Lapping is a deceptive and often overlooked type of financial fraud that can quietly drain resources from a dental practice for years before anyone notices. In its simplest form, lapping occurs when an employee steals a payment intended for one patient’s account, then hides the theft by applying a different patient’s payment to the first account. The process repeats, using each new payment to fill the hole left by the previous theft. On paper, the records look balanced—but the “balance” is artificially constructed.
Because each missing dollar is temporarily replaced, the scheme can continue for months or even years. The longer it runs, the more difficult it becomes for the thief to keep the sequence from unraveling. As amounts grow, increasingly large payments must be “borrowed” to keep the scheme going. In a recent case I investigated, an employee lapped payments for more than twelve years—enabled by weak financial controls and the owner’s mistaken belief that if collections in the practice management software matched bank deposits, embezzlement could not be occurring.
How a Lapping Scheme Works
Lapping is both straightforward and insidious. A person with access to payments and financial records steals a payment, then uses the next payment to hide the first theft. A typical cycle looks like this:
Payment stolen – A patient’s payment is taken instead of being deposited. Many dentists believe embezzlers only steal cash, but theft of checks, stolen credit card payments, and even electronic fund transfers are increasingly concealed through lapping.
Cover-up with another payment – To hide the missing payment, the thief applies a payment intended for a different patient to “cover” the first account.
Cycle repeats – The second patient’s account is now short, so a third patient’s payment is applied to cover the second. That third payment will also need to be replaced later, and the cycle continues.
If the initial theft wasn’t a one-time lapse in judgment, additional lapping entries are needed to cover future thefts.
Characteristics of lapping:
• Daily end-of-day reports “balance,” showing collections in the practice management software that match deposits—because the thief has manipulated entries to force the numbers to line up.
• Patient account balances look correct because every account eventually shows a payment, even though the actual money may have been diverted.
• Actual payment amounts rarely match, meaning thieves must split payments across accounts or take other deceptive steps to make numbers appear consistent.
Common Signs of Lapping
Without careful reconciliation, the following red flags may be dismissed as clerical errors rather than deliberate fraud:
• Payments repeatedly deleted, re-entered, or adjusted.
• Unexplained delays in making deposits, or deposits that do not match recorded payment activity. “Hoarding” deposits allows thieves to time transactions in support of the scheme.
• Daily reports showing that patient payments are not collected at the time of treatment.
• Split payments—especially checks—where the number of checks recorded exceeds the number actually deposited.
• Infrequent patient statements, or selective omission of certain patients from statement runs.
• Frequent patient complaints about incorrect balances or missing payments.
Why Lapping Is So Hard to Detect
Because each stolen payment is masked with another, lapping often mimics routine bookkeeping corrections. Detecting it requires meticulous comparison among patient accounts, deposit slips, and bank records.
Having an outside party prepare and send patient statements is often the quickest way to expose a staff member who is lapping.
Preventing Lapping in Your Practice
The strongest defense against lapping is a clear division of financial duties and routine, independent oversight. Team members who record payments should not be the same individuals who handle deposits or send patient statements. Statements should be generated or reviewed by different team members—or, ideally, an external party—to ensure accuracy.
Routine reconciliation of accounts, deposits, and daily collections can quickly uncover timing irregularities that are typical of lapping. Audit logs should remain locked, secure, and not be editable.
Get additional guidance on dividing duties from Prosperident here.
Even in smaller practices, adopting these principles—separating responsibilities, independently reviewing reports, and maintaining unalterable records—greatly reduces opportunities for lapping to occur.
Final Thoughts on Lapping
Lapping is a quiet crime that thrives on trust, routine, and a lack of oversight. Detecting it requires patience, attention to detail, and a willingness to question what appears normal. Studies indicate a 70% lifetime probability of embezzlement in a dental practice. Strong preventive measures are essential. Mistakes can be corrected—but only if they’re noticed before they grow into something far more costly.
