Today, I want to take a moment and run through a question we get asked every day. What should me AR or Accounts Receivable look like?
It’s a legitimate question and sometimes just looking at a full Accounts Receivable printout can produce anxiety and feelings of overwhelm. Admittedly, there is a lot going on there and it can be difficult to interpret all the figures.
Let me run through a couple of things from a high, overview level.
Generally speaking, your total Accounts Receivable (AR) should never exceed what your average monthly charges are.
If it’s getting larger, too much larger than your average monthly charges then it indicates in most cases a lack of follow-up. You probably have a good chunk of money sitting out there in the older age brackets that is not receiving the correct amount of attention.
We can use that AR report to properly channel our attention to where it is needed. Ideally you want to use this data to allow your collection team to apply focus to the accounts that need it.
When looking at where to focus you can divide the older unpaid accounts into:
• Less than 60 days
• Greater than 60 days
• 60 to 90 days
• Over 90 days
• Greater than 120 days
If your practice is expanding, you may notice these numbers increase as well. If your practice is staying the same in terms of volume or contracting, you would expect these numbers to stay the same or even decrease.
One thing you never want to see is the older accounts increasing disproportionately. No matter whether your business is expanding or contracting, these numbers should not continue to increase in proportion to the others.
For example, we do not want to see our accounts over 120 days growing. This shows that there is not enough attention being placed by the collections team on this area.
You can see quickly by looking at the areas in your practice’s A/R report where the focus is and where it is lacking.
These are general ideas, there are a few instances where things can cause these numbers to increase without triggering alarm bells.
One would be if you have many auto accident cases, these take longer to flow through the process. The other would be a high volume of cases that are under litigation. These types of cases call for a little give-and-take.
However, if your payer mix does not include an awful lot of litigation or motor vehicle cases than you should see those older accounts continue to decrease rather than enlarge.
These are just a couple of ways to peak at you’re A/R every month and judge where your practice is performing well and where you would want to shift the focus of your billing team.
Of course, we are always here for you at Jet PT Billing should you want a professional look at your accounts. Please do not hesitate to reach out if there is anything we can do for you.
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