Medical practice bookkeeping works best when the electronic health record (EHR) production reports, payer and patient receipts, bank deposits, and your general ledger are tied together cleanly. When that linkage is in place, monthly revenue can be trusted and you can spot posting gaps early. This guide outlines a practical monthly workflow, straightforward documentation habits, and control checks a small medical practice can run with typical EHR and billing systems.
Why a medical-practice bank deposit rarely tells the whole revenue story
Bank deposits show when cash lands. They do not tell you which charges were earned, what portion relates to prior months, or whether part of a batch is a refund or a contractual offset. If you read revenue straight from deposits, you will miss timing differences and payer-side adjustments that change the picture for revenue and accounts receivable.
Illustrative example: the bank shows $12,000 in deposits this month. Within that, $3,000 reverses patient overpayments the office refunded, and $2,000 relates to services rendered two months ago. If you treat the full $12,000 as this month’s revenue, you are overstating current revenue and understating what customers still owe.
Clearinghouses add another layer. Payer remittances are often bundled, netted, and deposited as a single amount. One deposit might include multiple claims, partial payments, take-backs, and offsets. Patient card payments can also “straddle” months because merchant processors settle batches on a different date than the transaction date. These normal but messy mechanics are why earned revenue should be reconciled from the EHR through remittance detail to the general ledger instead of being inferred from the bank feed.
The fix is not complicated: reconcile operational activity to accounting records, then tie accounting records to cash. This is a familiar control concept—just applied to clinical revenue. If you want a refresher on the control logic, see our bank reconciliation guide.
Define the purpose of the EHR, billing system, and general ledger
EHR / Practice management system
The EHR and its practice-management module track appointments, encounters, coded charges, and insurance eligibility. Use production and billing-status reports to see what was delivered and submitted. Think of the EHR as an operational ledger: excellent for volume, coding, and claim status; not designed to present revenue under accounting rules.
Decide on practical cutoffs. For example, if you run month-end on the last business day, make it clear whether the EHR export is based on date of service, date charged, or date submitted. Also set expectations for voided, test, and re-billed items so they do not pollute production totals or show up twice in downstream reports.
Billing clearinghouse / payer remittance system
Billing software and clearinghouses handle claims submission and remittance advice (ERA). These systems record how payers adjudicated each claim—paid, denied, adjusted, or shifted to patient responsibility. ERAs routinely include partial payments and adjustments at the line level, so summary totals do not always map neatly to a single claim or patient. For context on electronic billing formats and timing, review the CMS guidance on EDI transactions (CMS: EDI).
Most clearinghouses provide a remittance report that translates ERA files into a practice-readable summary. That report is your bridge from payer activity to bank deposits when the clearinghouse aggregates or nets amounts. Keep those remittance summaries with your month-end pack; they are often the only practical way to unpack a large batch deposit later.
General ledger and financial statements
The general ledger (GL) is where revenue, receivables, and cash are recognized and presented. Month-end financial statements live here, and owners rely on them to make decisions. If you want a quick primer on what you are reading each month, see our guide to understanding financial statements.
Your accounting policy choices determine how EHR activity maps to GL revenue. Common examples: posting gross charges with a separate contractual allowance, or posting net revenue based on expected collections by payer. Whatever you choose, write down the rules and use them consistently. Clear mapping reduces month-end debates and makes reviews faster.
Recordkeeping also matters. Business records must be retained and organized. The IRS provides general guidance on what to keep and for how long; see the IRS recordkeeping resources for retention considerations you can adapt to your practice.
A monthly EHR-to-deposit reconciliation workflow
Close the loop as soon as month-end EHR and remittance reports are ready. Many practices can wrap this within the first 10 business days of the following month. The aim is simple: explain how billed services flowed through payer activity to cash, and book revenue so it reflects what was earned in the period—no more, no less.
- Export an EHR production summary
Pull a report that includes date of service, CPT, billed amount, patient, rendering provider, and billing status (billed, unbilled, voided). Exclude tests and duplicates. Save with a clear filename and cutoff (for example, EHR_Production_2024-06-30.csv). Consistent naming makes audits and re-runs far easier.
- Compile remittance and ERA postings
Ask your biller or clearinghouse for ERAs or remittance summaries for the same period. You want payer payments, contractual adjustments, denials, and patient-responsibility shifts. Where possible, include claim numbers and internal patient identifiers—those fields turn a scavenger hunt into a match-and-post exercise.
