Refunds and Writeoffs

Refunds and Writeoffs

Abstract

Capable 21C supports the ability to refund services rendered and products sold, and also supports the ability to write off bad debts that are considered unrecoverable. It is important for operators to understand how these features were designed, and when to use them. This article explains how they work, and when to use them.

Underlying challenge

Capable 21C records all debits on a patient/client’s file as positive amounts. Services and products have positive dollar/pound/euro values associated with them. All credits are recorded as negative amounts. They reduce the patient/client’s outstanding balance. In financial terms, the Capable 21C financial engine is a debtors’ engine. It records patient/client debts as positive amounts, and patient/client credits as negative amounts.

In examining a patient/client file, a positive outstanding balance indicates that the patient/client owes monies to the office. A negative outstanding balance indicates that the patient/client has a credit.

A Writeoff is the simplest of the journal transactions. It represents writing off a bad debt and reduces a positive patient/client balance to a lower amount: possibly writing off a positive balance down to a zero balance. As such, the writeoff is a negative amount. It appears as a credit on the patient/client file. In financial reports and summaries, it is important to note that writeoffs will be grouped with other credits.

A Refund is more complex than a writeoff. It represents the situation where a service has been rendered, or a product sold, and that transaction must be reversed. Most importantly, a typical transaction involves two components: a service or product which has a positive value and a payment which has a negative value. These two amounts typically add up to zero, leaving no outstanding balance on the patient/client file.

When a refund is executed for a product, typically the product is returned, and monies are returned to the patient/client. This too represents two components: the reversal of a product sale and the reversal of a payment (eg Cash Out given back to the patient/client). The reversal of a product sale is effectively a negative product sale (eg an item is returned to stock) and, as such, has a negative amount associated with it. A Cash Out is a negative payment (eg cash is taken out of the till and given back to the patient/client), and as such, has a positive amount associated with it.

A refund for a service is even more complex, as there is no product to be returned to stock. There is no reversal of the service rendered, so it is not possible to enter a negative service into the system. However, there may still be cash taken from the till and returned to the patient/client. In this case, the Cash Out introduces a debit onto the patient/client file, but there may not be an associated credit to balance the file back to zero. It will be necessary to create some form of credit entry to balance the file back to zero. /p>

Resolution

Writeoffs, refunds and journal entries should be used in the following scenarios:

When the situation is

Use the following feature

A patient/client file has an outstanding debt that will never be recovered

Write off

A patient/client file has an outstanding credit that they wish to recover (eg as Cash Out)

Create a normal invoice/receipt with no services but a Cash Out in the payments area

A patient/client file has an outstanding credit that they wish to recover, and the office elects to pay the patient/client by cheque.

Create a normal invoice/receipt with a ‘Cheque Refund’ product

A patient/client returns a product

Refund the product in Visits and Financials,

and

create a normal invoice/receipt with no services but a Cash Out in the payments area

The office elects to refund a service that has already been rendered to a patient/client

Create a normal invoice/receipt with no services, but a Cash Out in the payments area and a credit journal in the payments area.

Detailed Information

To create a Writeoff on a patient/client file:

Go to Visits and Financials.

Create a payment on the patient file by clicking on the left hand box and selecting payment. The simple payment option may be available in some configurations, and the bulk payment may be the only option available in others.

Enter the amount and the practitioner for the Write Off and select Write Off as the payment method.

To refund a product in Visits and Financials:

Go to Visits and Financials.

Click on the visit when the product was sold and choose to alter the receipt.

Click on the item being returned.

Click on the refund button.

To Create a normal invoice/receipt with no services but some form of Cash Out:

Go to Patient Information and Editing.

Select the patient file, and click the Walk In button.

Click on any service that is displayed and select the option to delete the service from the fly out menu.

Click on any payment that is displayed and select ‘Cash Out’ from the fly out menu.

Enter the amount of the Cash Out.

To Create a normal invoice/receipt with no services but some form of Cash Out and a credit journal:

Perform the steps shown above.

Click on the second payment line, and choose ‘Credit Journal’ from the fly out menu.

Enter the amount of the credit journal.

To Create a normal invoice/receipt with a Cheque Refund product:

Create a product called Cheque Refund:

Go to Setup|Setup Product Groups

If a product group of administrative or accounting items exist, double click it to open it. If not, click the button to create a new product group, and alter its name to ‘Administrative’.

Go to the Products tab and create a new product.

Name the product ‘Cheque Refund’. Clear the item codes.

Ensure that the tick-box for ‘include on normal invoices/receipts’ is ticked.

Ensure that the tick-box for ‘include in normal patient stats’ is not ticked.

Save and close the product details, the product group details and the product groups window.

Go to Patient Information and Editing.

Select the patient file, and click the Visits History button.

Click in the box showing previous visits, and select ‘Create an invoice for another date’.

Choose the product that has been created.

Set the amount to match the amount of the refund.

Ensure that the appropriate practitioner is selected.

Special notes:

Writeoffs are not income. They are non taxable under Australian law, and should be reported to accounting agents specifically as write offs. Take care in reviewing statistical reports to ensure that write offs are not summed with other credit entries.

Cash Outs will reduce the amount of money in the till. Take care when cashing up at the end of a shift when Cash Outs have occurred.

Refunded stock sales will result in stock levels increasing (eg a stock item is returned to the shelf). Not all stock items can be returned the shelf and resold. Take care when taking stock levels to account for any stock returns that may have occurred.

This knowledge resource is designed for use on a Windows (tm) XP system operating at a screen resolution of 1024x768 or better. Windows Media Player must be installed for this training resource to operate correctly.

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