Managing billing effectively is crucial for maintaining healthy cash flow and avoiding the pitfalls of past-due accounts receivable (AR). However, many practices face challenges that lead to delayed payments, financial instability, and reduced profitability. In this article, we will explore common AR issues, their impact on dental practices, and actionable solutions to ensure financial stability.

The Financial Impact of Aging AR

Research at Prosperident has revealed that dental offices generating $1 million in annual revenue typically maintain an average outstanding AR balance of $140,000, with only $50,000 of this within the most recent 30-day period. This means a substantial $90,000 remains past due, with the majority exceeding 90 days.

The longer an account remains unpaid, the harder it becomes to collect:

• 0-60 days: 90% collectability
• 90+ days: Drops to 50%
• 180+ days: Only 20% collectability
• 1 year+: Nearly uncollectible

Can you imagine working hard every day and not getting paid? Worse yet, many practices unknowingly work 1-4 days per month at a financial deficit due to uncollected AR.

Internal Fraud and Dishonesty

AR delinquency can also be exacerbated by internal fraud. Employees may take advantage of weak internal controls, embezzling payments while neglecting to address patient balances. As your Accounts Receivables continues to grow, so do write-offs due to bad debt. This can result in uncollectable accounts being written off and create the opportunity for a fraudulent employee to use this to their advantage. For example, if a patient paid an older balance, and write offs are normal this could easily be hidden. Fraud can go undetected without proper oversight, making it essential to implement strong internal controls and routine monitoring to maintain transparency and prevent financial losses.

The Negative Impact of Delayed Billing

Challenges with Insurance

Zero compensation is the harsh reality of missing insurance companies’ timely filing deadlines. For example, MetLife now enforces a 90-day claim submission deadline. Missed deadlines result in automatic denials, leaving practices unpaid. We’ve seen practices lose hundreds of thousands of dollars due to simple billing inefficiencies, with little recourse other than billing the patient.

The Patient’s Perception

Delayed billing can negatively impact patient relationships. Receiving a bill months or even years after treatment leads to frustration, skepticism, and disputes over accuracy. This dissatisfaction erodes trust, weakens patient retention, and can damage your reputation.

Long-Term Consequences for Practices

Beyond immediate financial setbacks, delayed billing can damage your practice’s reputation, leading to patient loss and decreased revenue. Negative word-of-mouth further amplifies these effects, making patient acquisition even more challenging. Prioritizing timely and consistent billing is essential for financial stability.

There are simple and effective steps to negating financial loss and lessening vulnerabilities for accounts receivable to allow for hidden theft.

Implementing a Successful AR Strategy (Estimated Time: 3 Hours)

Detect, Deter, and Document

Detect Monthly review of transactions completed in software	Deter Transparent review with staff to keep systems on target	Document Documentation for accountability with team members

Detect:

• Run your own reports weekly – don’t just check at the end of the month.
• Set AR targets: AR should be lower than the 12-month production average (e.g., $1M/year = AR below $83,500).
• Over 90-Day amounts should not exceed 10-15% of your total AR balance.

Deter:

• Assign AR responsibility to a trained team member or a third-party service.
• Set weekly reporting deadlines – Thursdays at lunchtime work well.
• Include outstanding balances as a key topic in morning huddles. This is your biggest opportunity to collect older balances.

Document:

• Track all actions taken: Example – Feb 7/25: Claim sent electronically.
• Set follow-ups: Example – Feb 21/25: Check payment status and take necessary action.
• Approve Write-offs: When an accountable is “written off” or sent to collections, this needs to be approved by the practice owner. Supporting documentation including billing and attempts to collect need to be provided before the account is written off. In our experience, we have found theft occurring with this occurrence.

Implement Regular AR Reporting

A structured AR review process, such as weekly reporting, helps identify outstanding payments early and prevents major problems from developing. Regular reporting also fosters accountability, offering a clear financial overview and enabling informed decisions to improve AR management.

Your Next Step: Conduct a Vulnerability Assessment

Don’t let AR delinquencies drain your revenue. Schedule a vulnerability assessment to identify financial risks in your practice and implement strategies to improve cash flow.

Your team should be growing the practice – not your accounts receivable. Implementing structured billing methods, preventing aging AR, and ensuring accountability will keep your practice financially healthy and thriving.

If you have questions about your Accounts Receivable and want to know your risks, contact     Prosperident for a complimentary consultation.