Chapter 17
Learning Objectives
Define, spell, & pronounce the terms listed in the vocabulary.
Explain the purpose of the Federal Reserve Bank & the types of banks it manages.
Identify common types of bank accounts
Do the following related to banking in today’s business world:
Discuss the importance of signature cards
Explain how online banking has made standard banking processes more efficient
Review the benefits of customer-oriented banking.
Do the follow related to checks:
Compare different types of negotiable instruments.
Identify precautions in accepting checks from patients.
Explain how checks are processed from one account to another.
Review the procedure followed when the healthcare facility receives a nonsufficient funds (NSF) check.
Identify precautions in accepting cash
Discuss the use of debit & credit cards, including advantages & precautions.
Do the following related to banking procedures in the ambulatory care setting:
Describe banking procedures as related to the ambulatory care setting.
Explain the importance of depositing checks daily
Compare types of check endorsements.
Review check-writing procedures used to pay the operational expenses of a healthcare facility
Understand the purpose of bank account reconciliation for auditing purposes.
Discuss patient education, as well as legal & ethical issues, related to banking services & procedures.
Banking
Services &
Procedures
Pages 326 – 342
Pages 327 – 328
Banking in Today’s Business World
Monthly bank account balances can help
healthcare facilities establish & maintain a
monthly operational budget.
Banks also provide opportunities to earn interest
& to invest for future financial gain.
You most likely will manage only the bank
account set up for the income & operational
expenses of the healthcare facility.
If you have any questions contact the accountant
chosen by the provider.
Page 328
Banking in Today’s Business
World: Cont.
Common Types of Bank Accounts
Checking Accounts
Simply stated, a checking account is a bank
account against which checks can be written &
funds can be transferred to the payable party.
Page 328
Banking in Today’s Business
World: Cont.
Savings Accounts
A standard savings account earns interest at the
lowest prevailing rate & has no minimum balance
requirement & no check-writing privileges.
However, penalties apply for withdrawing funds
from a savings account more than four times per
month. The provider may deposit a certain
percentage of discretionary income into a savings
account each month to earn interest.
Page 328
Banking in Today’s Business
World: Cont.
Money Market Savings Account
These have higher interest rates but lower number
of transfers are allowed.
Some business transfer excess funds from the
business checking account to a money market
account over the weekend or over an extended
holiday period to draw interest on the funds.
Page 329
Banking in Today’s Business World: Cont.
Signature Cards
When an account is opened at a bank branch, the
account signer is required to provider their
handwritten signature on a physical or electronic
card, which is kept on file with the bank.
The provider often designates the task of paying
bills to you.
If this is the case they would have to authorize
you to sign checks by having your signature
added to the card.
Page 329
Banking in Today’s Business World: Cont.
Online Banking
This is a means of performing banking services
electronically via the Internet. A customer can
usually do the following:
• Check account balances
• Transfer funds between accounts (same bank)
• Pay bills electronically & create checks
• Determine whether a check has cleared
• Download account information
• View images of transactions
Page 329
Banking in Today’s Business
World: Cont.
Customer-Oriented Banking
Convenience has become a basic expectation of
consumers where the banking industry is
concerned.
Mobile banking is a customer-oriented innovation
that is emerging through the wireless technology
Page 329
Checks
A check is a bank draft (An order to pay a certain
sum of money) to a specified person or entity.
For a check to be negotiable, it must:
• Be written & signed by the drawer (person
who has the checking account)
• Contain a promise (order to pay a sum of
money)
• Be payable on demand (at a fixed future date)
• Be payable to order to the drawee (the bank on
which the check is drawn or written)
Page 329
Checks: Cont.
Routing & Account Numbers
A routing transit number (RTN) is a nine-digit
code printed on the bottom left side of the checks.
A RTN is assigned to every banking institution
under the Federal Reserve Banking System, so it
identifies the bank upon which the check was
drawn. RTNs also are used for direct deposits &
the wiring of funds between banks.
Page 330
Checks: Cont.
American Bankers Association Number
This number appears in the upper right hand area
of the check.
The number is used as a simple means of
identifying the area location of the bank on which
the check is written & the particular bank in that
area.
The code number is expressed as a fraction.
Page 330
Checks: Cont.
Types of Negotiable Instruments
The following are different types of negotiable
instruments used to withdraw money from one
bank account & deposit it into another
Page 330
Checks: Cont.
Personal Checks
A personal check is drawn by a bank against
funds deposited to a personal account in another
bank.
Patient typically write these checks for
copayments & other financial responsibilities.
Page 330
Checks: Cont.
Cashier's Checks
A cashier’s check is a bank’s own check, drawn
on itself & signed by the bank cashier or other
authorized official.
A cashier’s check is obtained by paying the bank
the amount of the check, in cash. Many banks
charge a fee for this service.
Page 330
Checks: Cont.
Money Order
Domestic money orders can be purchased at
banks, some retail stores, & the U.S. Postal
Service.
Money orders often are used to pay bills by mail
when a person does not have a checking account.
The maximum face value varies, depending on
the source.
Cashier checks are preferable to money orders
when larger amounts need to be paid.
Pages 330 – 331
Checks: Cont.
Business Checks
Can be prepared through:
• online banking portal
• accounting management software programs
A business checkbook is a ledger-type book with
three checks per page & perforated stub at the left
side of the check.
Page 331
Checks: Cont.
Voucher Checks
A voucher check has a detachable voucher form
or could be attached to an Explanation of Benefits
(EOB).
The voucher portion is used to itemized or specify
the purpose for which the check was drawn.
Thevoucher portion of the check is removed
before the check is presented for deposit.
Page 331
Checks: Cont.
