Explain the purpose of the Federal Reserve Bank amp the types of banks it manages Identify common types of bank accounts Do the following related to banking in todays business world Discuss the importance of signature cards ID: 913554
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Slide1
Learning Objectives
Define, spell, & pronounce the terms listed in the vocabulary.Explain the purpose of the Federal Reserve Bank & the types of banks it manages.Identify common types of bank accountsDo the following related to banking in today’s business world:Discuss the importance of signature cardsExplain how online banking has made standard banking processes more efficientReview the benefits of customer-oriented banking.Do the follow related to checks:Compare different types of negotiable instruments.Identify precautions in accepting checks from patients.Explain how checks are processed from one account to another.Review the procedure followed when the healthcare facility receives a nonsufficient funds (NSF) check.Identify precautions in accepting cashDiscuss the use of debit & credit cards, including advantages & precautions.Do the following related to banking procedures in the ambulatory care setting:Describe banking procedures as related to the ambulatory care setting.Explain the importance of depositing checks dailyCompare types of check endorsements.Review check-writing procedures used to pay the operational expenses of a healthcare facilityUnderstand the purpose of bank account reconciliation for auditing purposes.Discuss patient education, as well as legal & ethical issues, related to banking services & procedures.
Chapter 17
Slide2Banking Services & Procedures
Pages 326 – 342
Slide3Banking in Today’s Business World
Monthly bank account balances can help healthcare facilities establish & maintain a monthly operational budget.Banks also provide opportunities to earn interest & to invest for future financial gain.You most likely will manage only the bank account set up for the income & operational expenses of the healthcare facility.If you have any questions contact the accountant chosen by the provider.Pages 327 – 328
Slide4Banking in Today’s Business World: Cont.
Common Types of Bank AccountsChecking AccountsSimply stated, a checking account is a bank account against which checks can be written & funds can be transferred to the payable party.Page 328
Slide5Banking in Today’s Business World: Cont.
Savings AccountsA standard savings account earns interest at the lowest prevailing rate & has no minimum balance requirement & no check-writing privileges. However, penalties apply for withdrawing funds from a savings account more than four times per month. The provider may deposit a certain percentage of discretionary income into a savings account each month to earn interest.Page 328
Slide6Banking in Today’s Business World: Cont.
Money Market Savings AccountThese have higher interest rates but lower number of transfers are allowed.Some business transfer excess funds from the business checking account to a money market account over the weekend or over an extended holiday period to draw interest on the funds.Page 328
Slide7Banking in Today’s Business World: Cont.
Signature CardsWhen an account is opened at a bank branch, the account signer is required to provider their handwritten signature on a physical or electronic card, which is kept on file with the bank.The provider often designates the task of paying bills to you.If this is the case they would have to authorize you to sign checks by having your signature added to the card.Page 329
Slide8Banking in Today’s Business World: Cont.
Online BankingThis is a means of performing banking services electronically via the Internet. A customer can usually do the following:Check account balancesTransfer funds between accounts (same bank)Pay bills electronically & create checksDetermine whether a check has clearedDownload account informationView images of transactionsPage 329
Slide9Banking in Today’s Business World: Cont.
Customer-Oriented BankingConvenience has become a basic expectation of consumers where the banking industry is concerned.Mobile banking is a customer-oriented innovation that is emerging through the wireless technologyPage 329
Slide10Checks
A check is a bank draft (An order to pay a certain sum of money) to a specified person or entity.For a check to be negotiable, it must:Be written & signed by the drawer (person who has the checking account)Contain a promise (order to pay a sum of money)Be payable on demand (at a fixed future date)Be payable to order to the drawee (the bank on which the check is drawn or written)Page 329
Slide11Checks: Cont.
Routing & Account Numbers A routing transit number (RTN) is a nine-digit code printed on the bottom left side of the checks. A RTN is assigned to every banking institution under the Federal Reserve Banking System, so it identifies the bank upon which the check was drawn. RTNs also are used for direct deposits & the wiring of funds between banks. Page 329
Slide12Checks: Cont.
American Bankers Association NumberThis number appears in the upper right hand area of the check. The number is used as a simple means of identifying the area location of the bank on which the check is written & the particular bank in that area. The code number is expressed as a fraction.Page 330
Slide13Checks: Cont.
Types of Negotiable InstrumentsThe following are different types of negotiable instruments used to withdraw money from one bank account & deposit it into anotherPage 330
Slide14Checks: Cont.
Personal ChecksA personal check is drawn by a bank against funds deposited to a personal account in another bank. Patient typically write these checks for copayments & other financial responsibilities.Page 330
Slide15Checks: Cont.
Cashier's ChecksA cashier’s check is a bank’s own check, drawn on itself & signed by the bank cashier or other authorized official. A cashier’s check is obtained by paying the bank the amount of the check, in cash. Many banks charge a fee for this service.Page 330
Slide16Checks: Cont.
Money OrderDomestic money orders can be purchased at banks, some retail stores, & the U.S. Postal Service. Money orders often are used to pay bills by mail when a person does not have a checking account. The maximum face value varies, depending on the source. Cashier checks are preferable to money orders when larger amounts need to be paid.Page 330
Slide17Checks: Cont.
Business ChecksCan be prepared through:online banking portalaccounting management software programs A business checkbook is a ledger-type book with three checks per page & perforated stub at the left side of the check.Pages 330 – 331
Slide18Checks: Cont.
Voucher ChecksA voucher check has a detachable voucher form or could be attached to an Explanation of Benefits (EOB). The voucher portion is used to itemized or specify the purpose for which the check was drawn. The voucher portion of the check is removed before the check is presented for deposit.Page 331
Slide19Checks: Cont.
