I work in a medical office and receive payments from insurance companies for services provided to our clients. Sometimes the insurances will make a payment to us and then months down the road realize they made it in error and will recoup that money from the account. We don't actually write a check to them in most instances, usually they take it from our future payments instead.
So far, the only way I've found to deal with this on the client's end to reflect that the payment is no longer there is to create a debit memo. However, while this method will remove the payment from the account, it does not clear out the invoice the payment was originally applied to. So, a new payment cannot be reapplied to the invoice if one is made again, or simply to know which invoices are still outstanding even, at a later date.
Frequently we see this when a payment is made and then the insurance company finds out they weren't the primary insurer and shouldn't have paid anything because the actual primary will have covered the entire amount - we then rebill to the correct insurance and we receive a "second" payment that is the accurate one that we can't apply to the invoice it belongs to and it's just floating there unapplied instead and muddying up our AR aging.
I can't use the application inquiry/reversal option like I would for a misapplied payment to the wrong client, because in this instance we're not reapplying the amount - it's essentially a refund. Unless I'm missing something, that would leave the payment still registering as in the bank account, when technically future payments are being offset until that amount reaches zero. Thus, our bank reconciliations would be off.
Is there anything else we can do to clear these out of the account at all?
