Module 6: Billing, Payments, and Accounts Receivable

A dental practice does not get paid when it does the dentistry. It gets paid when someone posts the money correctly. Open Dental gives you precise tools for that: payments split to procedures and providers, insurance payments tied to specific claims and deposits, adjustments with types you define, and statements that pull from all of it. Used well, those tools produce an account ledger a patient can understand and reports an owner can trust. Used loosely, they produce credits on the wrong family member, write-offs disguised as discounts, and an aging report nobody believes.

This module assumes you have finished Module 5, because a claim built on a bad plan setup cannot be posted cleanly. We start with insurance payments (the largest dollars in most offices), move to patient payments and adjustments, then statements, payment plans, aging, and collections.

Posting insurance payments: receive, then finalize

Open Dental treats an insurance check (or EFT) as two things: the claim-level detail of what was paid per procedure, and the payment itself, which goes to a deposit. You enter the first by receiving the claim, and the second by finalizing the payment.

Step 1: receive the claim

1. In the Account module, double-click the claim to open the Edit Claim window.
2. In the Enter Payment area, click By Procedure. This is the method Open Dental recommends for PPO plans. (As Total is intended for Category Percentage, Medicaid or Flat Co-pay, and Capitation plans.)
3. For each procedure, confirm or edit Ins Pay, Write-off, and Deduct to match the EOB. Put carrier remarks in Remarks. If a procedure was denied, record the reason in Pay Tracking.
4. Check Pat Resp, which is fee minus insurance paid minus write-off. It should match the patient responsibility on the EOB.
5. Save. If some procedures were not paid on this EOB, Open Dental asks whether to mark all of them received. Answer No if more payment is coming; the claim stays in its sent (verified) status.

A few preferences protect you here. "Disallow write-offs greater than adjusted procedure fee" and a related preference about primary payment plus write-off exceeding the fee both stop the most common data entry errors. Ask whoever administers your system whether they are on.

Step 2: finalize the payment

1. After receiving, fill in the Insurance Payments area of the claim: amount, payment type, check number, and date.
2. Click This Claim Only if the check covers one claim, or Batch if one EOB covers several claims.
3. In the Insurance Payment (EOB) window, confirm the attached claims. Use Detach to remove anything that does not belong.
4. Make sure total payments equal the payment amount, then click OK.

For large EOBs, start from the other end: in the Manage module click Batch Ins, click Add, enter carrier, check number, amount, and deposit information, then attach claims (receiving any that are not yet received). When the total of attached claims equals the check, the payment locks. If it does not match when you leave, the batch is marked Partial so you can come back.

ERAs (electronic remittance)

If your clearinghouse delivers 835 ERAs, open them from the Manage module with ERAs. You have three levels of automation:

Claims that will not match can be detached with Detach Claim and received manually in the Account module. A preference lets you stop auto-processing for specific claim adjustment reason codes, which is how you keep denials from being posted without a human looking at them. The ERAs Automatically Processed report (Standard Reports, Lists) shows what the automation did.

Supplemental payments and overpayments

When a carrier sends more money on a claim you already received, click Supplemental on the claim instead of editing the original payment. That keeps the history honest and the original deposit intact. When insurance overpays and wants money back, Open Dental has separate guidance for insurance refunds; do not delete the original payment to "fix" it. The Insurance Overpaid and Procedures Overpaid reports in the Monthly section find these cases.

Patient payments and how they split

Set your allocation rules first

Go to Setup > Account > Allocations Setup. The paysplit options are:

• Rigorous: splits are created automatically and must be allocated to procedures, adjustments, payment plan charges, or an unearned type.
• Auto-Split: splits are created automatically, but unallocated splits are allowed.
• Manual: staff create splits by hand and allocation is optional.

The manual describes a "Rigorous Line Item" configuration for offices that want to track production and income by procedure and provider, and calls the simplest allocation approach not recommended because it produces reporting inaccuracies. If providers are paid on collections, line-item allocation is not optional in practice: it is the only way the income report can say who collected what. See our associate pay calculator for why that distinction matters.

Posting a payment

1. In the Account module, highlight the charges the patient is paying (the manual's recommended method), then click Payment. Open Dental splits the amount across the selected charges.
2. If you click Payment with nothing selected, Open Dental applies it first in, first out: to the oldest family charges, or to this patient's oldest charges if you check Prefer this patient.
3. Choose the Payment Type (cash, check, card, and so on). Payment types are set in Setup > Definitions, and they are how your deposit and daily payments report categorize money, so keep the list short and specific.
4. Confirm Payment Date (used on deposits and reports), Amount, and a Check # for checks.
5. Review Current Payment Splits. The total must equal the payment amount before you can save.
6. For cards, use the Credit Card button if you have an integrated processor so the transaction and the payment record stay tied together.

