Due to and due from (intercompany) for dental groups
Due to and due from are the entries a dental group books when one of its legal entities owes another, such as a practice entity and its management company (MSO). The entity that owes records a due to; the entity that is owed records a matching due from. Booked on both sides, they net to $0.00 across the group.
Also calledIntercompany balancesDue to/due fromIntercompany
By Dr. Maya Arnaout, DDS, VP of RevenuePublished 3 min read
Why do dental groups have due to and due from balances?
Many groups run each practice as its own legal entity, with a management company, often called an MSO, providing billing, staff and services. Each entity keeps its own books, bank accounts and month-end close. Money does not always land where it belongs, and services are charged for, so the entities end up owing each other.
When does a due to or due from come up?
- A deposit lands in another entity’s bank account, such as a payer paying one practice into the account of another.
- The management company charges each practice entity its management fee.
- One entity settles what it owes another.
What does a due to and due from entry look like?
Take a payment for Practice B’s patients that landed in Practice A’s bank account:
| Entity | What it books | Why |
|---|---|---|
| Practice A | The cash, and a due to Practice B | It holds money that belongs to Practice B |
| Practice B | The payment, and a due from Practice A | The payment was for its patients |
| The group | The due to and due from cancel out | Nets to $0.00 across the group |
How do you keep intercompany balances in agreement?
- Book both sides at the same time, for the same amount, so neither entity’s books run ahead of the other’s.
- Check that every due to has a matching due from, and that the group total is $0.00, before closing the month.
- Book settlements and management fees the same way, on both sides.
- Flag a deposit in the wrong entity’s account the day it lands, not at month end.
Intercompany entries are one part of the month-end close for a group with several entities.
How ScoutIQ handles it
ScoutIQ keeps each practice entity and the management company on their own books, bank accounts and close. A deposit that lands in another entity’s bank account is flagged, and what one entity owes another is booked on both sides as due to and due from, netting to $0.00 across the group. Management fees and settlements between entities are booked the same way.
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