Banking

check sequence number

he check sequence number is also imprinted by the bank as the last number at the bottom, along with a first series of numbers, which identifies the financial institution, and a second series of numbers, which identifies the checking account number. The American Bankers Association code number, called the ABA routing number, appears as a fraction and is located on the face of the check in the top right area. The name and address of the owner of the checking account appears in the top left portion of the check.

Types of checking accounts

individual or joint checking business or commercial checking account

voucher check

is a check that is available in a variety of styles. Some medical offices order the style that is bound with three checks to a page. A perforation divides the actual check from that portion that outlines written details of the payment. Another style is unbound checks in assembled packs with a copy that is retained as a record of the transaction. Insurance plans and programs often issue voucher checks as payment for insurance claims.

banking by mail

A bank service whereby deposits are mailed by the customer to the bank is known as bank by mail. Banks provide special mail deposit slips and envelopes with either preprinted account numbers or with space to record them. This saves the medical assistant considerable time, but cash cannot be deposited by this method unless it is sent by registered mail and all checks should include restrictive endorsements. The bank will send the depositor a receipt along with another envelope and deposit slip, or some banks use a duplicate deposit slip system, whereby the depositor keeps the duplicate as the receipt

check fraud prevention

A check written with the knowledge that there is not sufficient money in the account to cover the check is considered an intent to defraud and is unlawful. Businesses are more vulnerable during the following times: Friday afternoons Evenings Weekends Holidays Be cautious when receiving checks. Do not give out bank or credit card information over the telephone, and ask the bank about fraud prevention features when checks are ordered.

Business or commercial checking account

A large number of checks are purchased or furnished by the bank to the depositor. Typically, if the account has a minimum balance, there is no charge, but if the balance of the account falls below a set minimum amount (e.g., $10,000), a service charge may be levied.

checks

A large percentage of the money received in a physician's office are payments made by checks. A check (CK) is a written order to a bank to pay money on demand.

limited check

A limited check is one bearing a statement that indicates the check is void if written over a certain amount. Such checks are used for payroll or may be received as payment of insurance claims. A limited check also specifies a time limit during which it is negotiable, for example, "Void twelve months from issue date." If the time limit has passed, the check is referred to as a stale check.

Point of sale banking system

A point-of-sale (POS) banking system brings banking to the business location. It allows instant transfer of funds from a patient's bank account at the time services are received. The system uses an electronic terminal and a plastic debit card plus an identification number (PIN), which is known only to the owner.

Reconcileation

Act of proving the accuracy of all transactions that have occurred on a checking account by performing mathematical computations and comparing the bank's records with those of the customer

Electronic Funds Transfer system (EFTS)

Allows banks to transfer funds among accounts quickly and accurately without the exchange of checks. +Instead of writing checks, the EFTS may be used for automatic bill payments for such things as mortgage payments, utility bills, and insurance premiums. There is often no charge for this service. Payroll can also be handled with an EFTS. Benefits of using an EFTS are security, efficiency, and cost savings because processing electronic payments is less expensive than paper checks.

checks presented in a medical office

Always inspect a check to be sure it is properly completed. Obtain a state driver's license number and a second form of identification so that they may be compared against existing records before accepting a check for payment. Request additional information for all out-of-state or suspicious checks. Use of a check authorization system or private company that offers a check verification service may be worthwhile in a large medical practice or clinic setting.

overdraft

Charge against an account in excess of the account balance

postdated check

Check dated for deposit at a future date; cannot be considered valid or payable until that date

stale check

Check that is previously dated and so old when presented for payment that it is no longer valid; time limit can vary from 90 days to 6 months, and such information is noted on the face of the check; also called a stale dated check

currency

Coins and paper bills used as money

checkbook management #2

Deposits are added to the balance (preferably in red ink) and checks are subtracted to compute the new balance. Other bank charges, such as service charges for handling checks returned by the bank for insufficient funds, must also be subtracted in the check register to keep the balance accurate. If a check is not written properly, financial responsibility for any loss is borne by the drawer.

signature card

Document required by banks to identify those authorized to act on (sign) an account or safe deposit box; signing indicates acknowledgment to handle the account according to existing bank laws.

forgery

Fraudulent signature on document

deposits

Funds given to a bank to be credited to an account

A check is negotiable, that is, legally transferable, to another person by endorsement when it meets the following requirements. It must be:

Written Signed by the drawer, or maker An unconditional order to pay a specific amount of money Payable to the order of the bearer Payable on demand or on a definite date Written to the payee The payee endorses the check, thereby transferring the right to receive the money

ABA routing number

appears as a fraction and is located on the face of the check in the top right area. The name and address of the owner of the checking account appears in the top left portion of the check.

