$40,000
Fair Work Back-Payment
paid by the business before Matthew was managing payroll
$0
Back-Payments Since
Deputy and correct award interpretation in place from day one
Hours
Saved Monthly
cheque processing and manual data entry eliminated entirely
-
INDUSTRY:
Healthcare — Medical Practice and Pharmacy -
ISSUE:
Offline MYOB with cheque-based payments requiring physical collection; no bank feeds; doctor fee tax invoices coded incorrectly for GST; manual timesheets with no award interpretation causing a $40,000 Fair Work back-payment before Matthew was engaged -
OUTCOME:
EFT payments implemented, bank feeds activated, clearing account methodology established for doctor fee invoices, Deputy integrated with MYOB for award-compliant payroll
The Situation
This client operates a medical practice and pharmacy under the same business structure. When Matthew first became involved with this client, the business was running on an older offline version of MYOB and was paying all of its creditors and contractors by cheque. Every payment cycle required Matthew to travel to the practice, collect the physical cheque books, process the payments, and return them. For a business with regular payment obligations to multiple payees, this was a significant time cost embedded in a process that had no good reason to exist in that form.
The business had been operating this way for years before the conversation about changing it took place. These situations are common in long-established practices run by principals whose focus is clinical rather than administrative. The payment process worked, in the sense that creditors were paid and the books were maintained. It simply worked in a way that was considerably more time-consuming and manually intensive than it needed to be, and the time cost was absorbed by the bookkeeper rather than appearing as an obvious line item in the practice’s operating costs.
Over time, Matthew made the case for two foundational changes that transformed how the bookkeeping operated for this client: moving all payments from cheques to electronic funds transfer, and activating bank feeds in MYOB. Both changes were eventually adopted, and both produced immediate and lasting reductions in the time required to process and maintain the accounts. They are described here not because they are technically complex, but because they illustrate the kind of practical, client-focused advice that a bookkeeper with a long-term view of a client’s business naturally provides when the relationship extends beyond quarterly compliance to genuine operational understanding.
A cheque-based payment process in a practice with regular creditors is not just inconvenient. It is a structural inefficiency that adds hours of processing time every month and creates a physical paper trail that is harder to reconcile and verify than electronic transactions.
EFT and bank feeds are not innovations. They are the baseline that every business should be operating from.
Moving from cheques to EFT and activating bank feeds
The transition from cheque payments to EFT removed the requirement for Matthew to physically collect and process cheque books at the practice. All creditor payments are now initiated electronically, processed through MYOB, and settled directly to the payee’s bank account. The physical handling of cheques, the travel time associated with collecting them, and the manual data entry required to process each one are gone.
The activation of bank feeds in MYOB was the second foundational change. Bank feeds import transactions directly from the practice’s bank accounts into MYOB on a daily basis, eliminating the need for manual statement entry and ensuring that the accounting software reflects the actual bank position without a delay. For a practice with multiple accounts and regular transaction volumes, the time saving from bank feeds alone is material across the course of a year.
Together, these two changes reduced the mechanical overhead of maintaining the practice’s accounts significantly. The time previously spent on cheque collection, manual payment processing, and manual statement entry was redirected to the substantive bookkeeping work that actually requires professional judgement, including the doctor fee invoice coding and the payroll management described below. The accounts are more current, the reconciliation is more reliable, and the process is more efficient than it was under the old arrangement, without any reduction in the accuracy or completeness of the records.
Bank feeds do not replace professional bookkeeping. They remove the mechanical data entry layer that sits underneath it and allow a bookkeeper to focus on the transactions that require assessment and judgement rather than on importing and entering information that software can handle automatically.
Doctor fee tax invoices and the clearing account methodology
How the invoices are structured
The doctors at this practice send through tax invoices each month showing their total fees generated, less the management fees charged by the practice entity for providing the premises, equipment, administration, and infrastructure within which the doctors operate. The net of those two figures is the amount paid to each doctor.
