Electronic funds transfers, otherwise known as EFTs, are all the buzz right now. The team at Global Team Solutions has received a lot of questions about them lately. Insurance companies have started using them, and many companies are sending letters to dental practices stating that an EFT is the only way they’ll be able to receive their funds. While I believe EFTs are a wonderful way to receive money, the problem I’m seeing is that they’re making the end-of-day balancing confusing for many offices.
The first of many questions we’ve received is, “What does EFT mean?” An electronic funds transfer is the money deposited directly into the doctor’s account. There is no check that comes to the office that requires a deposit in the bank. The money just magically appears. It’s much like the way many employees receive their paychecks these days.
Keeping track of which payments are made by check and which are paid by EFT is proving to be tricky for many offices. In most software systems there is an option to mark it as an EFT payment, or electronic payment. If that’s not an option, some offices are setting up a separate payment type for these payments, for example, “MetLife EFT payment.” Each office will need to determine how to accomplish this because it’s important to have these numbers separate when balancing the deposit for each day. For advice on that, feel free to contact me at [email protected].
Now, I just said that it’s important to balance these payments, and all payments for that matter. Many people may wonder, “Why is it so important to balance these payments? That money is going straight in the bank, right?” While this is true, you want to be sure you’re receiving all of the funds due to you by the insurance companies. Every payment that is entered in your computer system should be accounted for in the bank. There should not be more in one system than in the other. If you’re not balancing the payments, you don’t know if you’re applying the correct payments to your patients’ accounts.
WE HAVE BEEN RECOMMENDING THAT OUR CLIENTS SET UP A SEPARATE BANK ACCOUNT INTO WHICH THE EFTS CAN BE DEPOSITED. This account should be connected to the practice’s primary account in order to simply transfer the funds over when they’re received. The reason we feel this is helpful is because the practice owner can then simply print the deposits for this second account for the administrative team to balance against on a regular basis. Most practice owners do not want the admin team to see the complete bank statement of their practices. Also, it’s sometimes difficult to pick the EFTs out of everything else that is happening in an account. A second account simplifies things for everyone.
This brings us to the final question, “How does the practice know when a payment has been deposited in the bank?” Unfortunately, there is no easy answer to this since the insurance companies all notify you, or don't notify you, differently. When you’re setting up the EFT payments, we recommend that you ask insurance companies how they will let you know that they've made a deposit. This way you’ll start off on the right foot. We’ve heard of many different processes in which notifications are received. Some are emailed, some EOBs are received by mail, and other companies don’t send anything and people must go to their websites to view the payments.
I KNOW ALL OF THIS MAY SEEM DAUNTING and many people may be discouraged by it. Please don’t be! EFTs are an easy and fast way to receive money. If you create a protocol for each insurance company that determines how you will identify and enter the EFT payments to your patient accounts, as well as set up a second account for those deposits, you’ll be ready to go!
I’ll be happy to answer any questions you have about EFTs. Send them to [email protected].
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