Credit Balances – Low Hanging Fruit Opportunities

The following is Part II in our series – Credit Balances – Management, Opportunity & Challenges. Over the last 20 years, we have found that doctors and the front desk team consistently consider patient credits as “Oh, my gosh, there they are.  If patients want them, they will ask!”  End of story.  What is not considered is the missed “opportunity” of production and revenue for the practice.  Remember, patient credits are money in the bank that is just waiting for the practice to present a treatment plan recommendation that will invest those patient dollars in a healthy, beautiful patient smile.

Let’s consider the true nature and financial impact of patient credits when they are not managed as opportunity, but instead considered, at best, a challenge. When patient credits are sitting on the books, they are generally overstating Accounts Receivable (A/R). Consider the following:

  • Ninety-nine percent of dental practice management software include patient credits in the “current” column of their A/R report.
  • Doing so produces a bogus A/R report! Why? Credits are money owed to patients.  When credits appear on the same report as money owed to the practice by patients, it produces a net reduction in the money due from patients and insurance payers.  This makes the front desk look like they are doing a better collecting job than they are!
  • weaselAs I outlined in Part 1 of this series Credit Balances – Management, Opportunity & Challenges! Part I unattended credit balances can be problematic due to state statues governing patient “Unclaimed Property”.
  • Unattended credit balances can illustrate a need for front desk training on either 1) proper handling of the credits, OR 2) making them work for the practice and patients. Additionally, this may illustrate a lack of oversight by the doctor(s), front desk manager, and/or team.
  • Improper management of credit balances can leave a gap in proper policies and internal controls that could lead to inappropriate activity by a dental weasel thereby causing harm to the practice.

When credit balances are properly managed, the practice produces a win/win situation for the practice and the patient. Here’s how to master the opportunity presented by credit balances:

  • Determine how to run the A/R report excluding patient credits so you know the exact money due the practice every day from patients and insurance payers. This is easy for some software, i.e. Dentrix; however, for others it may take a call to the software vendor support. For example, EagleSoft can be accomplished via an Excel download.  Using Excel you can sort the report so you will know by patient who has the largest credit balance, as well as the total amount of money you “owe” your patients at any point in time.  This can be very critical information when a practice is being sold, etc.
  • Consider a new associate joining the practice with the pressing issue of scheduling production. What sources can these patients come from?  The obvious answers are: new patients, procedure(s) from other doctor(s), referrals, marketing, etc.  Credit balances is another potential source that most practices don’t even consider. Everyone knows the best patients and lowest cost marketing come from current patients.
  • Other reasons to consider patients with credit balances: you need to fill available chair time, you just returned from the greatest CE course, or the practice needs more patients for any other reason. The list of opportunities and long-term positives are limited by the imagination of the doctor(s) and team.  Working your list of patients with credit balances provides you with a deep pool of potential patients and several ways to craft a marketing message that will get those active in your practice again.

For more information about how to produce a win/win situation utilizing your patients with credit balances, give us a call for a free, no obligation 30 minute consultation at 210.241.6329.


Educating dentists on identifying embezzlers or fraudsters hiding out in their practices is our expertise. Contact us to speak at your next dental meeting or study club by sending an email to or calling us at 210.241.6329.

Legally Avoid All Credit Card Processing Fees

By Ken Givens, Director of Sales, US Merchant Payment Solutions LLC

Credit Card Surcharge Ban MapPeter Freeman, the co-owner and “head jerk” at a Pharmacy and Soda Fountain shop, said credit card swipe fees are his biggest business expense after rent and payroll. He estimates he spends $15,000 a year on the 2 to 4 percent swipe fees that credit card companies typically charge to cover the cost of processing payments.  Many business owners agree with him!

But now, due to a recent settlement between merchants and credit card giants Visa and MasterCard, businesses in Texas and 9 other states are allowed to offer a discount for customers paying with cash avoiding the Credit Card Transaction costs.  Forty states allow surcharges for card charges as well as cash discounts.

“Retailers offer cash discounts because they want to reward customers for taking [transaction] costs out of the system,” said Jeff Lenard, a spokesman for the National Association of Convenience Stores in Alexandria.

In Australia it took several years for similar action to catch on, but many companies, and then entire industries, began dipping their toes into surcharge territory.  It evolved gradually — one airline would try it and see if they could pull it off, and then you’d see all the other airlines start to do it, too. Then hotels and so on. Now a large portion of the world’s merchants give cash discounts or charge card payment surcharges, saving them thousands in overhead.

Mitchell Katz, spokesman for the Federal Trade Commission, said: “The Dodd-Frank law prohibits a payment card network such as Visa ‘from inhibiting the ability of anyone to provide a discount for payment by cash, checks, debit cards, or credit cards.”

However, it must be disclosed, either with a written policy or conveyed verbally to customers before the transaction.

In Texas, the State Attorney General stated: “businesses can discount the regular retail price of an item for consumers who pay cash.”

The Texas Finance Code also allows for Cash Discounts, and card payments to be assessed an increase to the ‘regular’ price of the product or service.