How Checks are Processed from One Bank to
Another
There is a regional banking clearinghouse that
clears (or verifies the authenticity) of every
written check
Page 331
Checks: Cont.
Nonsufficient Fund Check (NSF)
Review the information given in previous
chapters
Page 331
Cash Management
To prevent the mishandling of cash, many
healthcare facilities do not allow patients to pay
cash for services.
If yours does follow these guidelines:
• Make sure the cash is not counterfeit (they
have markers to check) if it is contact the FBI
• Inform patients that change cannot be made for
larger bills
Page 333
Cash Management: Cont.
Debit Cards
Currently, some banks decline debit card charges at
the point of sale when an account has insufficient
funds, & they do not charge an insufficient funds
fee towards the attempted purchase. Stay up to date
on those issues because that could change.
Advantages of Using Debit Cards
There are many advantages to make it so patients
can use debit cards in the healthcare facility.
They are quick & easy to use/track.
Pages 333 – 334
Cash Management: Cont.
Credit Cards
There are the same benefits here as there are in
debit usage but there is a transactional charge
tacked on
Precautions for Accepting Credit & Debit Cards
Make sure the person presenting the card is the
person to whom the card was issued.
Page 334
Banking Procedures in the
Ambulatory Care Setting
Healthcare facilities use bank accounts to deposit
& to pay their operational expenses by check or
credit card.
Making Bank Deposits – daily
Depositing checks daily for these reasons:
• Checks may have a restricted time payment or
may be lost, misplaced, or stolen over time.
• A stop-payment order may be placed, or it may
be returned for insufficient funds
• Prompt processing is a courtesy to the payer
Pages 334 – 335
Banking Procedures in the
Ambulatory Care Setting: Cont.
Preparing the Deposit
A deposit is the record of all the money being
deposited
You need to record how much of it is in cash & how
much of it is in check form.
The check number needs to be recorded with how
much it is worth.
• Some banks require you to deposit before 3 pm for
the money to be posted to your account that day
Keep a copy of the deposit slip for your financial
records
Page 335
Banking Procedures in the
Ambulatory Care Setting: Cont.
Check Endorsements
The endorsement is a signature plus any other
writing on the back of a check
It can be done in pen or by rubber stamp
Page 335
Banking Procedures in the
Ambulatory Care Setting: Cont.
Types of Endorsements
There are 4
• blank & restrictive are the most common
Bank Endorsements
They sign only their name
Restrictive Endorsements
Specifics the purpose of the endorsement
• It is used in preparing checks for deposit to the
provider’s checking account
Pages 335 – 336
Banking Procedures in the
Ambulatory Care Setting: Cont.
Special Endorsements
Pay to the order of John Doe your signature
Qualified Endorsements
The effect of the endorsement is qualified by
disclaiming or destroying any future liability of
the endorser. “without recourse” is usually
included in the endorsement.
Page 335
Banking Procedures in the
Ambulatory Care Setting: Cont.
Methods of Endorsements
If the name is miss spelled; endorse it as it is
spelled & then sign it with the correct spelling
Stamp
For deposit only stamps can be used for
restrictive endorsements
Signature
Insurance checks sometimes require a signature
endorsement
Page 336
Using Checks for Healthcare
Facility Expenses
How to Write a Check
VOID
May 23, 2016
John Doe ---------------------- 550,000.00
Five hundred fifty thousand only---
rent Jane Mc Millen
Page 336
Using Checks for Healthcare
Facility Expenses: Cont.
Writing Cash Checks
You can make checks out to cash. (since anyone
can then cash that kind of check you may want to
wait to write them until you are at the bank)
Mailing Checks
Make sure that the check can NOT be send when
its in the envelope
Pages 336 – 337
Using Checks for Healthcare
Facility Expenses: Cont.
Overdraft
If you write a check for more money than is in
your account it is considered overdrawn (this is
illegal). You will be charged anywhere from $10-
35.
Stop-Payments
You can stop payments on checks for a fee
• Only do this when absolutely necessary.
Page 337
Paying Bills to Maximize Cash Flow
Pay bills on time this will limit the amount of late
fees charged to the practice
Online Bill Pay
This is a quick & easy method to pay bills
however some vendors are not set up to accept
bills paid online (you can get around this by
setting it up with your bank to send them out a
check at a certain time each month)
Direct Deposit
A safe, secure, efficient & less expensive way to
do payroll than paper checks.
Page 337
Paying Bills to Maximize Cash Flow: Cont.
Reward Credit Cards
More & more vendors are accepting credit card
payments.
Shop around until you find the right kind of credit
card that will give the healthcare facility the kind
of rewards you want.
Be sure that you pay the balance of in full each
month.
Page 337
Bank Statements & Reconciliation
Accounting management software has a feature
that if you download the bank statement it will
help with reconciliation.
The purpose of reconciliation is to start with the
beginning balance & then add all the deposits &
subtract all the checks & other debit transactions,
leaving the ending statement balance.
Itis extremely important to make sure at the end
of reconciliation that the ending balance is
achieved.
Page 340
Bank Statements & Reconciliation: Cont.
Bank Statement Reconciliation Formula
Bank statement balance $_______
Minus outstanding checks $_______
Plus deposits not shown $_______
Corrected bank statement balance
$_______
Checkbook balance $_______
Minus any bank charges $_______
Corrected checkbook balance $_______
Page 340
Bank Statements & Reconciliation: Cont.
What to Do When the Balances Do Not Match
If they don’t match ask yourself the following
questions:
• Is your arithmetic correct?
• Could a deposit, check, or online bill pay
amount be transposed?
• Did you forget to include one of the
outstanding checks?
• Did you fail to record a deposit or did you
record one twice?
