What are payment allocations?

Payment allocation, also known as explaining a payment, is a way to track the movement of money around Dentally. It assigns money taken from patients to the practitioner responsible for the work performed, as well as accounting for any sundries sold to the patient, or refunds/corrections made.

Using the two payment allocations reports will give you a clear understanding of how funds have been distributed between practitioners, ensuring transparency and accountability. This is our recommended method for calculating practitioner pay because it only accounts for money that has been used to pay for treatment (i.e. it will not assign deposits to practitioners until the work is performed), and it automatically tracks corrections, deductions and refunds even when the original payment was in a different pay period.

The payment allocations reports ('Payment Allocations' and 'Payment Allocation Totals') can be thought of as a ledger of financial movements within your dental practice. When money is received from a patient, a line is added to the report indicating that the money was moved from the patient's account to the site, and when the money is used to pay for treatment, new allocations are created from the site to a practitioner or sundry account. Correcting mistakes will automatically create allocation reversals, moving the money back to the previous state.

Let's take a look at some examples of where this would be useful. The following examples cover allocations for practitioners, but sundries work in the same way, so everything shown is applicable to both. Each site has its own sundry account.

Let's work through an example. Today we're working at Glasgow Dental Care, one of two sites in our practice. If we were to record a £100.00 payment against a patient, Robert Smith, using the 'Take Payment' button on the patient's account, we would see:

This will cause a single line in the 'Payment Allocations' report to be created, deducting £100.00 from our patient (Robert Smith) and assigning the money to the Glasgow Dental Care Site:

If you change the 'Allocation type' filter from 'Site' to 'Practitioner', you'll see that there are no allocations currently. This is because the money has been taken by the site but has not been used to pay for any treatment yet.

At this point our patient, Robert Smith, has £100.00 on their account.

Let's introduce a practitioner, Adam Fearn. If Adam charges through a £90.00 treatment item to the patient, Dentally will automatically assign part of this payment to pay for the treatment:

In the case of payment allocations, £90.00 of the payment previously recorded has now been used to pay for the work completed, so at this point the system has automatically created an allocation from the Glasgow Dental Care Site through to our practitioner, Adam Fearn, for this amount:

In addition, we have a second report, the 'Payment Allocation Totals' report, to make it easier to identify the total amount of money allocated to practitioners within a specific time period. This report will show detailed allocations, helping you to see exactly where and how the funds were distributed:

This shows that the site is currently holding £10.00 of unallocated funds taken during this period, and Adam has been allocated £90.00.

Should it later be realised that a mistake was made, or a refund issued to the patient, allocations will track any changes that we make to the destination of the money. For this example, let's introduce a second practitioner, Bill Scotland, who actually performed the work instead of Adam Fearn.

First, we unexplain the payment and delete the invoice:

Then we change the practitioner:

And re-charge through the invoice:

In order to accurately track the movement of money around Dentally, the payment allocations system will have created two new records as we made these changes: The first record will record the money being returned from Adam as the payment was unexplained from the invoice. The second will record the money being transferred to Bill once the new invoice is created and the payment automatically re-explained:

At this point, our 'Payment Allocation Totals' report has updated to note the fact that Adam has had a total of £0.00 allocated to him (as his two allocations cancel each other out), and Bill now has the £90.00:

The above example walked through correcting a mistake on the same day that it was made. But how does this look if you correct a mistake from a different day? In this example, we will unexplain the payment, delete the invoice, and then delete the payment entirely, but we'll do so on the day after the payment was initially taken. This may happen, for example, if the payment and treatment were recorded against the wrong patient.

After our changes, the patient's account is now back to its starting position, with no invoices or payments:

If we keep the same date filters on the 'Payment Allocations' and 'Payment Allocation Totals' reports (looking at the 29th July), we'll notice that the reports show exactly the same data that they did before:

This is because while the payment was taken on the 29th, it wasn't refunded until the 30th. Payment allocations can never be altered or deleted, and they also can't be backdated. Taking the money back from Bill and returning it to the patient is therefore recorded as happening on the 30th. This means that if you make corrections or issue refunds across months, you do not need to manually track any adjustments to make to practitioner's pay calculation, the money will simply be deducted in the subsequent month. Setting the report filters to the 30th gives us:

Both the site movements and Bill's totals are now negative as deductions need to be made from both in order to refund the payment taken on the previous day. If however we set the filters to cover both the 29th and 30th, the totals return to £0.00 as the payment that was taken was refunded within the same period:

For practices that have multiple sites in the same instance of Dentally, it is possible for payments to be taken at one site for work completed at another. Payment allocations also supports this case, and identifies times when money is used across sites to pay for work done on a patient.

For this example we've created 3 more invoices and payments:

If you're logged in to a multi-site practice, when viewing the 'Payment Allocations' report, with allocation type of practitioner, you will see an additional filter titled 'For allocations'. There are 3 options for this filter with different effects on the data:

This information is summarised by the 'Payment Allocation Totals' report. When viewing the report from within the Livingston site, the practitioner is awarded £60.00 in the table at the top that shows allocations from this site, and £180.00 in the table below which shows allocations paid to Livingston practitioners from other sites for the same period:

This example makes it easy to understand when money may need to be transferred from another site in order to pay practitioners correctly.