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principal

answer

a capital sum of money due to a debt or used as a fund for which interest is either charged or paid. The money originally invested or loaned, on which basis interest and returns are calculated

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UCC

answer

universal commercial code. a unified set of codes covering in many business transactions.

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negotiable

answer

legally transferable to another party.

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reconciliation

answer

the process of proving that a bank statement and checkbook balance are in agreement.

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online banking

answer

means of performing services electronically via the internet.It also is called personal computer (PC) banking, home banking, electronic banking, e-banking, or Internet banking. -Despite the disadvantages, forecasts show that banking via the Internet is becoming more popular. Convenience probably is the number one reason people and businesses use the Internet for financial services. In addition to Internet banking services, clinic bills can be paid online, without the delay of mailing.

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basic services a customer can do through online banking

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Check account balances Transfer funds between accounts Pay bills electronically Determine whether a check has cleared the bank Download account information View images of transactions (checks and deposits) -

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Advantages: Online banking

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Convenience, ease of use, portability, and availability

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Disadvantages: online banking

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Learning to navigate the software, limited service options, possible increased security risks

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Customer-Oriented Banking

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Convenience has become a basic expectation of consumers in banking industry Call centers of some banks employ customer service personnel to answer questions and fulfill requests for all types of bank transactions Mobile banking (m-banking) works through wireless devices Consider the services available through local banks when choosing the best banking facility for the physician's office.

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Electronic Funds Transfers

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EFTs are electronic payments of payroll, money owed to vendors or business establishments, and payments from government agencies Safe, secure, efficient, and less expensive than paper checks Processed through an automated clearinghouse (ACH)

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Automated Clearing House (ACH)

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an electronic network for financial transactions in the US -processes large volumes of debit and credit transactions in batches.

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Federal Reserve banks

answer

are the nation's largest clearing house operator.

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NACHA National Automated Clearing House Association and Federal Reserve

answer

established the rules and regulation that govern ACH network

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EPN Electronic Payment Network

answer

is the only private sector ACH in the country.

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Define a check.

answer

A check is a bank draft or order to pay a certain sum of money, payable on demand, to a specified person or entity.About 90% of all financial transactions in the United States are said to be accomplished by check.

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For a check to be negotiable, it must:

answer

Be written and signed by a maker Contain a promise or order to pay a sum of money Be payable on demand or at a fixed future date Be payable to order or bearer

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maker

answer

any individual, corporation, or legal party who signs a check or any type of negotiable instrument.

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Debit Cards

answer

When debit card is used, amount of transaction is immediately withdrawn from available balance in account. Some banks now decline debit card charges at the point of sale when there are not sufficient funds in the account to pay the charge and do not charge any insufficient funds fees toward the attempted purchase. If overdrawn, card denied unless some type of overdraft protection on account Stay abreast of recent banking legislation and always follow office policy when accepting debit cards as payment for medical services

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Types of Checks

answer

Bank draft Cashier's check Limited check Money order Traveler's check Voucher check

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Bank draft

answer

a check drawn by a bank against funds deposited to its account in another bank. -a check drawn by one bank on another bank in which it has funds on deposit. They are considered much more secure than personal checks, since the funds are coming from the bank rather than the individual

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Cashier's Check

answer

a bank's own check drawn on itself and signed by the bank cashier or other authorized official -often are issued to accommodate a savings account customer who does not keep a checking account.

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Limited Check

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check that is limited by amount and time for negotiability (30,60,90) -often is used for payroll or insurance checks.

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Money Order

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sold by banks, some stores, and the US postal service. -often are used to pay bills by mail when a person does not have a checking account. A way for people with no checking account to send money by mail

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Traveler's Check

answer

often used in place of cash when traveling (because personal checks may not be accepted or carrying a large amount of cash may not be acceptable); available in denominations of $20 to $100, $500, $1,000; requires a signature at place of purchase as well as signature at the time the check is used.

