Many offices find that Accounts Receivable are like a garden. If tended regularly, they are a pleasure. Untended, they become a jungle. Accounts Receivable (A/R) is more than the collection of monies for outstanding accounts. To ensure that your A/R’s stay up to date I suggest you look at the following areas in your practice and if necessary, clean them up as soon as possible:
- Your collections should be 98% or greater of the production for the month. After all, if you aren’t collecting for the work, there is almost 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 several patients have credits on their accounts that you can’t allocate to balances, then it’s likely that some payments are allocated incorrectly. These credits should not remain in A/R’s since they don’t provide 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 issue 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. Team needs to stay accountable as these errors are harder to fix the next accounting day than on the same day. Errors commonly happen when a patient visits for both hygiene and a dentist appointment on the same day. Examine a hygienist’s overall billing and if you see restorations in the report, then this is likely happening in your office.
- Moving to cycle billing for outstanding accounts instead of monthly billing, will provide a better cash flow. Cycle billing means that a patient would be contacted 30 days after there is a balance, rather than the end of the next month which effectively could be 55 days from the time that you completed treatment. Email statements work best, they are cost-effective and time efficient. Even better if you have all the patient’s email addresses entered in your information.
- Patients with 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. Rarely used, this feature is available on most software.
- Write-offs should only be applied to any uncollectable debt. Charge adjustments, discounts or payment adjustments should all be applied in the appropriate circumstance. For each of these transactions, provide and enter the appropriate reason into the account.
- Financial notes need to be shared with the entire team via the notes feature in your software.
I think all this clearly shows that effective monitoring of Accounts Receivable translates to far more than the simple collection of fees. Your A/R’s need to accurately reflect the financial state of your practice. Following the protocols of each of the above steps is vital to maintaining what you ultimately want – a healthy cash flow.
