Studies have shown that accounts receivable (AR) in dental practices is highest between January and April. If your practice sees higher than usual AR early in the year, make it your priority to reduce this number later throughout the year.
Carrying a balance on your accounts receivable is a common practice with any business, and especially dentists. You need to wait for insurance reimbursements and count on your patients’ willingness to pay out of their own pocket.
However, carrying too large of a balance can negatively impact your dental practice’s cash flow. Below are some tips to reduce the balance on your accounts receivable and keep your financials running smoother.
10 Tips to Lower Accounts Receivable
Consider implementing some or all of these tips to take control over your dental practice’s AR balance.
- Establish a collection policy
A good policy will document how payments are handled and how payment options are communicated to patients. For example, knowing in advance how much a patient’s insurance will cover, and giving the patient an estimated out of pocket expense beforehand and collecting it when the appointment is scheduled.
- Collect payment before treatment
At the very least the practice should collect the patients’ co-pay before treatment is scheduled and if necessary, you can also offer an incentive to collect payment in full in advance for out of network or fee-for-service patients. This goes in hand with a collection policy.
- Have a detailed written treatment plan available
For expensive treatments (for example, more than $1000), have the patient sign a form that describes the treatment plan, estimated cost, and estimated insurance coverage. This is also a legal document you can refer to if the account becomes severely delinquent.
- Issue an expiration date for payments
Always include a due date for payments, not just Payable Upon Receipt. We recommend 7 to 14 days.
- Offer financing
If your practice doesn’t yet offer financing, there are popular options available now that can take the collection burden off your dental practice and give patients another opportunity to pay over time. Some practices even have their own “financing’ plans available, however, be sure to have the tools for proper background and credit checks.
Communicate: with your staff and patients. Your staff should know your collection policies and expectations. Your patients should know their financial responsibility – no surprises. It sounds simple, but often gets overlooked.
- Run an Aged A/R report at the end of every month
If this isn’t already part of your front office’s tasks, it should be. Know how much of your AR is <30 days, 30-60, 60-90, and 90+. Flag overdue accounts.
- Train staff to ask for money
Asking for money can make some people uncomfortable. Whoever is in charge of collecting patient payments should be confident, polite, and comfortable having this conversation with your patients.
- Offer Electronic Payment Options
Make paying easy by allowing patients to use the practice’s website to process secure payments via smartphones and/or laptops. More patients are becoming tech savvy and prefer electronic payment options.
- Email statements
It costs about $7-$10 month to manage past due accounts when you mail statements. Reduce that expense and email or text statements instead and include a link to your website for payment options including electronic payments.
Reducing your AR balance won’t happen overnight. However, with a few key changes to your office’s policies, you can ensure an easier and less stressful collection practice. Watch your bottom line improve with the extra cash flow from a lower AR balance.
Let’s talk about how we can help lower your dental practice’s accounts receivable – contact us today.