> ## Documentation Index
> Fetch the complete documentation index at: https://mso.getlemma.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Handle paper checks from payers and patients

> Mobile deposit versus scanner versus lockbox, endorsement rules for PC checks, returned deposits, and joint-payee settlement checks.

Paper persists: small payers without EFT, workers' compensation and auto carriers, attorney settlements, and patients who write checks. Handling it means getting **endorsement and entity matching** right, and knowing that a deposit can reverse days later.

## Prerequisites

* Per-entity operating accounts
* A decision on deposit method
* A daily reconciliation process

## Choose a deposit method

| Method                              | How                                                                       | Fits                                                                 |
| ----------------------------------- | ------------------------------------------------------------------------- | -------------------------------------------------------------------- |
| **Mobile / remote deposit capture** | Photograph or scan, deposit electronically                                | Low volume, a few checks a week                                      |
| **Desktop check scanner**           | Batch-scan and deposit from the office                                    | Moderate volume                                                      |
| **Lockbox**                         | Checks mail to a bank-operated address; the bank deposits and images them | High volume, or multi-entity groups wanting checks out of the office |

**Lockbox has a control benefit beyond convenience**: it removes physical checks from the office, which removes a theft and internal-control problem. It also matters to lenders — facilities secured by healthcare receivables are commonly structured around controlled lockbox arrangements. See [Working capital and AR lending](/concepts/finance/working-capital-and-ar-lending).

## Endorsement and entity matching

**A check payable to a PC must be endorsed by that PC and deposited into that PC's account.**

You cannot deposit a check payable to "Meridian Dermatology CO, P.C." into the Arizona PC's account or the MSO's account. That is both a bank problem and a commingling problem.

In a multi-entity group this means **per-entity endorsement handling**, separate stamps, separate deposit workflows, and staff who know which is which.

Use a restrictive endorsement: "For Deposit Only, \[Entity Legal Name], \[Account Number]." It limits what can be done with a lost or stolen check.

## Joint-payee checks

<Note>
  🦴 **PT/Chiro and personal injury practices**, settlement checks are frequently payable jointly to the practice **and** the patient or the attorney. Every payee must endorse before deposit.

  Build this into the workflow: a process for obtaining the patient's or attorney's endorsement, a tracking log for checks awaiting endorsement, and a policy for how long you hold one before escalating. Joint-payee checks sitting in a drawer awaiting a signature are uncollected revenue and a control risk.
</Note>

## Deposits can reverse days later

A deposited check can be returned after you have treated the funds as available.

| Return reason         | Meaning                                |
| --------------------- | -------------------------------------- |
| Insufficient funds    | Balance too low                        |
| **Closed account**    | Common with patients who changed banks |
| Stop payment          | The issuer stopped it                  |
| Stale dated           | Presented past validity                |
| Refer to maker        | Contact the issuer                     |
| Endorsement irregular | A problem with your endorsement        |
| Duplicate presentment | Deposited twice, a mobile deposit risk |

The return arrives days later, reverses the credit, and usually carries a fee.

<Warning>
  **Don't post patient check payments as cleared on the deposit date**, or run a returned-item review as part of daily reconciliation. In an MSO-PC group a returned deposit can cascade into a management fee transfer that shouldn't have been made. See [Reconcile payments daily](/guides/payments/reconcile-daily-payments).
</Warning>

**Mobile deposit specifically:** mark or destroy the physical check after deposit per your bank's retention guidance, so it can't be deposited twice.

## Reassociating paper to remittances

Harder than with EFT. An EFT carries the **TRN trace number** in its ACH addenda record; a paper check does not.

The process:

1. **Log every check on receipt**, payer, check number, amount, date received
2. **Match to the 835** by check number where the remittance references it
3. **Where no 835 exists**, request one, or push the payer to ERA
4. **Never post a paper payment** without knowing which claims it covers

## Push payers to EFT

Every paper-paying payer is a recurring cost. Complete their EFT enrollment. Every conversion is permanent.

And if a payer sends **virtual credit cards** instead of EFT, that costs you 2–3% of the payment. Enroll in EFT and ask in writing to opt out of the card program. See [Paper checks and virtual credit cards](/concepts/payments/paper-checks-and-vcc).

## Multi-entity check operations

Each PC needs:

* Its own deposit method pointed at its own account
* Its own endorsement stamp
* Its own lockbox arrangement, if using one, since the payee entity determines the destination account
* Its own check stock for outbound refunds, drawn on its own account with its own signer

<Info>
  **Lemma** includes check deposit across entities in one interface, so a multi-PC group doesn't need a separate deposit workflow and login per entity. Named here under our [mention policy](/reference/appendix/about-lemma); the endorsement and reconciliation discipline above applies wherever you bank.
</Info>

## Verify it worked

* [ ] Deposit method chosen appropriately for volume
* [ ] Per-entity endorsement stamps, restrictive endorsement in use
* [ ] Every check deposited into the payee entity's account
* [ ] Joint-payee workflow defined with a tracking log
* [ ] Checks logged on receipt before deposit
* [ ] Returned-item review part of daily reconciliation
* [ ] Patient checks not posted as cleared on deposit date
* [ ] Physical checks marked or destroyed after mobile deposit
* [ ] Paper-paying payers being converted to EFT

## Common failure modes

| Failure                                            | Consequence                                   |
| -------------------------------------------------- | --------------------------------------------- |
| Depositing a check into the wrong entity's account | Commingling; bank rejection                   |
| Posting a check payment as cleared immediately     | Ledger wrong when it returns                  |
| No returned-item review                            | Unexplained reversals discovered at month-end |
| Joint-payee checks held with no tracking           | Uncollected revenue sitting in a drawer       |
| Duplicate mobile deposit                           | Return, fee, and a reconciliation puzzle      |
| No check log                                       | Cannot match paper payments to claims         |
| Accepting paper indefinitely                       | Recurring labor cost forever                  |


## Related topics

- [Reconcile payments daily](/guides/payments/reconcile-daily-payments.md)
- [Issue a patient refund](/guides/payments/issue-a-patient-refund.md)
- [Set up EDI, ERA, and EFT with each payer](/guides/enrollment/set-up-edi-era-eft.md)
- [Paper checks, lockboxes, and virtual credit cards from payers](/concepts/payments/paper-checks-and-vcc.md)
- [Payment rails 101 (ACH, checks, wires, RTP, cards)](/concepts/banking/payment-rails-101.md)
- [Per-entity account & access checklist](/reference/banking/per-entity-account-checklist.md)