most. commonly used endorsements in a medical office

blank, restrictive, and full endorsements

6 months

checks containing dates that are over 6 months oldwill not be accepted by a bank. If the numerical and written amounts do not agree, the payee receives the amount that is written out.

how often are bank statements mailed

every month, banks mail each depositor a statement of his or her checking account. Canceled checks or substitute checks that have been debited from the account during the month may or may not be included

service charges

for processing transactions and account maintenance, along with interest paid and corrections are also listed, and check numbers are shown. The statement should be compared with the checkbook register immediately to determine the cause of any disparity in figures.

voucher

(1) Receipt stating details (as evidence) of a disbursement of cash. (2) Part of the check that has no negotiable value and that remains in the checkbook after a check is written and removed. It is used to itemize or to specify the purpose for which a check is drawn; also called a check stub or check register. (3) In insurance, a payment check.

how a check is numbered

+ Each check is numbered at the top right corner

financial software

+ quick books, quicken books. and medical software programs offer computerized checks with the business name imprinted. They are usually preformatted but unnumbered and sequential check numbers are recorded on each check and the check register at the time of printing, along with the payee's name and amount. If personal information (e.g., gross pay with deductions) or notes (e.g., refund to insurance company) are recorded, that area appears white and the information does not show on the completed check.

The blank areas to be completed include the date, name you are writing the check to (payee), amount of the check (written in figures and spelled out), and signature of payer. Three parties are involved when a check is written:

1)The drawer/payer (or depositor) who orders the bank to pay 2)The drawee (or financial institution) where the money is deposited 3)The payee (or person) who is directed to receive the money

Electronic Check

An electronic check is a check created from digital images of the original. The 21st Century Act, known as "Check 21," is a federal law that went into effect October 28, 2004, and allows the use of electronic checks. Instead of the bank transporting checks physically, they can now transport them electronically to other banks in the check collection process. The reproductions are called substitute checks. Both the front and back of the check are copied and a legend that states "This is a legal copy of your check" appears; the substitute check serves all uses of the original check and may or may not be returned with the bank statement.

endorsements

Approval signature on the reverse side of a check that indicates liability for payment of funds disbursed in the case of default or nonpayment; on an item payable to the order of the endorser, it acknowledges receipt of the funds

checkbook management

At the time a check is written, the assistant should complete the voucher or check stub attached to the check or designated area in the checkbook, referred to as the check register. This routine reduces the possibility of forgetting to record information and prevents incorrect calculations. The bank balance should be known at all times, so a check is not written for an amount greater than the balance, causing an overdraft. A continuous record of the bank balance is kept on the stub or posted in a check register.

identify theft (privileged information)

Bank transactions involve privileged information, such as account numbers and signatures. Medical assistants must be aware of the importance of confidentiality in financial matters; for example, they should keep financial documents in locked files and shred documents as their retention period expires

basic rules of precaution when using an ATM

Complete the deposit envelope ahead of time to speed up the transaction. Park close and in a well-lighted area near a walk-up ATM and look for suspicious individuals or activity nearby. If you begin a transaction and notice something unusual, cancel and leave the area. Pull close to the machine when using a drive-up ATM and be sure your vehicle doors are locked and all windows are closed except when it is necessary to lower the driver's window to conduct your transaction. Select a PIN that does not have numbers that appear in birthdates, addresses, phone numbers, and Social Security numbers, or numbers that appear on anything that is carried in a wallet. Do not write it down; memorize it.

after hour deposits

If the physician's office closes after banking hours, a depositor may use the after-hours depository service of a bank. The deposit is placed in an envelope and dropped through a slot located on the outside of the bank. The deposit is processed by the bank the following morning or held unopened until the depositor can get to the bank personally to make the deposit; then during banking hours, it is necessary to obtain a replacement envelope and a deposit receipt. A double-locked security bag is available from banks for a small fee for this purpose. Always double-check that the deposit bag has gone into the evening deposit drawer properly by reopening the drawer.

Financial Institution

It is important to select a financial institution that offers services that can be tailored to the particular needs of a medical practice. Such services as free online banking and a safety deposit box; lines of credit that include a wide variety of loans and equipment financing; and face-to-face interaction with decision makers are all important considerations when choosing a financial institution. +Every financial transaction between a medical practice and a bank concerns some form of money (e.g., cash, checks, money orders). Therefore, the medical assistant must understand fundamental banking procedures and common banking terms.

