Many offices find that Accounts Receivable are like a garden, if you tend them regularly, they are a pleasure, if you leave them untended, they become a jungle. Accounts Receivable (A/R) does not refer to just collection of monies for outstanding accounts although that does cover a fair bit of it. To ensure that your A/R’s stay up to date I suggest you look at the following areas in your practice and clean them up if necessary:
- Your collections should be 98% or greater of the production for the month. If you aren’t collecting for the work, there is no point in producing it. Look at your net production for the month and then calculate the percentage of collections from that total. Some software programs will do this for you in a Collection to Production report.
- Clean up all of your credit balances and ensure that your allocations are accurate. If you have a number of patients with credits on their accounts that you are not able to allocate to balances then you likely have had some payments allocated incorrectly, these credits should not be left in your A/R’s as they don’t give you a clear picture. Don’t assume that prepayments are equal to these credit balances. Ensuring that there is allocation of payments to the correct treatment is the only way to avoid this in the future. Sometimes you will need support from your dental software provider to clean up these accounts.
- At the end of each day, each provider should be responsible to check that the work they completed for the day was allocated correctly. Teams need to be accountable as these errors are harder to fix the next accounting day then the same day. The most common time for this to happen is when a patient is in for both hygiene and a dentist appointment on the same day. If you look at a hygienists overall billing and see restorations in the report, then this is likely happening in your office.
- If you move to cycle billing for outstanding accounts instead of monthly billing, you will have a better cash flow. Cycle billing means that a patient would be contacted 30 days after there is a balance, not at the end of the next month which effectively could be 55 days from the time that you completed treatment. Email statements are cost effective and time efficient, ensuring that you have all patients email addresses will help with this step.
- Patients who have government coverage or dual insurance can be marked as non-statement accounts. These will be grouped separately in your accounts receivable report and will make any necessary resubmissions easier to recognize.
- If you use your software discount features from the beginning of a transaction, it will take away any errors for calculations later on. This feature is available on most software and is rarely used.
- Write offs should only be used for uncollectible debt. Charge adjustments, discounts or payment adjustments should all be used in the appropriate circumstance. For all of these transactions the appropriate reason should be entered into the account as well.
- Financial notes need to be shared with the entire team via the notes feature in your software.
Having accountability for your Accounts Receivable is more than just collecting fees. Your Accounts Receivables need to be an accurate reflection of the financial state of your practice. Putting protocols in place for all of the above steps with accountability is vital to your healthy cash flow.