Know Your Numbers: Get Back On Track When A/R Balance Doesn’t Measure Up
Posted August 30, 2016 by Dawn
When it comes to Accounts Receivable tracking there are few key metrics that you need to know.
- Accounts Receivable over 90 days should be 10% or less of total A/R
- Total A/R should be equal to 4 weeks of production
Let’s say a practice is producing $90,000 per month. Total Accounts Receivable should not exceed $90,000 while the A/R over 90 days should be less than $9,000. If your practice has fallen outside of these guidelines, it’s time to take action. Read on to identify areas for improvement and establish a plan for the future.
How to Get Back on Track
Review Insurance Claim Submission and Processing
Are your insurance claims being sent every day? Are claims being rejected for lack of information or attachments? How frequently is your practice following up on claims sent? How many days does it take to receive payment on claims?
XLDent recommends sending electronic claims with attachments every day. Send attachments before they are requested by the insurance company when possible. Follow up on claims sent every week. A week after a claim has been sent, view your claim status information to confirm that the insurance company has received your claim electronically. The amount of time it takes for an insurance company to process a claim may vary from one to another, but you should expect one to be consistent. Ask the insurance company if there’s anything you can do to get paid sooner. Consider utilizing Electronic EOBs and Electronic Funds Transfer to speed up the process.
Examine Patient Billing Procedures
Does your practice collect the patient portion at the time of service? Are you offering in-house financing? How frequently are patients’ being billed?
If you’re not already using your dental software’s benefit estimator to collect the patient portion at the time of service, get started immediately. This can be one of the easiest ways to avoid large unpaid patient balances and a growing Accounts Receivable. At a minimum, require a down payment for larger procedures. When offering in-house financing, get to know your software’s contracts feature to see if that can help you manage Accounts Receivable balances. Patient statements should be generated often; either immediately after the insurance payment is received or on a weekly basis. Your ‘Remit by Date’ should be about 7-15 days after the statements are sent. Giving your patients the ability to pay online will also have an impact on your collection cycle.
How to Motivate Team Members
If your Accounts Receivable is out of control, remember that it didn’t happen overnight. There may be many things your Office Manager or Insurance Coordinator could be doing differently, but it’s up to you, the Business Owner, to provide the leadership and direction.
Have patience. Share your goals with your team and give them the opportunity to help establish a game plan. Creating Action Steps together will show your team that you value their ideas and believe in their ability to help solve the problem.
Start slow. Don’t aim to make many changes at once. Create a timeline for implementing change and celebrate each milestone. Thank your team often. Be sure to show appreciation and create incentives for meeting practice goals.
Make yourself available to communicate with patients. If you were not previously collecting payment at the time of service, some patients may not like the change. Consider sending a letter or email to patients before the change happens. If patients are complaining to your front office team about the change, be available to back your team up. Don’t make exceptions on the spot, it will minimize the value of your front office team in the patient’s mind.
We hope these ideas will help you make positive moves in your practice. At XLDent, we value the workflow and process as much as the results. Want to see how XLDent Dental Software helps you manage Accounts Receivable balances? Check out www.xldent.com.
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