If the checkbook balance and bank statement balance do not agree, all details must be rechecked to locate the error, which may result from:

Omission of a debit card transaction, a written check, or one or more outstanding checks, which may have been written without recording the information on the register. This could occur if the physician wrote a check without the medical assistant's knowledge. Omission of a deposit in the checkbook register Check drawn for a different sum than that recorded on the register Check that has cleared for a different amount than what is shown in the checkbook Addition or subtraction error(s) in the checkbook register while recording, calculating, or carrying figures forward Transposition of figures on the register (divide the amount by nine to pinpoint a transposition error) Canceled check omitted on the bank statement in error If an error is found, mark the register where the error occurred with a reference to the check number or register line where the correction is made. Enter the correction after the last entry, together with a cross-reference to the check number or place in the register where the error occurred.

payer

Party responsible for payment of the amount owed as shown on a check or note

Prepaid card

Patients who do not have bank accounts may offer to pay the physician using a prepaid card. These cards are used to pay bills or buy merchandise in the same places a bank-issued debit card can be used. Cards may be bought at supermarkets, drugstores, and big box retailers (e.g., Walmart) and come with logos (e.g., Visa, MasterCard). Prepaid cards are the fastest growing payment method in the United States because they are now being used instead of checking accounts. Fees are charged to customers to activate, reload, and maintain the cards and merchants also pay a fee every time a card is swiped.

bearer

Person delivering an item for payment

Payee

Person named on a draft or check as the recipient of the amount shown; also known as bearer

accounts

Premier accounts, money market accounts, and both personal and business accounts are offered at financial institutions. The most common types of accounts are savings and checking accounts.

bank deposits

Preparing daily bank deposits is one of the routine chores usually handled by the administrative medical assistant. Deposits of checks and currency (paper money) should be made promptly to prevent payments being lost, misplaced, or stolen. Timely deposits reduce the possibility of a check being returned due to insufficient funds.

withdrawal

Removal of funds from a checking account by writing a check or using an ATM; from a savings account, a withdrawal slip may be completed or an ATM may be used

medical office electronic check

Some companies will take a paper check that has been sent by the medical office and convert it into an electronic transaction that is processed via the ACH system. Also, regular billers, such as telephone and utility companies, may convert check payments into electronic ACH transactions that are sent to the bank for payment. The original check is not forwarded to the bank for payment and, therefore, is not returned to the medical practice. A retailer may convert a paper check into an electronic ACH payment at the time of purchase (point of purchase [POP]). The cashier captures the information on the check electronically and hands back the physical check but it may not be used again.

computerized financial software for back deposits

Some computerized financial software programs create a daily deposit slip when payments are posted to accounts. Manual bookkeeping systems (e.g., pegboard) include a deposit slip that the bank will accept if it is stapled to the physician's deposit slip. Such slips have the account number printed in magnetic ink, so they may be "read" by magnetic ink character recognition (MICR) equipment. An itemization lists the types of money included in the deposit (e.g., checks and cash) along with each check's ABA number . Since checks are read electronically, banks no longer mandate that the ABA routing number be recorded. Some medical offices prefer to write the patient's last name or check number on the deposit slip instead of the ABA number. Computerized software programs often track the actual check number, which is input when posting payment.

check writer machine

Some offices use a check writer machine that imprints the figures on a check so that they cannot be changed. First, the date, the name of the payee, and the amount (in figures) are typed on the check. Then, the check is inserted into the check writer machine. Next, the dollar and cent amounts of the check are set on the machine, and a lever is pressed down. In one operation, the check is imprinted and embossed with the dollar amount. Some machines also imprint over the payee's name, so it cannot be altered. Always double-check the figures before imprinting the check; incorrect checks must be voided. The check should be signed by the physician

certified check

The bank makes note of the details, withdraws the funds specified, sets the funds aside until the check is presented for payment, stamps "certified" on the check face, and has the check signed by an authorized bank official. This check is not used very often.

individual or joint account

The depositor purchases a supply of checks and places money in the checking account to cover the amount of checks written. A joint checking account is owned by two or more people and requires signatures either singly or jointly for withdrawals or check writing, depending on how the account is set up. The bank keeps a signature card on file for each account, showing those authorized to sign or endorse and cash checks. There may be no fee with a specified minimum balance, a flat monthly fee, or a per-check charge.

automatic transfer of funds

The physician can arrange with the bank to have money automatically transferred on a certain day of the month from an interest-paying savings account into a noninterest-paying checking account.