- Map EHR billed charges to GL revenue accounts
Maintain a short mapping file that ties CPT codes or service categories to revenue accounts (for example, CPT 99213 → Revenue — Office Visits). Keep a place to capture unapplied receipts and credits. Items that do not map cleanly should not be buried in a suspense account indefinitely—tag them for follow-up.
- Match remittances to posted deposits
Compare remittance totals to bank activity. Expect differences when the clearinghouse nets or bundles payments. Use the remittance summary to break a grouped deposit into individual payer amounts. For mystery deposits, log the clearinghouse batch ID, open a ticket for detail, and park the unmatched amount in a tracked suspense line until the breakdown arrives.
- Post adjusting entries
Record contractual adjustments, write-offs, and any corrections needed to revenue or receivables. Keep support for each entry and route significant items for management approval. For a refresher on common entries and structure, see our adjusting entries guide.
- Reconcile accounts receivable (A/R)
Run an A/R aging from the billing system and tie the total to the GL A/R control account. Investigate aged differences above your threshold (for many small practices, 1–2% of monthly revenue or a sensible fixed dollar amount). Common reconciling items include unapplied deposits, payer credits, take-backs, and recent write-offs that have not yet synced across systems.
- Reconcile cash and deposits
Complete the bank reconciliation for all operating and deposit accounts. Note timing deposits, clearinghouse holds, and merchant-processing delays. Our bank reconciliation guide covers typical reconciling items and control steps. If a card batch spans a weekend or holiday, record the expected settlement date so the reconciling item does not become “mystery cash” next month.
- Document and sign off
Assemble a month-end pack: EHR production export, remittance summaries, deposit breakout, reconciliation worksheet, and a short sign-off by the preparer. Keep versions, note key assumptions, and have an owner or controller review material adjustments. Over time, this pack becomes your playbook and your audit trail.
Illustrative reconciliation table
| Source Item | Typical GL Account | Notes |
|---|---|---|
| EHR billed charge (CPT) | Revenue — Professional Services | Post at gross charge per policy; reduce later for contractual allowances. |
| Payer ERA payment | Cash / Undeposited Funds | Apply to A/R; match to the deposit once the batch clears the bank. |
| Contractual adjustment | Revenue Contra — Contractual Allowance | Reflect payer-negotiated discounts; reduce both revenue and A/R. |
| Patient payment (in-office) | Cash / Patient Collections | May settle via separate merchant batches; apply to patient balance. |
| Refund | Cash / Refunds Payable | Reverse original revenue as appropriate when returning an overpayment. |
Tip: keep a small “timing and suspense” section on your reconciliation worksheet. Track unapplied deposits, unposted ERAs, known take-backs, and merchant holds. Recurring categories make reviews faster and help new team members follow the story.
How to document payment, adjustment, refund, and deposit questions
Good notes save hours. A simple ticket or spreadsheet captures open questions, avoids repeated digging, and creates an audit trail. Over a few months, this becomes a practical reference for typical payer behavior and clearinghouse quirks.
Minimum fields to record
- Date opened
- Source (EHR line, ERA/claim number, bank deposit reference)
- Amount in question
- Type (payment, adjustment, refund, deposit mismatch)
- Patient or claim identifiers (use internal IDs, avoid storing PHI where not needed)
- Action taken and by whom
- Date resolved and resolution code
- Supporting documents or links (remittance, bank screenshot, clearinghouse ticket)
Illustrative example (not a client story): a $450 bank deposit line has no matching ERA. Log the deposit reference, note that a clearinghouse remittance is pending, and message the biller on MM/DD. Close the ticket after the clearinghouse provides the ERA tying the deposit to three patient payments. Attach the clearinghouse ticket number and the final ERA to the record.
When a deposit does not match expected remittances, first confirm whether it is a clearinghouse batch that aggregates multiple payers. If you need clarity on enrollment or remittance patterns, CMS information on provider enrollment and payer communication can be helpful context (CMS: Medicare Provider Enrollment).
Retain the full thread—emails, clearinghouse messages, and files—with the month-end pack. If a payer dispute later arises, these notes are your timeline and proof of follow-up.
The financial reports an owner should review
Owners do not need a binder. A focused bundle, reviewed the same way every month, tells you what you need to know about revenue health and cash position.
Essential monthly bundle
- Profit and loss (month-to-date and year-to-date) — scan revenue by service line and look for unusual swings.
- Balance sheet — verify cash balances and reconcile the A/R control account to the billing-system total.
- Accounts receivable aging and top payer/physician aging — watch trends in older buckets and concentration risk.
- Deposit and remittance reconciliation worksheet — confirm that cash was posted to the right accounts and periods.
- Cash flow statement or a short cash reconciliation — understand available cash; for context, see our cash flow overview.
