Financial Theory of DELPHI
DELPHI32 is a complete cash-based, accounts receivable, accounting system. Simply put, DELPHI32 keeps track of what you bill, what you receive, and the difference - which is accounts receivable (i.e., the money owed to you.) DELPHI32 also has the ability to track your expenses if you should choose. As for the money owed to you, DELPHI32 keeps track of what portion is due by the client and what part is expected from the client's insurance. DELPHI32 will also automatically age unpaid balances so you know the overdue status of each unpaid session in terms of current, 30, 60, and 90 days overdue.
In order to accurately track the accounting all transactions must flow through a general ledger. Unfortunately, the intricacies of a general ledger can be confusing and the understanding of them is better left to accountants. Our customers are not accountants and have no desire to learn the accounting terms and philosophy that make up a general ledger.
Therefore, DELPHI32 allows you to operate your business in terms that are easy for the average person to understand. For example, the average person can understand, with the right instructions, how to record a charge for a session and apply payments received towards those sessions (see Open-Item Accounting <>.) For the accountant, recording a charge is a credit to 'Sales/Revenue', and a debit to 'Accounts Receivable' and the receipt of a payment is a debit to 'Cash' and a credit to 'Accounts Receivable.' The average person, without a degree in accounting, does not want to know or need to know what the previous sentence means.
The bottom line: DELPHI32 allows you, the mental health care professional and your staff, the ability to run your practice in terms that you understand. Meanwhile, without your intervention, DELPHI32 is accurately passing this information onto the general ledger. This provides you with an 'audit trail' showing how and when all information was entered into DELPHI32.
All transactions performed in DELPHI32 have a specific effect on your practice. DELPHI32 applies each transaction to its appropriate category. Listed below are these categories presented in easy-to-understand terms. The benefit of understanding your practice in the terms as outlined below is that the Activity Reports, Super Reports, and Profit and Loss Reports allow you to select the specific information you are wanting to fully understand your practice. For example, if you ask for a report on Net Income, you may also want to know exactly how much of that income came from client payments vs. insurance payments. In addition, you might like to know why your income decreased; maybe it was due to client and/or insurance refunds. The bottom line is that every number in DELPHI32 belongs to a category that can be summed up or broken down to the detail you choose. There is no gray area. Everything is black and white and can be selected according to your individual needs.
Read the outline below to see how each transaction affects your practice. Pay attention to the categories that each transaction belongs to. Here are some basic definitions:
REVENUE What you bill or charge for the sessions you perform.
INCOME Money you receive from clients or insurance companies.
ACCOUNTS RECEIVABLE Revenue minus Income
EXPENSES Money you pay for bills (generally in the form of checks)
PROFIT Net Income minus expenses
NET REVENUE = Increases to Revenue minus Decreases to Revenue
INCREASES TO REVENUE
DECREASES TO REVENUE
NET INCOME = Increases to Income minus Decreases to Income
INCREASES TO INCOME
DECREASES TO INCOME
Net Revenue consists of those items that both increase and decrease revenue. Net Income consists of items the both increase and decrease income. With that said, each possible transaction that you can perform within DELPHI32 has a home within this hierarchy.