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Voucher Check

answer

check with detachable voucher form used to itemize or specify the purpose for which the check is drawn; commonly used in payroll checks the voucher details the reason for the payment by the issuer of the check. The recipient of the voucher check detaches the voucher and retains it for record-keeping before cashing the check.

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payer

answer

person who writes a check in favor of the payee (recipient)

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payee

answer

the person named on a draft or check as the recipient of the amount shown.

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The Federal Reserve

answer

Central bank of United States Goal is to provide a safer, more flexible, and stable monetary and financial system Congress created the Federal Reserve in 1913 as the central bank of the United States

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Routing Numbers

answer

Routing transit number (RTN) is a nine-digit code printed on bottom left side of checks Also used for direct deposits and bank wiring -it identifies the bank upon which the check was drawn -also used for direct deposit and bank wiring (first two digits-federal reserve district where the bank is located, 3rd digit-district office, rest is the individual bank identification number)

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ABA American Bankers Association Number

answer

appears in the upper right area of a printed check. -identifying the bank and area location of the bank on which the check is written (express as fraction) -is used to prepare deposit slips and to identify each check.

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How checks are processed

answer

The drawee (the bank of facility on which the check is drawn or written) pays the specified sum of money to the holder (the person presenting the check for payment) -check receive by the bank are turned over daily to a regional clearing house (clearing house cancel each one by stamping, mechanically punching, or embossing them).The identifying code numbers with magnetic ink enable the "clearing" process to be accomplished.

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what happens to the cancelled check?

answer

is either kept by the financial institution or returned to the drawer (person who writes the check), many banks no longer provide, if the drawer needs proof of payment, they can request from the bank.

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Who is the drawer of a check?

answer

the person who writes the check.If the drawer needs proof of payment, a copy of the check can be requested from the bank if the checks are not returned in the monthly bank statement.

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Clearinghouses

answer

Networks of banks that exchange checks Banks in the United States can present checks to the Federal Reserve System or private clearinghouses for regional and national check collection.

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Magnetic Ink Character Recognition

answer

Characters and numbers printed in magnetic ink are found at bottom of checks Represent a common machine language, readable both by machines and humans When check is deposited, amount of check also printed in magnetic ink below signature Magnetic ink character recognition (MICR) identification facilitates processing through a high-speed machine that reads the characters, sorts the checks, and does the bookkeeping.

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common types of accounts

answer

checking account, saving account, interest-bearing account, money market saving account.

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Checking Accounts

answer

Simply stated, a checking account is a bank account against which checks can be written A physician often requires three different checking accounts: Account for personal and family expenses Separate checking account for office expenses High-yield, interest-bearing account for funds reserved for paying insurance premiums, property taxes, and other seasonal expenses

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savings account

answer

money that is not needed for current expenses can be deposited on a saving account. earn interest on the amount deposited, no check-writing privileges.

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Interest-bearing accounts

answer

An account that generates interest income on the available balance in the account. Interest is a charge (payment) in exchange for the use of money. (savings accounts pay higher)

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Money market savings account

answer

requires minimum balance is a type of savings account that usually earns a higher amount of interest than a basic savings account. The minimum balance for this account is often considerably higher than the minimum balance of a basic savings account. They can range from $500-$50,000. -A money market account is an interest-bearing account that pays a higher interest rate than a savings account, and gives the account holder limited check-writing ability. It combines the benefits of savings and checking accounts, but usually requires account holders to maintain a higher balance in exchange for the higher interest rate.

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Individual retirement accounts (IRAs)

answer

are used as a means of preparing for retirement. -allowed special tax treatment. savings grows tax-deferred, tax deductions are realized for contributions, interest earned may not be taxed at withdrawal.

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The Business Account

answer

is used for business or company operations and managing cash related today-to-day business functions. -Services available: Business checking with interest Free checks and deposits with a maintained minimum balance Overdraft protection by linking the account to a savings account or to a bank-issued credit or debit card Online banking -Before a business account is set up, careful consideration should be given to determine which type best meets particular needs of the business.

