An operations director at a three-location addiction and behavioral health center approves a $14,600 invoice for electronic health record support.

The services were provided, the invoice was approved, and life moves on.

Excuse me for a second: What exactly did he approve?

The expense, sure. Who authorized the payment? And how would the finance team know if the vendor changed its banking information?

Here’s where it gets interesting. The center’s accounts payable software manages vendor invoices, approvals, and payments. It also allows connected vendors to manage their own payment details. However, an approved invoice doesn’t tell management everything it needs to know about the payment.

Now suppose the vendor calls claiming the money never arrived. Can the finance team trace the payment, identify who released it, and determine what the bank and payment platform actually processed?

Think about the number of financial transactions moving through three behavioral health locations. Management needs to know who verifies clinician compensation calculations, who reviews payer adjustments, and how the practice confirms expenses are assigned to the correct location.

Approval software can document an approval. However, management still needs to determine whether those internal controls are operating as intended.

Here are six controls that should be examined.

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1. Verify Who Can Establish or Change a Vendor’s Payment Information

A legitimate invoice can still become a problem if payment is directed to the wrong vendor account.

With connected vendors, the payment platform can allow the vendor to maintain its own banking information. Depending on the system, some changes require approval, while others take effect without separate review by the paying organization.

Before connecting a vendor, the finance team should verify the business through an established contact or contract. The team should also understand how the platform handles changes to payment information and what records are available when a transaction is disputed.

If a vendor reports an unexpected payment change, the finance team should investigate using previously verified contact information, not details from the payment platform.

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2. Separate Invoice Approval From Payment Authorization

Approving an expense and releasing a payment are different responsibilities.

An operations director can confirm that the addiction and behavioral health centers received the contracted electronic health record support. Although, payment approval should come from an employee with designated financial authority.

The finance team should review the accounts payable approval workflow, including who can enter vendor invoices, authorize payments, release payments, and override approval requirements.

Segregation of duties is important here. If the same employee can set up a vendor, approve an invoice, and release payment without independent review, management should assess whether those permissions are appropriate.

Direct ACH and wire payments initiated outside the accounts payable platform also need to be included in the review.

For a closer look at the controller’s role as a practice grows, see Does Your Group Therapy Practice Need Another Bookkeeper, a Controller, or a Fractional CFO?.

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3. Compare Payment Platform Reports With Actual Bank Activity

The payment platform shows the payments it processed. The bank statement shows the withdrawals that cleared the organization’s account.

A staff member within the finance department who did not prepare or release those payments should compare both records, accounting for processing dates and multiple transactions grouped into a single bank withdrawal.

If a vendor reports a missing $14,600 payment, the finance team should examine the platform’s payment status, supporting invoice, authorization record, and available remittance details. A bank withdrawal establishes that money left the account. It does not, by itself, prove the vendor received it.

An ordinary bank reconciliation also doesn’t establish whether the expense was authorized. The supporting records are needed to answer that question.

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4. Compare Payroll With the Active Employee and Clinician Roster

Across three locations, employees can transfer between locations, receive compensation adjustments, or leave the organization.

Compare the payroll register with current HR records before each pay period. An independent reviewer needs to verify approved compensation changes and confirm that terminated employees have been removed from active payroll.

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5. Examine Expenses and Payer Activity by Location

In a multi-location behavioral health practice, a consolidated statement can hide rising costs at one location.

Compare expenses by location against budgets, prior periods, and supporting invoices. Use consistent allocation methods for shared technology expenses and clinician compensation before management interprets location-level profitability.

For insurance-funded programs, review contractual adjustments, denials, and write-offs by payer and location. Compare unusual changes against remittance information and patient-account records.

An unexplained write-off deserves further review. Management should review the payer contract, transaction history, and approval records to determine whether the balance reduction reflects a legitimate contractual adjustment, a posting error, or an unauthorized write-off.

For a related discussion of billing and reimbursement, see Why Your Therapy Practice Isn’t Getting Paid for Sessions You Already Delivered.

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6. Test Financial Oversight When a Key Employee Is Away

An accounting manager who handles vendor payments, bank access, and financial reporting across three locations can become the only person who understands how certain transactions are processed.

What happens when that manager takes a week off?

Have a cross-trained colleague perform the assigned duties using documented procedures and their own authorized system access. Review whether payment approvals, exception reports, and other financial checks continue without shared passwords or undocumented workarounds.

The purpose isn’t to make employees suspicious of one another. It’s to determine whether the controls operate consistently when the person who normally manages them is unavailable.

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Where to Start

Start with one vendor payment from the previous month.

Ask the controller to trace it from the approved invoice through payment authorization and bank settlement. Examine how the vendor connection was established and what the platform records can establish if the vendor disputes receiving the funds.

Pay particular attention to transactions that bypass the normal approval process.

If the review identifies questionable activity, management should preserve the transaction history, approval records, and supporting documentation.

The evidence should help management determine whether a processing error or an internal control weakness explains the activity, or whether further investigation is warranted.

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This article is designed to provide information only and should not be considered legal or tax advice. Because of the complexity of the law and the variables in your own personal tax and accounting situation, you can’t rely on our advice specifically related to your unique circumstances. In order to get the best tax savings and legal advice available to you, you should consult with your own accountant, attorney or advisor regarding your particular facts and circumstances. Healthy Bodies of Finance is an accounting firm that specializes in working with health and wellness providers. We provide monthly accounting & bookkeeping services and financial education. For more information on our specialized services for health and wellness providers please contact us at info@healthybodiesoffinance.com