Paying an associate doctor a share of fees
How a practice pays a salaried associate doctor a monthly share of fees through payroll: the written basis, the working, the run and the payslip.
By Achekam · · 5 min read · For Healthcare businesses in South Africa, Nigeria, Kenya
Many practices bring on an associate doctor or dentist with a package of two parts: a basic monthly salary, and a share of the fees the associate generates. It rewards the associate for building a patient list and keeps the practice's fixed costs in check. It also creates a monthly calculation that someone has to get right, explain and put through payroll.
When that calculation lives in a partner's head or an unlabelled spreadsheet, it causes friction: the associate cannot see how the figure was reached, the bookkeeper cannot tie it to the books, and nobody is sure whether last month's shortfall payment from a scheme counted. This article sets out a cleaner way, from the written basis to the payslip.
Agree the basis in writing first
Before the first month, write down exactly how the share is worked out. The questions that cause arguments later are the ones to answer now:
- Billed or collected? A share of fees invoiced, or of fees actually received? Collected protects the practice's cash flow, but it means the associate waits on schemes and patients too.
- Which fees count? Consultations and procedures, certainly. Dispensary items, consumables charged on and missed-appointment fees are the usual candidates to leave out; decide each one.
- What about write-offs and credit notes? If a fee is credited or written off, does the share come back out?
- Which month? A share of fees collected in the month, paid with that month's salary, is simplest.
- Who calculates and who checks? Name the person who prepares the working, and the partner who reviews it.
- How are disputes raised? A simple route, such as the associate querying the working within a set time, prevents grumbling.
Achekam can send any document for electronic signature, with the signed PDF and a completion certificate filed back into Documents, so the signed basis sits where the practice can find it.
Work out the share from the practice's own figures
The share should come from records the associate can see and the practice can defend, not from memory.
If the basis is fees collected, the starting point is the receipts recorded against invoices. Achekam records customer payments against one invoice or spread across a patient's invoices, and a part payment leaves the invoice part-paid, so a scheme paying part of a fee is already visible as part of the record.
Make the associate's fees easy to pick out. A practical way is to name the treating doctor in the invoice line description, so the month's invoices and receipts for that doctor can be listed for the calculation. Then:
- List the associate's invoices that received payments in the month.
- Total the payments that count under the agreement.
- Take out anything the agreement excludes.
- Apply the agreed share.
- Save the working as a PDF or spreadsheet beside the month's payroll records.
Management accounts, which show an income statement for a chosen period added up from the practice's own journals, are a useful cross-check: the associate's fees should be a sensible part of total fee income for the month.
Enter it as a variable input on the monthly run
A business sets itself up as an employer and runs payroll under South African, Nigerian or Kenyan rules, chosen when the employer is created. Pay runs can be monthly, fortnightly or weekly, and each period's overtime, commission, allowances, reimbursements and unpaid leave are entered as variable inputs.
The associate's share goes in as a variable input on the regular monthly run, typically as commission. There is no separate bonus, correction or final-settlement run; those amounts also go in as variable inputs on the regular run. The payroll calculation then applies the country's tax and deductions to the salary and the share together.
A worked example in words: in March the associate's patients paid a set of fees counted under her agreement. The practice manager lists them, takes out a dispensary charge the agreement excludes, applies the agreed share and enters the result as commission on the March run beside her basic salary. The working is saved with the run.
Approval by someone other than the preparer
A pay run is approved by someone other than the person who prepared it, nobody can approve a run that pays themselves, and an approved run is never recalculated. In practice that means at least two people in payroll roles.
Two consequences matter here:
- The associate cannot approve the run that pays her share, even if she has a payroll role for other reasons.
- Mistakes are corrected forwards. If the share was wrong, the approved run stands, and the correction goes in as a variable input on the next run, with a note explaining it.
The reviewing partner should look at the working, not just the total. A share that looks reasonable can still include a fee the agreement excludes.
How it shows on the payslip and in the books
Payslips are PDFs with the practice's logo and details that can be downloaded or e-mailed, one per person. An employer setting can send them automatically when a run is approved, with a delivery log. Go through the first payslip with the associate so she can see how her salary and her share come together; that transparency is what makes a share arrangement trusted.
An approved pay run is posted to the practice's own ledger as a wages journal, with amounts owed to the tax authority and funds recorded as liabilities. The associate's share is therefore in the books as a staff cost in the same month as her salary.
South African practices can check what a payslip must show in the Department of Employment and Labour's basic guide to pay slips, which lists the details an employer must give a worker in writing each payday, such as the pay period, deductions and net pay.
For the associate's leave, see leave and payslips through self-service. Practices that also pay casual staff weekly can compare notes with weekly payroll for casual staff.
A share-of-fees arrangement works when both sides can follow the arithmetic. Write the basis down, build the figure from receipts the associate can see, and put it through the regular run with a second person approving.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