Prepayments and unearned income

Money received before the work is done is unearned income. Click Prepay in the Payment window to create a single unearned split using your default unearned type, or, if "Allow prepayments to allocate to treatment planned procedures" is enabled in Allocations Setup, use the Treat Plan tab to allocate the prepayment directly to planned procedures. When the work is completed, move the money with Allocate Unearned in the Account module. The family's unearned balance shows in the upper right of the Account module, and the Unearned Income reports list it.

Income transfers and refunds

When a credit sits on the wrong family member or the wrong provider, do not delete and re-enter the original payment. Use an income transfer: open the Payment window, check None (Income Transfer), add a negative split where the money is now and a positive split where it belongs (the total must be $0.00), then click Transfer. The Income Transfer Manager can clean up unallocated credits in bulk.

To refund a patient, right-click the original payment in the Account module and choose Refund, or create a negative payment. The manual suggests a dedicated "Patient Refund" payment type so refunds can be filtered out of payments and deposits, and notes that ACH transactions cannot be refunded through that route. If the refund is for work not performed, credit the procedure fee with an adjustment first, then refund.

Adjustments and write-offs: using them correctly

Insurance write-offs belong on the claim, entered when you receive it. Adjustments are everything else that changes what a patient owes. Add one from the Account module with Adjustment (the dropdown includes Add Multiple), or right-click a procedure and choose Add Adjustment.

Build a short, specific list of adjustment types

Adjustment types live in Setup > Definitions > Adj Types. Each is marked + (increases the balance) or - (decreases it), and that sign cannot be changed after creation, so name and sign them carefully. Hide types you no longer want; do not delete them.

These are examples, not Open Dental defaults. The rule is that someone reading an adjustment report a year from now should know exactly why each dollar moved. Finance and late charges have their own features (Setup > Advanced Setup > Show Features lists Billing/Finance Charges and Late Charges) and are regulated differently from state to state, so confirm with your attorney before turning them on.

Rules for clean adjustments

• Attach to the procedure whenever the adjustment relates to one. The adjustment's provider and clinic must match the procedure, which keeps net production correct by provider.
• Use the Adjustment Date honestly. It is the date that appears on the account and most reports.
• Control who can do it. Open Dental has separate Adjustment Create and Adjustment Edit permissions, and an Adjustment Type Deny permission to lock specific types. Give negative adjustment types to as few people as possible.
• Review daily. The Daily Adjustments report (Standard Reports, Daily) and the Daily Write-off report should be read by someone other than the person who entered them.

Finally, lock the past. A global lock date in Setup > Security (the Global Security Settings button) prevents editing old transactions and backdating new ones. Many offices lock each month after it is closed and reconciled. Module 7 explains why that makes reports stable.

Deposits and closing the day

1. In the Manage module click Deposits, then Add.
2. Filter by start date, clinic, and payment types. Open Dental highlights all eligible unattached payments; deselect anything not going in this deposit (card batches usually deposit separately from checks).
3. Confirm the amount and item count match the physical checks and cash, then print or create a PDF deposit slip.
4. Run the Daily Payments report (Standard Reports, Daily) grouped by payment type, and reconcile it to the deposit and to card processor batches.

Only finalized insurance payments are available to attach to a deposit, which is one more reason finalizing cannot wait. If you use the QuickBooks integration, the manual notes that changes to a deposit have to be made in QuickBooks too.

Statements and the billing cycle

One-off statements

From the Account module, the Statement dropdown offers a walkout statement, email, receipt, invoice, limited statements, and more options. Use walkout statements at checkout so the patient leaves knowing what they paid and what is still pending with insurance.

Batch billing

1. In the Manage module click Billing. If unsent statements already exist, you see them; otherwise click Create List. Open Dental will not create a new list while unsent bills remain.
2. In Billing Options, set filters. Key ones include Include anyone not billed since, Age of Account, Exclude if insurance pending, Exclude if unsent dental procedures, Exclude if balance is less than, Exclude inactive families, Exclude bad addresses (no zipcode), Show negative balances (credits), and Billing Types. Click Save As Default once you have a setup you trust.
3. Review the list. Spot-check the largest balances by opening the account. Anything that looks wrong usually is: an unreceived claim, an unapplied credit, a missing write-off.
4. Click Send. Each statement goes out by its mode: email as a PDF, mail as one combined PDF to print, electronic through a billing service, or in person.
5. If you made a mistake, Undo Billing exists. Use it the same day, before patients receive statements.