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Perks for Businesses

answer

Perquisites (a special right or privilege enjoyed as a result of one's position) : Business Express: computerized cash management system that allows access to account information by telephone. Sweep Account: an account in which excess funds over a minimum balance are "swept" into a higher interest-bearing investment account. When the balance in account drops below the minimum, funds are "swept" back into it automatically. Business checking with special features: account designed for businesses with low to moderate transaction volume and limited cash balances. Cash management account: combines a checking account with a money market fund and brokage account. All cash activities are summarized on one monthly statement. ideal for business owners who do not have time to manage their money/investments. Business Checks: ledger type book with three checks per page and perforated stub at the left side of the check, numbered in sequence, depositor's name, account number, additional information. (comp. generated checks and one-write check writing)

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Computer-generated check

answer

personalized check that can be ordered from printing houses to fit the office computer's financial software program.

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One-write check writing

answer

System of writing checks that can save time and minimize errors in medical office disbursements When check is written, a permanent record is created onto record of checks drawn and employee's payroll record, including a record of all deductions Space is provided for payee's address so that check can be mailed in a window envelope -An office with a pegboard bookkeeping system may want to include one-write check writing. Suppliers of basic pegboard systems also can provide a check writing system such as the one described.

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Establishing a Bill-Paying System

answer

Establish a systematic plan for writing checks and paying bills Online bill paying allow bills to be paid as soon as received For manual systems, write on invoice number of check, amount paid, and date paid Handling and writing checks must be done with extreme care.

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-Designated time

answer

Establish a routine for paying bills at designated times, such as on the fifteenth and thirtieth days of each month

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-Paying Bills to Maximize Money

answer

Most vendors allow 30 days to pay If business checking account is interest-bearing, do not pay bills before due date For weekly bills, accumulate invoices and issue one check per month When each invoice is received, check the "terms," which usually are located at the top of the document. A few vendors offer a discount if bills are paid within a shorter time. Checks are costly, and some banks charge businesses a fee for each transaction.

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-Automatic Withdrawals and deductions

answer

Some routine bills that are due monthly or on a regular billing cycle can be set up to be paid automatically through prior arrangements with the bank.

question

-Online Bill Paying

answer

Online bill paying account can be established with a bank or other business entity Bank pays bills by automatically debiting customer's account and crediting merchant's account More banks are offering this service; however, not all vendors accept electronic transfers in payment of bills.

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Writing Checks

answer

guidelines should be followed. Note incomplete name and space available for altering the check. When writing a numeric amount of a check, begin as far to the left as possible. When inserting a written amount of the check, again start as far to the left as possible, allowing no space for added or altered words. Writing checks for below a dollar is not recommended.

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-checkbook stubs

answer

Part that remains in book after check has been written and removed Depositor's own record of checks written: date, amount, payee, and purpose -It is important to complete the stub before writing the check.If the stub is not completed and the check is sent out, no record exists of the payee and the amount taken from the account until the cancelled check is returned at a later date.

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-Signing Checks

answer

Place all written checks on physician's desk for signature along with invoices Power of attorney must be filed for medical assistant to sign checks The power of attorney may limit the check signing authorization to a certain amount or to a limited period.

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-Handling Corrections

answer

Do not cross out, erase, or change any part of a check If mistake is made, write "VOID" on stub and check File with canceled check Checks are printed on sensitized paper so that erasures are easily noticeable, and the bank has the right to refuse to pay on any check that has been altered.

question

-Writing Cash Checks

answer

Cash check is made payable to Cash or Bearer Most often used to replenish petty cash funds Do not endorse check written for cash as it is a liability issue When should you write out a check for cash? (Because these checks are easily cashed, it is poor policy to write cash checks until physically at the bank.)

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-Mailing Checks

answer

Check should not be visible through envelope Place check within a letter or fold it into a plain sheet of paper Make sure the envelope is sealed Mail all checks as soon as possible. Special problems may arise when a check is written on nonexistent funds or when a payer, for a legitimate reason, wants to prevent the payee from cashing a check.

