Improve Your Accounts Receivable in 1 Step
How can you improve your accounts receivable so that they’re a minor annoyance instead of a financial burden?
It’s an unfortunate fact of the profession that dentists don’t always get paid on time, in full or at all, in some cases. People don’t pay their bills after the service is rendered, or they skip out on the appointment altogether – costing you time and money.
Luckily, there’s one simple step you can take to improve your collection and to even cut down on “no-show” appointments in the process.
The key is to get ahead of the game and improve your accounts receivable before they’re in arrears.
You can do so by requiring a deposit to secure an appointment. If that sounds bold or strange, consider how most businesses (even service-based businesses) make money.
First, they get paid, in part or in full.
Then, they deliver the product or service.
Notice how that process differs from how practices get paid. In a dental practice, a person makes an appointment, shows up (or not), is billed AFTER they receive service, and then they or their insurance company pays the bill (or not).
So some dental practices are changing things up, especially for new patients, or patients that need time-intensive, expensive procedures.
These practices are asking for a deposit to secure the appointment. That deposit can be anywhere from 10%-50% of the cost of the procedure.
Requiring a deposit has 3 big, immediate effects on your accounts receivable:
1) You incentivize patients to show up. They have skin in the game, so they’re more likely to make sure they don’t miss their appointments.
2) You always get paid a certain percentage of the services you bill for. That raises your billing significantly.
3) You get paid even if someone doesn’t show up – so every hour you’re booked in the office is cash-flow positive.
This idea might seem extreme, but you don’t need to implement it for all patients, all the time. You can look for problem areas where your accounts receivable are really suffering – like for new patients, or for certain patients who have missed appointments in the past, or even for certain high-cost procedures.
Implement this strategy where you need it most, and you can fix your biggest billing problems almost overnight.
Further reading: Previously, we’ve talked about having a clear billing policy and a way to remind patients about upcoming appointments.
These tips can help you reduce no-shows and improve accounts receivable, and combined with requiring a deposit, they can dramatically increase your practice’s profitability.