This 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:
- 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.
- 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.
- Ask your CPA what documentation you should retain, how to establish a timeline, and appropriate retention method(s).
- Make sure to track the receipt of your agency submissions. You could consider document management software, like that found on filecenterdms.com, to keep track of receipts and other financial documents digitally.
- Do not be surprised if your state has a “minimum” amount they will accept.
- 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.