Compare month-over-month and year-over-year results. Pair the financial picture with operational measures such as visits per provider, average billed charge, and collections per visit. If charges climb but collections lag, that suggests denials, slower adjudication, or rising patient balances—not necessarily growth in revenue.
Internal controls still apply, even in a small office. Separate duties where you can (receipting, posting, and reconciling), and document the policies that keep money and data safeguarded. For practical control steps, see our resource on internal controls in accounting. When headcount is tight, add compensating reviews by an owner or external accountant.
Privacy and professional-support boundaries
Bookkeeping for a medical practice often touches protected health information (PHI). Staff and vendors must handle PHI appropriately. For general guidance on responsibilities for covered entities and business associates, review HHS resources on HIPAA (HHS: HIPAA).
Scope note: this article offers general bookkeeping workflow information. It is not legal, tax, or HIPAA compliance advice. For specific regulatory or legal questions, consult qualified counsel or your compliance officer.
When you need outside help—for example, puzzling ERA codes, payer disputes, or compliance questions—engage professionals who understand both medical billing and privacy. Require business associate agreements (BAAs) where vendors access PHI, specify limited and necessary PHI in contracts, and document safeguards such as role-based access, encryption in transit and at rest, and periodic training attestation.
Clarify scope in engagement letters (bookkeeping versus coding or legal advice) and responsibilities for PHI handling. As part of your month-end control pack, note any vendor security confirmations and your own confidentiality procedures. Minimizing PHI in accounting files—using internal IDs and redacted screenshots—reduces risk without impairing reconciliation.
Why this guide is different
The most similar material on our site addresses accounting for remote therapy businesses and veterinary clinics. Those professions follow different operating models. For instance, veterinary clinics generally do not process payer ERAs, and their regulatory environment differs. This guide addresses the medical-practice reality: EHR production, insurance payments, deposits, and the revenue-cycle handoff to the GL.
What you will notice here is a straight, repeatable path from the EHR to cash: export, match, adjust, reconcile, and document. The process works across a range of EHRs and clearinghouses because it focuses on how to translate operational activity into consistent financial presentation—without assuming any single system or vendor.
Checklist: Monthly medical practice bookkeeping
- Export the EHR production and billing-status report for the month.
- Obtain ERA/remittance summaries and merchant statements for the same period.
- Map charges to GL revenue accounts; record contractual allowances per policy.
- Match remittances to bank deposits; log and track any unmatched deposits.
- Post write-offs and revenue corrections with support (see guide).
- Reconcile the GL A/R control to the billing-system A/R aging.
- Complete bank reconciliations and confirm available cash on hand.
- File month-end workpapers and a signed reconciliation pack with versioning.
- Maintain an issue tracker for follow-ups and unresolved deposit items.
- Review the essential monthly bundle and sign off on material variances.
Professional next step
If you want a review of your current month-end workflows or a template reconciliation pack adapted to your EHR and clearinghouse, contact Daniel Sandler, CPA for a conversation about practical bookkeeping and controls: contact Daniel Sandler, CPA.
Frequently asked questions
Should an EHR balance always equal accounts receivable in the general ledger?
No. The EHR or practice-management A/R and the GL A/R often differ because of timing, unapplied payments, take-backs, and adjustments recorded in one system ahead of the other. Reconciliation exists to explain these differences and document them. Large or unexplained gaps warrant investigation and may point to posting errors or missing remittances.
How should a medical practice investigate a deposit that does not match a report?
Start with the deposit reference and the clearinghouse remittance for that date. If it is a clearinghouse batch, ask the biller for a breakdown by payer and claim. Log the discrepancy in your issue tracker, set a follow-up date, and escalate when detail is not available within your expected timeline. Keep the correspondence and final mapping in your month-end pack.
What financial reports should a small medical practice review monthly?
At minimum: profit and loss, balance sheet, A/R aging, a deposit-to-remittance reconciliation, and a short cash reconciliation. Review them alongside operational metrics like visits and average charges so you can link movements in revenue to real activity rather than noise.
How often should I compare clearinghouse remittances to bank deposits?
Include the comparison in every month-end close. If volume is high or cash is tight, add weekly or periodic spot checks to surface missing deposits or posting delays sooner. Match the frequency to your volume and risk.
What if the clearinghouse cannot provide a breakdown for an old deposit?
Document your attempts to obtain detail and apply a reasonable materiality threshold to older items. For significant unresolved amounts, escalate with payer relations or consider an independent review. Keep aging and status updates visible in your issue tracker so leadership can decide on next steps.