The management fee charged by the practice carries GST if the practice entity is registered for GST. This means the tax invoice is not simply a record of income and a deduction. It is a document with a specific GST position that must be understood at the line level before any coding decision is made. The doctor’s gross fees represent income. The management fee deducted from those fees is a GST-inclusive expense that generates an input tax credit for the doctor, provided the doctor is registered for GST and the management fee has been correctly coded with the appropriate GST treatment.
ABN registration status matters here in a way that is easy to overlook. A doctor who is registered for GST will have GST on the management fee they pay to the practice. A doctor who is not registered for GST will not. Matthew keeps a record of the GST and ABN registration status of each doctor and applies the correct GST treatment to the management fee on each invoice accordingly. Applying the same GST treatment uniformly across all doctors without checking their individual registration status produces errors on some invoices in every batch.
The clearing account process
The bank feed for this practice is configured with a rule that sends incoming doctor payments to a clearing account rather than directly to an income account. This is a deliberate design decision that reflects the nature of these transactions and the timing involved in processing them correctly.
When a payment arrives from a doctor, it goes to the clearing account and sits there until the corresponding tax invoice comes through. The invoice is the document that tells Matthew how the payment should actually be coded: how much of it is gross income, what the management fee deduction is, and what the GST treatment on the management fee should be given that doctor’s registration status. Only once the invoice has arrived and been reviewed is the clearing account entry reallocated to the correct income and expense accounts.
The clearing account performs a specific function in this process. It holds the payment in a neutral position until the information required to code it correctly is available, and it ensures that payments are never coded based on the bank deposit alone. A payment that has been sitting in the clearing account without a corresponding invoice is immediately visible as an outstanding item, which prompts a follow-up to obtain the invoice before the period closes. By contrast, a payment that has been coded directly to income without an invoice would look complete in the accounts even though the underlying coding is based on incomplete information.
When the invoice arrives and the clearing account entry is reallocated, the clearing account balance returns to zero for that doctor and that payment period. A clearing account that does not return to zero is the signal that something has not been fully processed, which is exactly the kind of exception that the methodology is designed to surface rather than obscure.
A clearing account is not a complication. It is a control. It holds a transaction in a visible, unresolved state until the information required to code it correctly has arrived and been reviewed. A payment coded directly to income without the underlying invoice may look resolved in the accounts when it is not.
The $40,000 Fair Work back-payment and what happened after
Before Matthew was managing the payroll for this practice, the business was processing staff pay using manual timesheets. The award rate interpretation was being done by the business owner or administrative staff working from their own understanding of what the applicable award required. This is a common arrangement in practices where payroll has grown gradually and the complexity of the award obligations has grown with it without anyone specifically addressing whether the interpretation being applied is correct.
The consequence in this case was a Fair Work audit that identified incorrect overtime rates being applied to staff pay. The back-payment required to correct the underpayment across the affected staff and the affected period came to $40,000. This is a significant sum, and it did not arise from any intention to underpay. It arose from manual award interpretation applied without the benefit of software that could verify whether the rates being used matched the current award schedule and the correct conditions for each shift type.
Matthew was not managing the payroll at the time of the audit. That is an important distinction. The $40,000 liability was the result of an arrangement that existed before his involvement with this aspect of the client’s operations. The reason it is documented here is not to assign responsibility retrospectively but to make a specific point about what changed when Matthew took over the payroll and introduced Deputy.
A $40,000 Fair Work back-payment is not a worst-case scenario for payroll errors in a healthcare practice. It is a documented outcome from a real business. Manual award interpretation, applied without software verification and without a regular review process, produces exactly this kind of liability. The fact that the underpayment was not intentional does not reduce the obligation to correct it.
What Deputy changed
After Matthew took over the payroll for this client, Deputy was introduced as the workforce management platform. Staff record their hours through Deputy, and the platform applies the award rate interpretation for each shift automatically based on when it was worked, the employee’s classification, and the applicable conditions under the relevant award. When the pay period closes, the approved timesheets are exported directly from Deputy into MYOB with the correct rates already calculated, eliminating the manual interpretation step entirely.