How Checks are Processed from One Bank to AnotherThere is a regional banking clearinghouse that clears (or verifies the authenticity) of every written checkPage 331
Slide20Checks: Cont.
Nonsufficient Fund Check (NSF)Review the information given in previous chaptersPage 331
Slide21Cash Management
To prevent the mishandling of cash, many healthcare facilities do not allow patients to pay cash for services.If yours does follow these guidelines:Make sure the cash is not counterfeit (they have markers to check) if it is contact the FBIInform patients that change cannot be made for larger billsPage 331
Slide22Cash Management: Cont.
Debit CardsCurrently, some banks decline debit card charges at the point of sale when an account has insufficient funds, & they do not charge an insufficient funds fee towards the attempted purchase. Stay up to date on those issues because that could change.Advantages of Using Debit CardsThere are many advantages to make it so patients can use debit cards in the healthcare facility.They are quick & easy to use/track.Page 333
Slide23Cash Management: Cont.
Credit CardsThere are the same benefits here as there are in debit usage but there is a transactional charge tacked onPrecautions for Accepting Credit & Debit CardsMake sure the person presenting the card is the person to whom the card was issued.Pages 333 – 334
Slide24Banking Procedures in the Ambulatory Care Setting
Healthcare facilities use bank accounts to deposit & to pay their operational expenses by check or credit card.Making Bank Deposits – dailyDepositing checks daily for these reasons:Checks may have a restricted time payment or may be lost, misplaced, or stolen over time.A stop-payment order may be placed, or it may be returned for insufficient fundsPrompt processing is a courtesy to the payerPage 334
Slide25Banking Procedures in the Ambulatory Care Setting: Cont.
Preparing the DepositA deposit is the record of all the money being depositedYou need to record how much of it is in cash & how much of it is in check form.The check number needs to be recorded with how much it is worth.Some banks require you to deposit before 3 pm for the money to be posted to your account that dayKeep a copy of the deposit slip for your financial recordsPages 334 – 335
Slide26Banking Procedures in the Ambulatory Care Setting: Cont.
Check EndorsementsThe endorsement is a signature plus any other writing on the back of a checkIt can be done in pen or by rubber stampPage 335
Slide27Banking Procedures in the Ambulatory Care Setting: Cont.
Types of EndorsementsThere are 4 blank & restrictive are the most commonBank EndorsementsThey sign only their nameRestrictive EndorsementsSpecifics the purpose of the endorsement It is used in preparing checks for deposit to the provider’s checking accountPage 335
Slide28Banking Procedures in the Ambulatory Care Setting: Cont.
Special EndorsementsPay to the order of John Doe your signatureQualified EndorsementsThe effect of the endorsement is qualified by disclaiming or destroying any future liability of the endorser. “without recourse” is usually included in the endorsement.Pages 335 – 336
Slide29Banking Procedures in the Ambulatory Care Setting: Cont.
Methods of EndorsementsIf the name is miss spelled; endorse it as it is spelled & then sign it with the correct spellingStampFor deposit only stamps can be used for restrictive endorsementsSignatureInsurance checks sometimes require a signature endorsementPage 335
Slide30Using Checks for Healthcare Facility Expenses
How to Write a CheckPage 336May 23, 2016John Doe ----------------------550,000.00Five hundred fifty thousand only---rentJane Mc Millen
VOID
Slide31Using Checks for Healthcare Facility Expenses: Cont.
Writing Cash ChecksYou can make checks out to cash. (since anyone can then cash that kind of check you may want to wait to write them until you are at the bank)Mailing ChecksMake sure that the check can NOT be send when its in the envelopePage 336
Slide32Using Checks for Healthcare Facility Expenses: Cont.
OverdraftIf you write a check for more money than is in your account it is considered overdrawn (this is illegal). You will be charged anywhere from $10-35.Stop-PaymentsYou can stop payments on checks for a feeOnly do this when absolutely necessary.Pages 336 – 337
Slide33Paying Bills to Maximize Cash Flow
Pay bills on time this will limit the amount of late fees charged to the practiceOnline Bill PayThis is a quick & easy method to pay bills however some vendors are not set up to accept bills paid online (you can get around this by setting it up with your bank to send them out a check at a certain time each month)Direct DepositA safe, secure, efficient & less expensive way to do payroll than paper checks.Page 337
Slide34Paying Bills to Maximize Cash Flow: Cont.
Reward Credit CardsMore & more vendors are accepting credit card payments.Shop around until you find the right kind of credit card that will give the healthcare facility the kind of rewards you want.Be sure that you pay the balance of in full each month.Page 337
Slide35Bank Statements & Reconciliation
Accounting management software has a feature that if you download the bank statement it will help with reconciliation.The purpose of reconciliation is to start with the beginning balance & then add all the deposits & subtract all the checks & other debit transactions, leaving the ending statement balance.It is extremely important to make sure at the end of reconciliation that the ending balance is achieved.Page 337
Slide36Bank Statements & Reconciliation: Cont.
Bank Statement Reconciliation FormulaBank statement balance $_______Minus outstanding checks $_______Plus deposits not shown $_______Corrected bank statement balance $_______Checkbook balance $_______Minus any bank charges $_______Corrected checkbook balance $_______Page 340
Slide37Bank Statements & Reconciliation: Cont.
What to Do When the Balances Do Not MatchIf they don’t match ask yourself the following questions:Is your arithmetic correct? Could a deposit, check, or online bill pay amount be transposed?Did you forget to include one of the outstanding checks?Did you fail to record a deposit or did you record one twice?Page 340