Accepting Checks
When accepting checks from patients and other individuals, take a few minutes to inspect the check for this may eliminate checks returned from the bank for various reasons.
· Inspect the check for correct date, amount, and signature.
· Do not accept a third-party check (a check written to the patient from another person or company) unless it is from the insurance carrier.
· If a deposited check is returned from the bank marked "insufficient funds," adjust the check account balance accordingly. Follow office procedure for notifying the patient that the check was returned.
Lost or Stolen Checks
In the event that a check is missing and is thought to be lost or stolen, report this to your bank immediately. In some cases, you may be advised to stop payment to prevent unauthorized cashing of the check. In other situations, the bank may place a warning on the account, advising bank representatives to be especially careful about checking signatures to detect any attempt at a forged signature.
Writing and Recording Checks
Part of daily financial practices includes writing checks to pay bills (accounts payable), refunds of overpayment, and replenishment of petty cash. It is important that checks be typed or written legibly to avoid bank errors. Checks should be dated and must include the name of the payee and the amount of payment entered both in figures and in words. It is also advisable to complete the "memo" line on the check indicating what the check is for or, in some cases, an account number for reference purposes. In addition, business checking accounts need to make reference to the disbursement of the funds. Disbursement accounts are numbered accounts that break all expenditures into categories (i.e., salaries, rent, supplies) in the general ledger. At the end of the year, the accounts in this ledger will provide the figures for all tax-deductible expense. When the accountant completes the tax form for the practice, the information from the disbursement accounts is then easily transferred to the tax forms. Before preparing the actual check, complete the check stub, which is the only record of payments made from the account. The stub should include the same information entered on the check as well as the disbursement account name or number for the accountant. Remember, it is critical for tax purposes that each check stub contain disbursement information so the bookkeeper can post the information to the correct accounts in the general ledger. When the checks have been prepared, verify that the check amounts agree with the amounts written on the stubs, then subtract those amounts from the checkbook balance.
Rules for Writing Checks
Follow these few rules to assure that checks are properly written and recorded.
· Check that the numerical and written amounts agree.
· Check that everything is spelled correctly.
· Determine that the check has been signed by an individual with signature privileges.
· Follow office procedure for having the physician or office manager approve all expenditures and/or sign all outgoing checks.
· Check that it is payable to the correct payee and that the current date is used.
Reconciling a Bank Statement
Each month the bank will send a statement for the checking account (Figure 17-10). The statement will show the account balance according to the bank's records, a listing of all checks that have cleared the bank, deposits received by the bank, and any service charges deducted from the account. It is necessary to reconcile the entries in the checkbook against this statement to be sure there are no errors either in the checkbook or in the bank's records.
Purchasing Supplies and Equipment
It is important to ensure proper control over purchasing of supplies and equipment for several reasons:
1. To avoid purchase of unnecessary items
2. To avoid duplication of items purchased
3. To prevent employees from ordering items for personal use
4. To provide a system for payment of only those items properly ordered and received
In order to accomplish these things, the first rule of purchasing should be that: nothing is ordered or paid for without a purchase order or purchase order
number. A copy of the purchase order is sent to the supplier and a copy is retained by the office for verification of shipment and payment of invoice.
When accepting checks from patients and other individuals, take a few minutes to inspect the check for this may eliminate checks returned from the bank for various reasons.
· Inspect the check for correct date, amount, and signature.
· Do not accept a third-party check (a check written to the patient from another person or company) unless it is from the insurance carrier.
· If a deposited check is returned from the bank marked "insufficient funds," adjust the check account balance accordingly. Follow office procedure for notifying the patient that the check was returned.
Lost or Stolen Checks
In the event that a check is missing and is thought to be lost or stolen, report this to your bank immediately. In some cases, you may be advised to stop payment to prevent unauthorized cashing of the check. In other situations, the bank may place a warning on the account, advising bank representatives to be especially careful about checking signatures to detect any attempt at a forged signature.
Writing and Recording Checks
Part of daily financial practices includes writing checks to pay bills (accounts payable), refunds of overpayment, and replenishment of petty cash. It is important that checks be typed or written legibly to avoid bank errors. Checks should be dated and must include the name of the payee and the amount of payment entered both in figures and in words. It is also advisable to complete the "memo" line on the check indicating what the check is for or, in some cases, an account number for reference purposes. In addition, business checking accounts need to make reference to the disbursement of the funds. Disbursement accounts are numbered accounts that break all expenditures into categories (i.e., salaries, rent, supplies) in the general ledger. At the end of the year, the accounts in this ledger will provide the figures for all tax-deductible expense. When the accountant completes the tax form for the practice, the information from the disbursement accounts is then easily transferred to the tax forms. Before preparing the actual check, complete the check stub, which is the only record of payments made from the account. The stub should include the same information entered on the check as well as the disbursement account name or number for the accountant. Remember, it is critical for tax purposes that each check stub contain disbursement information so the bookkeeper can post the information to the correct accounts in the general ledger. When the checks have been prepared, verify that the check amounts agree with the amounts written on the stubs, then subtract those amounts from the checkbook balance.
Rules for Writing Checks
Follow these few rules to assure that checks are properly written and recorded.
· Check that the numerical and written amounts agree.
· Check that everything is spelled correctly.
· Determine that the check has been signed by an individual with signature privileges.
· Follow office procedure for having the physician or office manager approve all expenditures and/or sign all outgoing checks.
· Check that it is payable to the correct payee and that the current date is used.
Reconciling a Bank Statement
Each month the bank will send a statement for the checking account (Figure 17-10). The statement will show the account balance according to the bank's records, a listing of all checks that have cleared the bank, deposits received by the bank, and any service charges deducted from the account. It is necessary to reconcile the entries in the checkbook against this statement to be sure there are no errors either in the checkbook or in the bank's records.
Purchasing Supplies and Equipment
It is important to ensure proper control over purchasing of supplies and equipment for several reasons:
1. To avoid purchase of unnecessary items
2. To avoid duplication of items purchased
3. To prevent employees from ordering items for personal use
4. To provide a system for payment of only those items properly ordered and received
In order to accomplish these things, the first rule of purchasing should be that: nothing is ordered or paid for without a purchase order or purchase order
number. A copy of the purchase order is sent to the supplier and a copy is retained by the office for verification of shipment and payment of invoice.