CONTROLLING YOUR ACCOUNTS RECEIVABLE

As a consultant, one of the first things I check when I go into a new office is their accounts receivable.  From experience I know that if the practice is doing a poor job of collecting money, there are probably plenty of other issues that need to be addressed.

Getting paid for what you do is so important, but in many offices it seems to be secondary in nature, or maybe it is just perceived as the cost of doing business. Collecting money does not have to be difficult if you use a good system and adhere to it.

From the Analysis page, this statistic is derived by dividing your accounts receivable total by one month’s collection.

If <1, You are doing a good job in managing the finances at the front desk.  You probably collect in advance or as services are rendered.  You do a good job of tracking your insurance claims and making sure to call if claims are not being processed in a timely manner.

>1 Your accounts receivable is too high.  This can be caused by several reasons:

1. Not collecting payments from your patients correctly
2. Insurance claim processing protocol needs to improve
3. May have patients on a payment plan
4. Haven’t cleaned up old, non-collectible accounts
5. Need to turn delinquent accounts over to collection

In every practice that we see high accounts receivable, we uncover other practice weaknesses. Conversely, if A/R is good, the practice usually is being effectively managed.  A/R is a reflection of the competence of your front office staff. Use A/R as the measurement of your office manager’s effectiveness

When your treatment plan is accepted, have the patient sign a form that states that they accept your treatment plan and the fee for services to be rendered.  Here is the system that will work well in your practice.

1) Following acceptance of treatment plan, patient pays for the entire case before beginning treatment , usually with an incentive of a 5 to 10% discount.  I would give them a 5 % discount even if they pay by credit card.  This is the most effective means of collecting fees from your patients. 

2) Pay as you go; in other words patient pays as the work is completed.  With a crown, try to collect on the first visit or have them pay half at the prep appointment and half when the crown is seated

3) If your patient is unable to pay, use a dental financing plan like Care Credit or Chase.  They will not accept every patient due to poor credit (better you find out before you start a big treatment plan!)

4) Another option if they are unable to pay is to suggest that they get a loan from a family member.  If they perceive the value of your treatment, they will find a way to pay your fee.

Remember that you are a dental practice, not a bank.  In my 20 years of clinical dentistry I gave away hundreds of thousand of dollars of dentistry simply because I did not have a good system of collecting up front. 

Your front office should be familiar with any insurance plans you accept and be able to determine the patient’s portion prior to providing treatment.  If you wait to see what the insurance will pay and then bill the patient for the balance, you are asking for trouble. 

5) Turning unpaid accounts over to collection

>90 days/collection: If this exceeds 20% of your total accounts receivable, do this:

Turn your delinquent accounts over to collection

Clean up old accounts by writing off non-collectible accounts

Start fresh and by using this A/R Protocol, never worry about this in your practice again

As a consultant, one of the first things I check when I go into a new office is their accounts receivable.  From experience I know that if the practice is doing a poor job of collecting money, there are probably plenty of other issues that need to be addressed.

Getting paid for what you do is so important, but in many offices it seems to be secondary in nature, or maybe it is just perceived as the cost of doing business. Collecting money does not have to be difficult if you use a good system and adhere to it.

From the Analysis page, this statistic is derived by dividing your accounts receivable total by one month’s collection.

If <1, You are doing a good job in managing the finances at the front desk.  You probably collect in advance or as services are rendered.  You do a good job of tracking your insurance claims and making sure to call if claims are not being processed in a timely manner.

>1 Your accounts receivable is too high.  This can be caused by several reasons:

1. Not collecting payments from your patients correctly
2. Insurance claim processing protocol needs to improve
3. May have patients on a payment plan
4. Haven’t cleaned up old, non-collectible accounts
5. Need to turn delinquent accounts over to collection

In every practice that we see high accounts receivable, we uncover other practice weaknesses. Conversely, if A/R is good, the practice usually is being effectively managed.  A/R is a reflection of the competence of your front office staff. Use A/R as the measurement of your office manager’s effectiveness

When your treatment plan is accepted, have the patient sign a form that states that they accept your treatment plan and the fee for services to be rendered.  Here is the system that will work well in your practice.

1) Following acceptance of treatment plan, patient pays for the entire case before beginning treatment , usually with an incentive of a 5 to 10% discount.  I would give them a 5 % discount even if they pay by credit card.  This is the most effective means of collecting fees from your patients. 

2) Pay as you go; in other words patient pays as the work is completed.  With a crown, try to collect on the first visit or have them pay half at the prep appointment and half when the crown is seated

3) If your patient is unable to pay, use a dental financing plan like Care Credit or Unicorn.  They will not accept every patient due to poor credit (better you find out before you start a big treatment plan!)

4) Another option if they are unable to pay is to suggest that they get a loan from a family member.  If they perceive the value of your treatment, they will find a way to pay your fee.

Remember that you are a dental practice, not a bank.  In my 20 years of clinical dentistry I gave away hundreds of thousand of dollars of dentistry simply because I did not have a good system of collecting up front. 

Your front office should be familiar with any insurance plans you accept and be able to determine the patient’s portion prior to providing treatment.  If you wait to see what the insurance will pay and then bill the patient for the balance, you are asking for trouble. 

>90 days/collection  If this exceeds 20%, do this:

Turn your delinquent accounts over to collection

Clean up old accounts by writing off non-collectible accounts

Start fresh and by using this A/R Protocol, never worry about this in your practice again