Section  339.001  of  the  Texas  Finance  Code states:

  1. Cash discount

Section 339.001 prohibits surcharges for paying by credit card, but it does not  prohibit discounts for paying by cash, check, debit card, or other methods.

Definition of Discount: A surcharge is an increase from the regular price of a good or service, but a discount is a  decrease from the regular price.

The federal Truth in Lending Act allows sellers to have two prices (one for cash and one for credit), as long as the creditcard price of the good or service is also the regular price.

IMPORTANT TO NOTE: The processing system must have special software so that the ‘regular price’ must show in the point of sale system or the credit card machine receipt to the customer. Per regulations it cannot be added to the price total by hand and then entered into the POS. The receipt must clearly show the original ‘cash discount’ price, and the fee that brings the ‘cost’ to the ‘regular price’.

Want more information on how you can eliminate credit card transaction and processing fees in your business? Ask us for a free information packet called “Reverse Processing”.  Call 888-995-3995 or email or complete a contact form at mention ‘Reverse Processing’ to receive the free information.



About the Author:

Ken Givens is the Director of Sales for US Merchant Payment Solutions and has been in the payment processing industry for over 23 years. He has helped businesses of all sizes accept card, checks, and even cash safely and securely.  Ken collaborates with over 25 bank managers around central Texas, including financial institutions such as Frost Bank, Wells Fargo, First State, Horizon Bank, Texas Health Credit Union, and many more because of his one-on-one approach and local support. He provides businesses of all sizes the tools to accept and lower the fees they pay to accept all forms of payments.  His company Guarantees to Lower costs or pay the business $500 for letting them try.  Processing solutions include:

  • Cell Phone/iPhone/iPad/Laptop Card Readers
  • Mobile Wireless Credit Card Terminals with Integrated Printers
  • E-Wallet/Tap-N-Go/ApplePay Card Readers Solutions
  • Computerized Multi Station Point of Sale Registers
  • Ecommerce Sales/Donation Website Integration

Learn more about Ken by contacting him at or calling 888.995.3995.

Credit Balances – Management, Opportunities & Challenges

calculatorThis is the first article in a series that will focus on how credit balances should be managed to provide growth opportunity or handle substantial challenges in your practice.

Today I want to address what to do with credit balances belonging to patients that are no longer “active” for whatever the reason, e.g., death, moved, etc.

The treatment of credit balances is one of the key items we review in every engagement as they consistently receive minimal attention by the owner doctor and/or team.  We often see those balances sitting in the practice management software just getting older and more nonproductive.  Noting this provides significant insight for our investigators into practice management internal controls, training, production, financial management, and other areas of standard patient care.

So what should you do with credit balances? The KEY POINT to note is that states have very specific timelines and procedures for notifying and returning consumer credits before they must be sent to the state as “unclaimed property.”   All states have laws and rules governing “unclaimed property’ that are generally administered by their respective Office of the Controller (or a department with a similar name).  Your specific state agency can be found by Googling “state agency for unclaimed property.”

We often find that our clients do not know credit balances must be consistently managed to insure return to their owner.  We advise them as follows:

  1. Contact your state “unclaimed property” agency for the time line for holding credits before statue, regulation and/or rule requires sending to the state agency after the credit becomes “unclaimed property”. The credit balance becomes “unclaimed property” based on the type of credit balance, e.g., utility deposit, insurance premium, etc. and date established by the state.
  2. Generally, dental and medical credit balances are given a one (1) year due date and must be sent to the state within thirty or sixty days after becoming “unclaimed property”. There will be state paperwork that must accompany each “unclaimed property” credit balance check.
  3. Ask your CPA what documentation you should retain, how to establish a timeline, and appropriate retention method(s).
  4. Make sure to track the receipt of your agency submissions.
  5. Do not be surprised if your state has a “minimum” amount they will accept.
  6. States have considered establishing a statute of limitations after which they can capture unclaimed funds for schools, senior care, veterans, etc. If this happens, discuss with your CPA how to handle this as income.

My next article on this topic will present more detail on managing credit balances by the owner/doctor and front desk team.  This is the key to maximizing opportunities and reducing challenges.

If you want to learn more about how to manage credit balances, give us a call for a free, no obligation 30 minute consultation at 210.241.6329.



How CFO’s Can Protect Against Fraud & Embezzlement

CFO’s can minimize the risk to fraud, embezzlement, waste, and abuse in their organization. Total prevention of fraud and embezzlement is impossible because the crooks think and act smarter each time they are caught. They change venue and continue to take other people’s money. Many times they think they deserve the money or that it’s not their fault — the organization should have been more vigilant and diligent. They will continue until they are jailed but won’t necessarily stop when released. Success through criminal activity is a hard habit to break.The outcome can be devastating. Learn what to look for and what to do to keep your revenue out of the wrong hands.

This was part of an original presentation for clients of Abila MIP software, sponsored by TeamNFP Software Solutions.
Fraud Webinar Slides 2-18-2014