How Do your Accounts Receivable Line up?

In many dental offices, Accounts Receivable (A/R) can feel like a garden: well-tended, they remain manageable and even enjoyable. 

But…

When neglected, they quickly become overgrown and difficult to control. A/R management is about much more than just collecting outstanding balances—it requires careful attention to various aspects of your practice’s finances. 

Without the right systems in place, your financial health could quickly take a hit. To ensure that your A/R is up-to-date and functioning effectively, it’s essential to evaluate the following eight (8) areas in your practice:

1. Collections vs. Production

Your collections should be at least 98% of your monthly production. After all, if you’re not collecting payment for the work completed, your production efforts lose value. Review your net production for the month and compare it with your collections. 

Most dental software programs can generate a Collection to Production report, simplifying this process.

2. Address Credit Balances

Ensure all credit balances are accurate and appropriately allocated. If you see several patients with credits that can’t be applied to any outstanding balances, this likely indicates a misallocation of payments. 

These unallocated credits skew your A/R and give a distorted picture of your financial standing. Allocating payments correctly to the appropriate treatment is the only way to ensure accuracy going forward. 

You may need assistance from your software provider to resolve any long-standing issues in this area.

3. Daily Provider Accountability

Each provider should review their daily production to ensure it has been properly allocated. Errors made today are much easier to fix now than later. Common mistakes occur when patients have both hygiene and dental appointments on the same day. 

For instance, if a hygienist’s overall billing includes restorative treatments, something has gone wrong. Building this check into your daily workflow promotes accuracy and saves time.

4. Cycle Billing for Better Cash Flow

Moving to a cycle billing system, instead of monthly billing, can drastically improve your cash flow. In cycle billing, patients are contacted for outstanding balances 30 days after their treatment, rather than at the end of the following month, which could lead to a 55-day gap. 

Emailing statements is not only cost-effective but also faster, making it easier to get timely payments. Ensure that your office collects every patient’s email to streamline this process.

5. Handling Government and Dual Insurance Patients

Patients with government or dual insurance coverage can be marked as non-statement accounts in your A/R report. This categorization simplifies the process of recognizing accounts that may require resubmission or special handling, reducing confusion and improving your A/R management.

6. Proper Use of Software Discounts

Leverage your dental software’s discount features at the beginning of each transaction. Doing so will prevent calculation errors down the line. Many offices overlook this feature, even though it’s available on most systems, and doing so can significantly reduce manual errors.

7. Appropriate Use of Write-Offs

Write-offs should only be used for truly uncollectible debts. For charge adjustments, discounts, or payment modifications, use the appropriate coding within your system. 

Always document the reason for the transaction to maintain transparency in your financial records.

8. Share Financial Notes Across the Team

Financial notes need to be visible and accessible to the entire team. Your dental software should have a notes feature that makes sharing this information simple. This ensures that everyone on your team is aligned and aware of any payment-related details, creating a smoother workflow.

Closing the A/R Gaps

Managing your Accounts Receivable goes far beyond just collecting fees—it’s about maintaining a clear and accurate representation of your practice’s financial health. 

By implementing and adhering to the protocols mentioned above, your practice will improve cash flow and enhance operational efficiency. 

A well-managed A/R reflects a thriving practice, providing you with the financial stability necessary for long-term success.