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CS Dental Employee
CS Dental Employee

Why Doesn’t the Deposit Slip Match the Line Item Accounting Payroll Report?

tl:dr 

The deposit slip and payroll report use different reporting criteria and provide different types of information. If you want to analyze the Payroll report, run the Distribution Audit report. 

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When dealing with money, particularly payroll, people want assurance of its veracity. If you end up overpaying a producer, the practice is short on revenue. If you underpay, the shortchanged provider will be upset and trust in the software’s integrity is reduced.  

In an effort to verify the Payroll report totals, some offices compare the deposit slip with the payroll report. The expectation is if both reports are run for the same time periodthe deposit total will equal the distributions. As every office attempting to compare these two has found, the results do not match.  

These totals were never intended to line up. In this post I’m going to discuss why that is.  

Let’s look at the main reasons.  

1. Prepayments resulting in credit balances.  Prepayments resulting in a credit balance cannot be distributed as there is nothing to distribute it to. The funds are listed on the deposit slip. Since it cannot be distributed, it will not show on the payroll report.  

2. Payment recorded on one day, distributed on another. Line Item Accounting (LIA) introduced a new date; the Distribution DateThis matters because:  
 
The Payroll report is run by Distribution Date 
The Deposit Slip is run by Service Date 
 
If you’re new to LIA or interested in the ledger entry dates, keep reading. Otherwise skip to #3.  
 
When LIA is activated, ledger entries have three unique dates. Often these dates will be the same. Sometimes they will not be. The three dates are:  

  • Entry Date – an immutable date, pulled from the system date. 
  • Service Date – typically identical to the Entry date but able to be edited. Service Date allows for human error. Let’s say you collected and deposited a $100 check on August 14th but didn’t record it in software until the 15th. If Entry Date were the only time stamp your digital records would not reflect reality. With Service Date, you can modify the date from 8/15 to 8/14. Your financial reporting now reflects what happened.  
  • Distribution Date - The Distribution Date records the date a credit was applied, or distributed, to a debit. Distribution date, like the Entry Date, cannot be edited. 

    Distribution Date.jpg

     

You could record a Cash payment on 8/14 (Entry Date), backdate it to 8/1 (Service Date), and distribute it on 8/15 (Distribution Date). The Deposit slip will show 8/1 and the Payroll report will list the distribution on 8/15. 

3. Ledger entry removed. In this scenario a payment or procedure is entered one day but removed sometime in the future. Removing the ledger entry does not remove the original distribution; it records a reversal and maintains the original distribution*. 

Ledger entries may be removed for several reasons, from an entry error to placement on the wrong patientIn the case of payments, if the deposit slip is run after the payment is removed, the money will no longer be listed. If the Payroll report is run for a range with the original distribution date, the distribution will be listed. The Payroll correction, or reversal, is reflected on the day the ledger entry is removedIt is listed as a negative distribution to the provider (money owed back/deducted from that payroll).  

4. Distribution Swaps. During the beta phase of LIA users repeatedly ran into the following issue.  
 
A patient has a $100 procedure performed. The patient pays $50. The funds are distributed to the procedure. A few weeks later the insurance check arrives. The check is for $75. The “distribution bucket” will only allow for $50. To correctly distribute the insurance check, you had to manually remove $25 of the distribution.  
 
If the $50 patient payment were distributed in full the net distributions would be $75 and this would match the deposit slip. But if the $50 patient payment is not distributed the same day, the net distributions are $25 ($75 Insurance Check - $50 Patient Payment swap).  
 
The final release of 8.0 handles swapping out patient payments for insurance payments automatically. In the scenario above you simply enter your $75 insurance payment and the software undistributes $25 of the patient payment for you.  

5. Distribution Changed. Sometimes a payment allocation isn’t right. A payment for $100 is received and distributed the same day. At some point you or another employee realizes the $100 distributed to Dr. Smith was meant for Dr. Jones. Someone goes into the distribution screen and removes the distribution from Dr. Smith. If the full $100 is redistributed that day, the distribution total is $0 and the payroll and deposit numbers would agree. But if the $100 is not distributed the same day, or only a portion of the payment is distributed, there will be a difference between the deposit slip and the Payroll report.  

If the Payroll report leaves you with more questions than answers, run the Distribution Audit report. The Distribution Audit report provides the same totals as the Payroll report (if run with the same criteria) but provides full details on the Adjustments and Distributions. You can read more about both reports and see annotated samples here

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*During the development process significant consideration was given to how we correct distributions. Ideas ranging from allowing the distribution date to be changed to forbidding all corrections to distributions were discusseddebated, and put to users such as yourself. We chose to fix the Distribution date (non-editable like Entry Date) and record reversals in the database (also with fixed dates) to account for corrections or modifications to distributions. This had the double advantage of making payroll reports consistent over time and allowing people to easily modify distributions.  

By consistent over time I mean the Payroll report will be the same whenever you run it. If you run January’s payroll in February, the report will be the same in March, April, May, etc. January’s payroll report does not change. This prevents payroll confusion when a distribution or payment from January is changed after the fact.