BUSINESS

  BUSINESS STRATEGIES

GET PAID IN FULL AND ON TIME

TAKE ACTION WHEN ACCOUNTS RECEIVABLE SPIRAL OUT OF CONTROL

GARY GERBER, O.D.

AS MRS. SMITH’S visit wraps up, Sarah, your front desk checkout person, tells her “Your charge for today for your eye exam and glasses, after allowances from your insurance plan, is $218.” Mrs. Smith is the only patient you see and at the end of the day, you notice only $163.50 has been collected.

Sarah is dumbfounded. She swears that Mrs. Smith handed her a check for $218. Yet, when she looks at the check now, it only says $163.50. Indeed, 25% of the charge magically disappeared!

Is this magic trick acceptable to you? What if it happened with every patient? Would “only” 5% be OK? Is any amount of money due that goes uncollected acceptable? I’d guess that every reader would answer with a resounding “NO!”

NEGLECTED RECEIVABLES

Yet, in client after client that we work with, accounts receivable is often treated or, more appropriately, neglected and relegated to the “We’ll get to it later pile.” We have seen practices destined to close their doors because their accounts receivable were so high.

If the effect of accounts receivable on cash flow and day-to-day operations is so easily comprehended, why does it so often spiral out of control, and what can you do?

DRAW THE LINE AT 30 DAYS

As with any problem, first you have to recognize it exists. Simply stated, if you have any “non-outlier” accounts receivable that are more than 30 days old, you likely have a problem. Outliers would be things like a patient or insurance claim that you know, with a high degree of certainty, will pay soon, but they had a good reason for delaying. Again — these should be few.

Let me state what is rarely obvious when you’re in the midst of a financial crisis: If you have a considerable amount of money outstanding for work that has already been done — you need to collect it!

The most common reasons we hear for large amounts beyond 30 days is, “That one slipped through the cracks. . . oh yeah, that one too.” Or, “I know, but we’re so busy!” Busy doing what — generating more money you’ll never collect?

The work is done. The lab bills and related expenses have been paid, but you haven’t. So, stop what you’re doing, and collect!

EXTREME COLLECTIONS

In extreme cases, practices actually close their offices (sometimes for days), don’t see patients (what’s the point if you are bad at collecting anyway?) and hold an “all-hands-on-deck” collection effort. Yes, it’s extreme, but if you’re in dire straits, it’s necessary to put an inordinate amount of work on this effort. If you use this technique, you must clearly state collection goals. For example, “By next Thursday, we will have contacted 80% of patients and/or insurance companies or chipped away at $78,000 of accounts receivable.”

Spend the last day of this effort making a plan so that accounts receivable never spiral out of control again. Review fee presentation and collection procedures, and ensure that someone, or some company, is tasked with keeping a lid on future accounts receivable.

The other “good thing” that comes out of this effort: Your staff realizes the importance of getting paid on time! OM

DR. GERBER is the president of the Power Practice, a company specializing in making optometrists more profitable. Learn more at www.powerpractice.com, or call Dr. Gerber at (888) 356-4447.