Does your dental practice carry excessive accounts receivable? If so, it is putting a heavy strain on your cash flow.
At Dental Practice Enhancement, our team of trainers and virtual assistants are the best in the dental industry. With a deep understanding of and unmatched experience in dental practice management, we do whatever it takes to make your practice succeed and be profitable.
Today, we are going to discuss some of the reasons for excessive accounts receivable and share 3 tips to improve cash flow.
Why do dental practices lose money due to accounts receivable?
The reasons dental practices have issues with accounts receivables can vary widely, but the result is the same—lost profits for you.
Some of the reasons include:
- Lack of training
- Neglecting to embrace a culture of prepayment
- Improperly estimating insurance
- Unmotivated front desk team members
- Not setting up automated bank drafts or credit card payments
- A chaotic accounts receivable system
Carrying some accounts receivable is considered normal, and sometimes it can be a good thing. For instance, automated payments ensure future payments while improving patient treatment acceptance. But how do you know how much accounts receivable to carry?
Some suggest a healthy amount to carry in accounts receivable is equal to one month of average production. Of course, this can vary depending on your type of practice.
But what it really boils down to is your comfort level.
Now on to the tips to improve your cash flow. After all, unmanaged accounts receivable means lost revenue.
Tip #1: Charge Interest on Your Accounts Receivable
If you don’t already charge interest on accounts with balances over 30 days old, why aren’t you?
People pay interest to banks, credit card companies, mortgage lenders, and car dealers every day. Your patients are used to paying interest for outstanding balances.
And if that money was in your bank, you could be earning interest income on it.
Consider this: If you charge just 2 percent interest, and if you carry $80,000 in accounts receivable, that equates to $19,200 a year!
And most likely, your patients won’t even notice a 2 percent interest charge.
Imagine what you could do with that extra $19,200.
Tip #2: Stop Chasing Accounts Receivable That Aren’t Worth It
If your practice works the accounts receivable, there are costs involved. Is the amount you are chasing worth those costs? Especially considering many of those efforts are in vain.
Before you answer, consider some of the costs involved:
- The hourly rate of the team member to make phone calls and produce and mail statements
- Postage and certified mail fees
- Paper and toner to produce statements
It may not seem like a lot, but it adds up quickly. Especially if your practice sends out a lot of monthly billing statements.
In fact, it has been estimated that the cost of mailing a statement from a dental practice is anywhere between $2.41 and $10. Each statement. Each month.
How many times should you send a billing statement to someone who owes you $50?
Tip #3: Consider Outsourcing Your Accounts Receivable
Consider the costs of having one of your team members working accounts receivable. You pay a salary, taxes, benefits, and probably insurance fees.
When you hire Dental Practice Enhancement, our team of experts will recover your uncollected dollars and clean up your accounts receivable. And we do it remotely, which makes us a high value, low-cost option.
In addition, we cover many other front desk services, including things like:
- Reviewing rejected insurance claims
- Clean claims billing
- Verify insurance and benefits
- Create daily statements
- Patient recall
- Follow up on patient case acceptance.
Are you ready to bring on the best team members?
Dentists who are serious about getting the front office work done right want to hire the best team members.
If you want the best, give Dental Practice Enhancement a call at (833) 373-3678 extension 1 today. Our expert team is ready to answer all your questions and set up a consultation with you.