Dunning messages add targeted notes to statements based on billing type, account age, and whether insurance is pending. Set them up from Billing Options with Setup Dunning. They only print on statements created from the billing list, not on statements printed from a single account.

Billing types

Setup > Definitions > Billing Types controls who gets which statement treatment. Open Dental uses special codes in the item value: E to email statements, C for collections, and CE for collection exclusions (used with the TSI integration). A simple setup covers most offices: Standard, Email, Payment plan, Collections, and Do not bill (for accounts under legal review, bankruptcies, or deceased patients with an estate). The default billing type for new patients is set in practice setup.

Payment plans that do not break your books

Current Open Dental versions call the main type simply Payment Plan (formerly Dynamic Payment Plans, shown as type DPP in the Account module). The Payment Plan dropdown also lists Insurance Payment Plan, Old Payment Plan, and a separate Installment Plan button exists. What you see depends on your version.

1. In the Account module, open the Payment Plan dropdown and choose Payment Plan.
2. Confirm the Date of Agreement and enter any Down Payment.
3. On the Production tab, click Add and attach the procedures (and positive adjustments) the plan covers. Each production item can belong to only one plan.
4. Set terms: Date of First Payment, APR if you charge interest, either Payment Amount or Number of Payments (Open Dental calculates the other), Charge Frequency, and how to handle treatment-planned work (Await procedure completion or Procedure as complete).
5. Click Create Schedule, then print and have the patient sign (or send it to eClipboard for signature).
6. Consider a Permanent Lock once signed. Locked plans cannot be edited; changes require a new plan.

Charges post to the account through the Open Dental Service each day. Future charges show in gray on the schedule, posted charges in black, and payments in green. Whether plan charges and payments appear as line items and affect aging depends on the PayPlan charge logic preference, so learn which setting your office uses before explaining a balance to a patient.

To end a plan early, click Close Plan. Remaining production without posted charges is removed from the plan, excess income moves to unearned, and future interest is removed.

Aging and the collections workflow

How aging works

Aging sorts balances into 0 to 30, 31 to 60, 61 to 90, and over 90 days, and applies credits to the oldest bucket first. It is shown in the Family Aging area of the Account module. Aging is not recalculated every second. It runs automatically each day if the Open Dental Service is running and an automated aging run time is set in preferences, and it also runs during certain tasks such as billing. You can run it by hand from Tools > Aging.

The Aging of A/R report

Open Reports > Standard and choose Aging of A/R under Monthly. Useful options: Age of Account (Any Balance, Over 30, 60, or 90 Days), group by family or individual, billing types, providers, clinics, include negative balances, include patients with insurance estimates and no balance, Age write-off estimates, and Show last payment date. Columns show each bucket, total, insurance estimate, and patient portion.

The companion Insurance Aging report shows insurance and patient estimates by age. For chasing claims, Open Dental points you to the Outstanding Insurance Claims report from Module 5 instead.

A collections workflow (hypothetical example)

Here is one reasonable escalation path. Adjust the days and wording to your written financial policy.

Open Dental integrates with Transworld Systems (TSI) for collections: accounts are sent from the Manage module, get a collections billing type, and payments sync back through the Open Dental Service. If you use another agency, change the billing type to your collections type, record a bad debt adjustment per your CPA's guidance, and log what you sent and when. Debt collection and credit reporting are regulated at the federal and state level, so have your attorney review your letters and your agency agreement.

Practice exercises

Use a test database or the Open Dental trial the first time through.

What's next

With clean posting, your reports finally mean something. Module 7: Reports and Queries shows which standard reports answer which business questions, how production and income are calculated, and how to write simple, safe custom queries. For the owner's view of the same numbers, read Financial Management for Practice Owners.

ChairsideSource is not affiliated with or endorsed by Open Dental Software, Inc. This is independent educational content. Menus and features change between versions: verify against the official Open Dental manual and contact Open Dental support before changing settings that affect live patient data. This guide is educational content and does not constitute legal, financial, tax, or clinical advice. Laws and regulations vary by state and change over time. Consult your own dental-specific attorney, CPA, and state dental board before acting.