How Should a Dentist Account for a Third Party Finance Fee?

If a patient’s treatment plan is $1000 and they use a 3rd party finance company like Care Credit, the total amount I receive is something like $900 (for example). How do you account for the “finance fee” difference?

Currently I enter $900 as payment received and enter $100 as a write off. Is there an advantage to doing it another way?

In QuickBooks you enter the deposit as a split transaction:

$1,000 to fee income, revenue, whatever you call it, and

$100 (or -$100) as collection expense

$900 is your net deposit.

It’s that simple.

If that was your ONLY transaction for the day and you ran a P&L statement it would look like this:

Income 1,000

Expense 100

Net income 900

Make sense?

PMS should show $1,000 payment.

So, if I have only accounted for the NET credit card or Care Credit payment on my QB (which for me is all that counts from an accounting perspective)–then I have essentially done the accounting, right? In other words, I cannot go back and claim an expense for the processing/finance fee?

Correct, no double dipping allowed…

This first appeared on Dentaltown.

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