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Overdraws or Overdrafts

answer

Issuing a check for more than amount on deposit in bank is illegal in most states If check is written by established depositor, bank may honor check and notify depositor that account is overdrawn Considerable fees are charged for an overdraft Follow office policy regarding charges for a returned check Some accounts allow automatic withdrawals from savings accounts to cover overdrafts without additional charges. If the check is returned to the physician's office unpaid, call the maker of the check immediately and ask him or her to forward the funds needed to cover the check and the fee.

question

Reasons for Stop-Payments

answer

A depositor or check writer who wants to rescind the check has the right to request that the bank stop payment on it. Reasons: Loss of a check Disagreement about a purchase Disagreement about a payment

question

Precautions for Accepting Checks

answer

Best defense against check fraud is to train employees to detect signs of a fraudulent check Check is not perforated on at least one side Routing number and ABA number will be consistent with physician's checking account numbers Never accept a third-party check

question

National Check Fraud Center Recommendations

answer

Ask bank to advise office when new books of checks are ready, then either pick them up or use a parcel delivery service to have them delivered Make sure cancelled checks and bank statements are in a secured area Check bank statements immediately after receiving them Print return address on envelope or use printed stationary or return address stickers Do not discard credit card records or bills with trash; instead, shred them

question

Acknowledging Payment in Full

answer

"Payment in Full" is a type of restrictive endorsement, and it can prevent physician from ever collecting any balance due Research state law to determine whether any further regulations apply to acceptance of a check with a payment in full endorsement If a patient presents a check to the office and the notation of "payment in full" appears on any part of the check, front or back, it may be best to refuse to accept the check unless insurance has paid its portion and the patient owes no more on the bill. If the check is taken, however, the following disclaimer should be written on the back of the check above the normal endorsement: "This check is deposited under protest, without prejudice, and with preservation of all rights of the payee against the drawer of this check, according to UCC §1-207."

question

Precautions for Accepting Credit and Debit Cards

answer

Match name on card with patient or payer's ID Follow office policy if names do not match Sometimes, a married couple may use each other's cards. Some patients may also use blank cards that are purchased with cash to pay on their accounts.

question

Returned Checks

answer

Bank may return a deposited check because of some irregularity Missing signature or endorsement Insufficient funds If a check is stamped "NSF," contact maker immediately If the person cannot be reached, waste no time in tracking down all leads, such as referrals, numbers obtained from credit cards, driver's license, and so forth.

question

Charging Fees

answer

Most banks currently charge both payer and payee a fee for a check that has been returned due to insufficient funds Notify person who wrote check that it was returned If person requests check be "run through again," call bank first to determine adequate funds are available Some offices add these charges to the patient's account in an attempt to recoup the expense.

question

Legal Options

answer

Many NSF problems can be cleared up quickly and easily, assuming situation was simply a mistake or an oversight Turn account over to qualified collection agency if unable to collect on account promptly Make sure documentation exists proving that attempts were made to collect the check Best evidence is a certified letter sent to patient with a return receipt requested Bad checks also can be reported to district attorney's office What other legal action may you take against bad checks? (You can file against the maker of the check in small claims court.) An experienced medical assistant can often sense a "red flag" during the initial information-gathering process with a patient.

question

endorser

answer

the person who signs his or her name on the back of a check for the purpose of transferring title to another person.

question

Endorsements

answer

A signature plus any other writing on back of a check by which endorser transfers all rights in the check to another party The name of the last endorser of the check shows who last received the money If a check is cashed for someone who did not endorse it and is returned for some reason, the bank charges the check to the last endorser, not to the last person receiving the money.

question

Types of Endorsements

answer

Blank endorsement Restrictive endorsement Special endorsement Qualified endorsement Blank and restrictive endorsements are most commonly used.

question

blank endorsement

answer

the payee signs only his or her name. This makes the check payable to the bearer. simplest and most common type of endorsement on personal checks.

