The Practicon Viewpoint by Ann Page Griffin

JUST HOW MUCH IS TOO MUCH IN ACCOUNTS RECEIVABLE?

Accounts receivable (A/R) is one statistic that is often overlooked when the doctor or practice administrator analyzes monthly reports. Yet this figure represents services which have been delivered but not paid for, money the practice is owed. To personalize the importance of collecting fees promptly, think of it this way: every day you do not collect the fee for delivered care, it is costing your practice money. You do not have that money to pay staff salaries, or for supplies, utilities, or even your own compensation. Furthermore, if you are in debt, you are essentially borrowing money and paying interest to compensate for uncollected fees.

The recommended maximum goal for total A/R is 1 to 1½ month's gross production. Recommended A/R ratios are:

• Current – 50% to 60% of total
• 30 days – 15% to 20% of total
• 60 days – 10% to 15% of total
• 90 days – under 10% of total
• 120 days – to outside collection action or deducted from total A/R as a write-off

The overall collection rate in a well-managed dental practice should be 97% or better. Suggestion: check the collection rate in your practice at the end of each month. If the collection rate falls, it is easier to analyze and solve problems on a monthly basis than to allow the problem to reduce collections for a prolonged period. Although all business staff members may collect fees at check out, one business person should be responsible for monitoring the collection rate, generating reports monthly for the doctor's review, accompanied by explanations for any anomalies.