I have found that 1 of the most important end-of-year items often gets overlooked: reviewing accounts receivable (AR). Year-end AR management is a strategic step toward practice profitability and cash flow.
By carefully analyzing and cleaning up your AR before January, you can set the stage for a stronger financial performance in 2026. Below is a checklist for this process:
Run an Aging Report
- Generate a detailed aging summary report from your practice management software. This data allows you to evaluate cash flow stability and measure the effectiveness of your billing processes.
- Review accounts by aging buckets (0–30, 31–60, 61–90, 91+ days). Segmenting accounts helps prioritize action. Reviewing each bucket ensures timely follow-up and accountability. The likelihood of collecting balances decreases significantly after 90 days. These accounts tie up cash flow, inflate AR reports, and may ultimately require write-offs. Targeting these early reduces revenue leakage and improves profitability.
Look for Outstanding/Unpaid Insurance Claims
- Verify payer status through patient portals or phone calls.
- Correct and resubmit claims that have errors (eg, coding issues, missing documentation, or eligibility problems).
- Flag carriers who have sent repeated denials or have delayed payment for possible payer con-tract reviews in the new year.
Audit Patient Balances
- Cross-check patient balances against explanation of benefits and electronic remittance advice.
- Correct any misapplied payments or duplicate charges.
- For balances older than 60 days, generate patient statementsand send reminders before year’s end. Many practices now issue patient statements every 14 or 30 days to maintain consistent cash flow and reduce the number of accounts drifting into the 90+ bucket.
Assess Patient Credit Balances
- Identify and resolve patient and insurance credit balances.
- Issue refunds where appropriate before the year’s end. Holding on to credit balances can frustrate patients and raise compliance concerns. Of note: Several insurance plans and states require expeditious credit balance refunds or the provider risks legal action.
Compare Current-Year AR Against Last Year’s Benchmarks
- Assess days in AR (goal: typically, <30 days).
- Identify trends in denials, de-lays, or frequent patient-balance carryovers to set improvement goals for next year.
- A goal example: decreasing the denials by instituting better coding strategies.
Contact Your Certified Public Accountant (CPA)
- Provide clean AR reports to your CPA for tax planning.
- Discuss potential year-end write-offs, bad debt considerations, and revenue recognition (recognizing income when it is earned, not necessarily when cash is received).
The Reward
Proactively addressing overdue balances, insurance denials, and ensuring billing accuracy can improve cash flow. By entering the new year with a cleaner, more accurate AR ledger, you can focus on patient care with the confidence that your financial foundation is strong. OM