The practical consequence is that the overtime rates, penalty rates, and other award conditions that produced the $40,000 back-payment under the previous arrangement are now applied automatically and consistently for every employee on every shift. There is no manual calculation to verify, no individual judgement call about which rate applies to which shift, and no accumulation of small errors that compound into a large liability over time.
Since Matthew began managing the payroll with Deputy integrated into MYOB, the practice has had no payroll compliance issues. The rates applied to every shift type are the rates the award requires, applied by software configured specifically for that purpose and reviewed as part of the regular payroll process. The risk that produced the original $40,000 liability has been addressed at the process level rather than simply being monitored more carefully under the same manual arrangement that created it.
The difference between a practice that has experienced a $40,000 Fair Work back-payment and one that has not is not always the intention or care applied to payroll. It is often the presence or absence of a system that applies award rates correctly without relying on human interpretation under time pressure. Deputy does not prevent all payroll errors. It eliminates the specific type of error that comes from manual award interpretation applied inconsistently across a large number of shifts.
The summary
|
Issue Identified |
Resolution & Outcome |
|
Offline MYOB with cheque-based payments requiring physical cheque book collection for processing |
Transition to EFT payments implemented; cheque books retired; physical collection no longer required; processing time reduced significantly |
|
No bank feeds active; transactions entered manually from bank statements |
Bank feeds activated in MYOB; transactions import daily; manual statement entry eliminated; accounts more current and reconciliation more reliable |
|
Doctor fee tax invoices containing management fees coded without GST assessment or ABN verification |
Clearing account methodology established; each invoice reviewed at line level; management fees coded with correct GST treatment based on each doctor’s individual ABN and GST registration status |
|
Doctor payments coded directly to income from bank deposits without waiting for underlying invoices |
Bank feed rule sends doctor payments to clearing account; payment held until invoice arrives and is reviewed; clearing account reallocated to correct income and expense accounts on invoice receipt |
|
Manual timesheets with owner-interpreted award rates producing incorrect overtime calculations |
Deputy implemented and integrated with MYOB; award rate interpretation automated for every shift type and employee classification; manual calculation step eliminated |
|
$40,000 Fair Work back-payment required before Matthew was managing payroll due to incorrect overtime rates |
Zero payroll compliance issues since Matthew took over payroll management with Deputy; correct rates applied automatically for every shift |
Key takeaways for medical and pharmacy practice owners
This client’s history covers almost every category of bookkeeping problem that a long-established healthcare practice can accumulate over time: outdated tools, manual processes, incorrect GST coding, and payroll interpretation errors with real financial consequences. Each problem was addressed at the process level when it was identified, and the current arrangement reflects the result of those changes applied over the course of a long-term bookkeeping relationship.
- Cheque-based payment processes in practices with regular creditor obligations have no operational justification in a modern banking environment. EFT is faster, more reliable, and significantly less labour-intensive for the bookkeeper responsible for processing the payments.
- Bank feeds are not optional for a practice that wants its accounts to be current and its reconciliation to be reliable. Manual statement entry introduces delay and error risk that bank feeds eliminate entirely.
- Doctor fee tax invoices that show gross income less management fee deductions must be read at the line level, not coded from the net deposit. The GST treatment of the management fee depends on the individual doctor’s registration status and cannot be applied uniformly without checking.
- A clearing account methodology for incoming doctor payments provides a structural control that holds the payment in an unresolved state until the invoice arrives, preventing the coding from being completed on the basis of incomplete information.
- Manual award interpretation for healthcare payroll is a material compliance risk. A $40,000 Fair Work back-payment is a documented outcome of this risk for a real practice. Software that applies award rates automatically does not just save time. It removes the interpretation error that produces this category of liability.
- A bookkeeper who has managed a client’s accounts over an extended period understands not just the current state of the books but the history of decisions and changes that produced that state. That institutional knowledge is one of the least visible but most valuable aspects of a long-term bookkeeping relationship.
