What are Invoice Reversals?
So it’s the end of the week and you’re in the middle of checking the ‘ol Sales Report like you usually do and— oh! What is that? Your eyes narrow trying make sense of this unfamiliar grey text.
“What the heck is an invoice reversal” you mutter to yourself, hoping that the patient peering into last November’s Bon Appétit magazine in your waiting room didn’t hear.
Well, we’re so glad you asked!
Anytime a new invoice is created in Jane, she will create a new line item in your Sales report corresponding to that particular service date. There are occasions where we might need to make changes to an invoice— for example, adding a discount for the patient. Whenever a significant change happens to an invoice, Jane will scrap the original and create a new one in its place, which is denoted by the extension after an invoice number. For example, invoice #1531-P01 is changed, so Jane deletes this and invoice #1531-P02 takes its place.
If a change is made to an invoice on a different day than when it is created, it would be important to be able to track this change so that we can better understand how money is flowing in and out of the clinic— this is where invoice reversals come in!
You’ll be able to enable invoice reversals in your account by setting a Reconciliation Date under your Settings > Reconciliation Date area of Jane.
Invoice Reversal Example
Let’s imagine a scenario where a patient comes in for a $100 appointment on May 23rd and has not yet paid for an outstanding balance. The next day, May 24th, we remembered that we had forgotten to apply a 15% Friends and Family discount to their invoice so we go ahead and do so.
By doing this, we have caused a reduction in our clinic’s accounts receivable (A/R) although we have not yet collected a payment from the patient during this period. On May 23rd, Jane knows that $100 is still outstanding but the next day, only $85 is outstanding — but this is not a result of us collecting $15 from the patient.
If an invoice has been changed sometime other than the original invoice date, Jane creates a record indicating that we are no longer awaiting income from the original invoice. She will create a new line item that will negate the original invoice amount and indicate that it has been reversed.
The original invoice will appear on the Sales Report for the original purchase date, with the Reversed status. The negative version of this invoice (denoted by the “X” at the end, #1531-P02X), along with the newly created invoice will also appear on the report for the original purchase date (but will also indicate the date when these changes were made under “Invoice Date”).
If you are working from the Compensation Report (sorted by invoiced amounts), the original line item will show up on the date the session was purchased (February 19th, in this case):
And any reversals will show up on the date that the invoice was modified (February 25th):
Invoice reversals will help your clinic keep track of historically accurate A/R and make your life a little bit easier when attempting to reconcile your books!
When Do Invoices Get Reversed?
This is not an exhaustive list, but it will give you an idea of the different types of scenarios where a reversal will occur. Please note that the date of the action must be different than the original invoice date for a reversal to occur (otherwise Jane just overwrites it).
- Adding or removing an adjustment
- Adding, removing or changing the insurer
- Adding or removing billing codes to an invoice
- Changing staff member associated with invoice
- Writing off an outstanding amount
- Marking an appointment as no-show (with or without a no-show fee)
- Refunding or returning a product
- Adding or removing tax from a purchase
- Editing quantity on a product purchase
*Please note that manually overriding the amount on a patient invoice will not generate an invoice reversal.
Don’t hesitate to reach out to us if you have any further questions about navigating invoice reversals. We’d be happy to guide you in the right direction.