The challenge with practice bookkeeping is that what you bill and what you collect are rarely the same number. When you bill an insurance company $200 for a procedure, you might receive $140 from insurance and $30 from the patient, with a $30 contractual adjustment that gets written off. Your books need to track all three pieces to show you what the practice is actually earning and what it is still owed.

Start by recording charges at the full billed amount. When you see a patient and bill $200, that creates a $200 accounts receivable. The receivable should be tagged to that patient and ideally broken out by payer so you can track insurance receivables separately from patient balances.

When the insurance payment arrives, it comes with an Explanation of Benefits or Electronic Remittance Advice that breaks down the math. This shows what you billed, what the insurer allowed under your contract, what they paid, and what the patient owes. You need to record the payment amount, the contractual adjustment between your billed amount and the allowed amount, and any patient responsibility that shifts to the patient’s balance.

Contractual adjustments are not bad debt. They are simply the difference between your fee schedule and what the insurance contract allows. Most medical and dental practices run a contractual adjustment account as a contra-revenue account so it reduces gross revenue to show net collectible revenue. This gives you an accurate picture of what the practice actually earns versus what it bills on paper.

Patient balances need their own tracking. After insurance pays, patients often owe copays, coinsurance, or deductible amounts. These should sit in accounts receivable separately from insurance balances. Patient collections behave differently from insurance collections and age differently too.

Run aging reports weekly or at least monthly. Separate insurance aging from patient aging because they require different follow-up. Insurance claims that age beyond 30 or 45 days usually need follow-up or resubmission. Patient balances building beyond 60 or 90 days need statements and collection efforts.

The goal is knowing at any time what the practice is actually owed and from whom. Insurance receivables sitting too long might indicate claim problems or denials that need attention. Patient receivables piling up might mean your front desk isn’t collecting copays at the time of service. Without this visibility, practices leave money on the table and often don’t realize it until cash flow gets tight.

QuickBooks Online can handle this with the right setup. The chart of accounts needs separate revenue and adjustment accounts, and receivables need to be tracked at the customer level. Some practices use their practice management software for detailed claim tracking and then sync or summarize into QuickBooks for the actual financial records.

If this feels like a lot to manage on top of running a practice, you’re not alone. Many practice owners benefit from small business bookkeeping services that understand how insurance billing flows into the financial records. We work with practices across New England and nationwide and can help set up the tracking that shows you what you’re really collecting. Reach out for a consultation if you’d like to talk through your situation.