Warrant

is a check that is not considered negotiable until it is converted into a negotiable instrument, that is, a written order promising to pay a specific sum. A warrant shows that a debt is due because services have been rendered, entitling the bearer to payment. Government and civic agencies may issue warrants. An insurance adjuster issues drafts, also known as warrants, that order the insurance company to pay a claim. Warrants do not have ABA numbers. To receive payment on a warrant, it must be submitted to the bank that has the funds for collection and final payment. A warrant can be subjected to a lengthy delay before funds are available from the source bank.

money order

is an instrument similar to a check purchased for face value plus a fee, which may vary depending on where it is purchased. It is signed by and issued according to the purchaser's instructions. The seller sets aside funds until payment of the money order is made. Money orders are issued by banks, financial institutions, money order companies, the post office, and various grocery or other types of convenient stores.

savings account

is an interest-bearing account into and from which deposits and withdrawals may be made; there is no stated maturity date. Generally, savings accounts have debit restrictions to discourage frequent withdrawals, so they typically do not offer check-writing capabilities; however, some may offer limited check writing (e.g., three checks per month). A physician's office may have a savings account into which regular deposits are made to accrue interest, then money may be transferred into the checking account monthly or as the need arises to pay practice expenses, including payroll.

cashiers check

is drawn by the bank, made payable out of the payee's bank account, and signed by an authorized bank official. No stop payments are allowed, so this type of check is often considered as good as cash.

counter check

is one available at the bank for the depositor to draw funds from his or her own account. The wording on the check, "Pay to the Order of Myself Only," makes the counter check nonnegotiable. A counter check can also be a blank check used to transact a payment when a person does not have checks with him or her. The name of the bank must be written in as well as other standard information

direct deposit service

is the automatic electronic deposit of wages or benefits (e.g., payroll/Social Security check) into a customer's bank account explained earlier as an electronic funds transfer. This expedites the deposit of a check and the availability of funds. It also eliminates mailing expenses or going to the bank to accomplish the transaction. In a physician's practice, payroll may be deposited directly into an employee's bank account or arrangements can be made for regular insurance payments (e.g., Medicare) to be deposited into the physician's bank account.

bank statement

lists the date and amount of each deposit and of each withdrawal by date presented for payment, not by the date written. The statement also lists electronic transfers of money to the checking account, payments made via electronic banking (debit cards), and deposits made by mail.

checking account

may or may not be interest bearing; it is subject to withdrawals of funds on deposit by check, debit cards, automatic clearing house (ACH) debits, electronic funds transfers, and online bill paying.

Balance forward

previous balance carried over to a new accounting period or page in your check register

Automated Teller Machine (ATM)

s a computerized terminal that enables a customer to make a deposit, withdraw cash, transfer funds, or obtain other bank services. Automated teller machines are accessible 24 hours a day, 7 days a week, and are installed in the outer wall of a bank. Additional terminals can be found in airports, train stations, shopping centers, college campuses, and supermarkets. Depositors are given a debit card and select a personal identification number (PIN) that gives them access to their own computerized bank accounts. If cash is needed and the bank is not open or located in a convenient area, a debit card allows withdrawal (removal of funds) at an ATM. The card may also be used at other locations (e.g., restaurants, stores) to make cashless purchases from funds on deposit. Banks may charge retailers and customers for the use of debit cards. Do not keep a copy of the checking account number and ATM personal identification number in the same place; if found together, these numbers make it easy for a thief to steal from an account even without a check.

The balance on the statement and the balance on the checkbook stub or register may not agree due to outstanding checks,

so each month the two balances must be reconciled. It is an act of courtesy to cash checks promptly, so payers' bank statements can be more easily reconciled at the end of the month.

Pay by Phone System

system is a substitute for check writing whereby the medical assistant telephones the bank or savings and loan association to initiate payments by asking for a transfer of funds. Secure passwords and/or security questions are used to verify the caller and access the account. There may be a nominal fee for the service, which is usually less than the postage to mail a check; some financial institutions provide this as a free service if a minimum balance is maintained.

banking online

that benefits both the financial institution and the client is offered by banks, credit unions, savings and loan associations, and other financial institutions. The physician must have a computer with Internet access. To bank online, you have to have an eligible account (e.g., checking, savings, certificates of deposit, loans), a user identification number, and an online bank password. Usually there is no monthly fee for accessing accounts, but fees may apply to services ordered online. Access is available 24 hours a day, 7 days a week. Features that are available with this type of communication include viewing account balances; reviewing transaction history; viewing the front and back of a paid item; transferring money between accounts; printing a statement; searching for specific transactions by date, check number, or amount; placing a stop payment on a check; and many other benefits. It is possible to send electronic mail messages to the financial institution and obtain a response

travler's check

were developed for use while traveling and in situations where personal checks may not be accepted or carrying large amounts of cash is not desirable. They are printed in denominations of $10, $20, $50, and $100. The checks, purchased from banks or traveler's clubs, are signed on their face in the presence of a witness at the time of purchase. Then, when cashing a check, the owner fills in the name of the payee and signs his or her name again on the face of the check. The second signature must be done in the presence of the person cashing the check, who can then compare the two signatures for authenticity. Copies of travel check numbers are provided to the purchaser and must be kept separate from the original checks. This provides protection against loss or theft. When a bank deposit slip is completed, traveler's checks are listed as checks, not cash.