question

Restrictive endorsement

answer

specifies the purpose of endorsement

question

Special endorsement

answer

includes word specifying the person to whom the endorser makes the check payable. Ex: on the back of the check says: Pay to the order of Theodore F. Wilson, M.D. Helen Barker -the check is negotiable but requires Dr. Wilson's signature or endorsement.

question

Qualified endorsement

answer

the effect of the endorsement is qualified by disclaiming or destroying any future liability of the endorser. using the word "without recourse"

question

Methods of Endorsement

answer

Stamp checks from patients with "For Deposit Only" Endorsement should agree exactly with name on face of check Some insurance checks or drafts require a personal signature endorsement; a stamped endorsement is not acceptable

question

How should one endorse a check when name of the payee is misspelled?

answer

If the name of the payee is misspelled, the payee usually must endorse the check the way the name is spelled on the face, followed by the correctly spelled signature

question

These are the reasons it is very important to deposit checks promptly.

answer

A stop-payment order may be placed The check may be lost, misplaced, or stolen Delay may cause the check to be returned because of insufficient funds The check may have a restricted time for cashing It is a courtesy to the payer

question

Preparing the Deposit

answer

All deposits must be accompanied by a deposit slip Keep carbon or photocopy of deposit slip on file Commercial deposit slip is used for office checking account List all checks on the back of the deposit slip Transfer the total to the front of the slip Enter the amount of the total deposit on the deposit slip stub Clip the currency together and clip the checks in a separate packet. Then place the entire amount in a heavy envelope for taking to the bank. A bank deposit should be made daily.

question

What is a deposit slip?

answer

Deposit slips are itemized memoranda of cash or other funds a depositor presents to the bank with the money to be credited to the account

question

Direct Deposits

answer

is a plan in which payments are transferred by a paying agency directly into account of recipient

question

Other Methods of Deposit

answer

Some automated teller machines (ATMs) accept deposits Online banking allows customers to view accounts, make transfers, order checks, pay bills Online banking also is an excellent way to research the checks that have cleared the bank and compute accurate bank balances.

question

Bank Statements

answer

This statement indicates the following: Beginning balance Deposits received Checks paid Bank charges Ending balance The bank periodically sends the customer a statement, which shows the status of the customer's account on a given date.

question

Online Statements

answer

Electronic version of a paper bank statement Customer receives statements quickly and easily Statements can be saved in an electronic file for examination and printing at customer's convenience Fees are kept low, because paper and mailing costs are minimized

question

Reconciling the Bank Statement

answer

Bank statement balance and customer's checkbook balance usually differ Reconciliation discloses any errors in checkbook or, on rare occasions, in bank statement In all types of accounts, bank may charge a fee for services If the average or minimum balance is maintained at an established level, the bank may forego a service charge.

question

Signature Cards

answer

Kept on file at bank to check against suspicious checks or endorsements Any staff member authorized to pay bills must go to bank and add signature to file

question

Bonding

answer

Fidelity bonds reimburse physician for any monetary loss caused by employees The three types of bonding are: Position-schedule bonding, which covers a specific position rather than an individual Blanket-position bonding, which covers all employees Personal bonding, which covers specific individuals

question

What is usually required to purchase fidelity bonds?

answer

Personal background investigations are generally required

question

Patient Education

answer

Encourage patients to pay for professional services with a personal check Be responsible for pointing out check errors and requesting a new check Call patient and explain problem immediately if returned as NSF

question

Legal and Ethical Issues

answer

Write "VOID" across the face of checks with errors, make a note on check stub, and file check with cancelled checks Stop-payment order may be placed with bank in an emergency Do not accept a check made payable to another party without endorsement of person who gives check to you

question

Who is responsible for a returned check?

answer

If the bank returns a check for any reason, the check will be charged to the last endorser, not the last person to receive the money.

question

drawee

answer

The bank on which a check is written. -directed by the drawer (maker) to pay third party payee

question

drawer

answer

A person who signs a check or draft ordering payment to be made is called the

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