typical scope: Insurance AR over 90 days should be under 15% of total insurance AR. Problem practices often have 25-40% or more in old buckets.

Why It Happens

• Claims submitted but never followed up
• Denials received but not appealed or corrected
• Secondary insurance never billed
• Staff overwhelmed or untrained
• Nobody assigned to AR management

How to Address It

Assess collectability. AR over 180 days is often uncollectible. Be realistic about what can be recovered.

Identify quick wins. Some aged AR may pay with simple follow-up. Claims that just need a call or resubmission.

Work systematically. Create a follow-up schedule prioritized by amount and likelihood of collection.

Set write-off expectations. Discuss with the owner what should be written off versus worked.

Establish go-forward process. Implement AR management procedures to prevent future accumulation.

Documentation Gaps

Good records are the foundation of good accounting. Inherited practices often have poor records.

What You Will Find

Missing bank statements. EOBs that were not saved. Adjustment records with no backup. Financial decisions with no documentation.

Typical scope: Documentation gaps make historical reconciliation difficult and may indicate larger problems.

Why It Happens

• No document retention policies
• Staff not trained on documentation importance
• Physical documents lost in moves or floods
• Digital records not properly backed up
• Intentional destruction (fraud cover-up)

How to Address It

Inventory what exists. Document what records are available and for what periods.

Obtain what you can. Request bank statements, merchant records, and other documents from external sources where possible.

Accept limitations. Some historical documentation is gone forever. Document the gap and move forward.

Establish retention going forward. Implement proper document retention policies and procedures.

Setting Client Expectations

Inherited messes require managing client expectations.

Scope the Cleanup

Before committing to a cleanup, assess the work required:

• How many months of unreconciled activity?
• How large are the unidentified deposits?
• What is the credit balance situation?
• How bad is the AR aging?

Price Appropriately

Cleanup work is separate from ongoing bookkeeping. Either:

• Quote a fixed fee for cleanup phase
• Bill hourly for cleanup with an estimate
• Build cleanup into higher ongoing fees for initial period

Do not absorb cleanup costs in standard monthly fees. You will resent the client.

Communicate Clearly

Set expectations about:

• Timeline for cleanup
• What can realistically be resolved
• What may need to be written off
• When normal operations will begin

Establish Boundaries

Make clear that cleanup is finite. You will work through historical issues, establish clean processes, and then operate normally. You are not responsible for solving problems created before your engagement indefinitely.

Preventing Future Issues

Once cleanup is complete, establish processes to prevent recurrence.

Regular Reconciliation

Implement monthly reconciliation at minimum. Weekly or daily is better.

Clear Procedures

Document who does what, when, and how. Remove ambiguity.

Oversight

Review client financials regularly. Catch issues early.

Communication

Establish regular check-ins to discuss questions and concerns.

Taking on new dental clients means inheriting their reconciliation problems. Zeldent helps bookkeepers clean up faster and prevent future messes. Our multi-client dashboard shows you exactly where each practice stands, what needs attention, and whether your cleanup efforts are working. Schedule a demo to see how Zeldent makes dental client management easier.