Billed, collected and outstanding: reading hospital totals

A hospital can collect more money today than it billed today. That can happen when patients settle older invoices. Comparing the two totals without their dates can make an ordinary collection look like an accounting error.

For the desk review, define what each total includes before asking staff to explain a difference. The terms below are practical reading aids. Your accountant should determine how the hospital prepares formal accounts and recognises income.

Three totals with different boundaries

• Billed means the charges recorded on the invoices included in the selected period, subject to how authorised adjustments are reported.
• Collected means the payments actually received and recorded in that period. Some may settle bills from earlier dates.
• Outstanding means the unpaid amount on the invoices included in the balance review at a stated point in time.

Those definitions need a date boundary and a clear rule for corrections. A report labelled this week is difficult to compare with another that quietly includes all open invoices.

Follow the fictional amounts

Suppose the hospital starts Monday with 12,000 naira outstanding on an older invoice. Monday brings a new 20,000-naira bill. The hospital receives 12,000 against the older invoice and 8,000 against the new one.

Monday's charges are 20,000 naira. Monday's collections are also 20,000 naira, but that coincidence does not mean the new bill is fully paid. Its remaining balance is 12,000 naira.

For this deliberately simple example, with no other invoices or adjustments, the closing balance is opening outstanding 12,000 plus new charges 20,000 minus received payments 20,000. The result is 12,000 naira. It is arithmetic for invented records, not a statement of hospital earnings.

Investigate the right difference

If the physical cash does not match cash receipts, inspect the daily cash close, including its float and authorised movements. If an invoice balance is wrong, inspect the charges and payments linked to that invoice.

The bookkeeping manual hosted by FAO discusses cash records and customer balances in a non-healthcare setting. Keep those questions distinct in the hospital's operational review.

Ask whoever prepared a total to show its period, included records and adjustment rules. Write those boundaries beside any number carried into a management meeting so the next person compares the same thing.