Home 2025 Coaching Issue What’s Not in Your Wallet? Hidden AR Risks That Could Cost You Thousands

What’s Not in Your Wallet? Hidden AR Risks That Could Cost You Thousands

by TPD Editor

The Silent Threats in Your Accounts Receivable

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.

Picture of Amber Weber-Gonzales

Amber Weber-Gonzales

Amber began working in the dental field as a Registered Dental Hygienist in 2005. With a background in accounting and her interest in the business side of dentistry, she moved into office management roles and ultimately into dental consulting. Before joining the Prosperident team, Amber discovered embezzlement taking place in one of her clients' offices, bringing to light her aptitude for the kind of investigative and preventative work she now performs for our clients.

Amber was recently the runner-up in the prestigious Spotlight on Speaking competition, featuring dentistry's best-emerging speakers, and has been published in Dentistry Today magazine. In June 2022, Amber was appointed the head of Prosperident's Proactive Services Group, which provides embezzlement prevention services to individual practices, groups, and DSOs.

Picture of Alyssa Kimmins

Alyssa Kimmins

Alyssa Kimmins started in dentistry in 1999, first as a Certified Dental Assistant, then as a Registered Dental Hygienist; all the while helping to manage the front office. Alyssa further developed her career teaching as an adjunct instructor for the Dental Assisting Program at Phoenix College.

With her deep dental working experience, Alyssa was able to retire from clinical practice and start her own remote dental billing company. In so doing, Alyssa discovered that one of her clients had been embezzled, which set the wheels in motion for Alyssa to join the Prosperident team. She thoroughly enjoys the investigation challenge and understanding how an embezzler will penetrate and steal from a dental practice.

Alyssa holds a BS in Dental Hygiene and a M.Ed. in Career and Technical Education from Northern Arizona University.

Picture of Kathy Kirkby

Kathy Kirkby

Kathy Kirkby has spent almost her entire adult life working in dentistry. Starting her career as a Registered Dental Assistant, she has worked chairside knee to knee with periodontists, other specialists, and general practitioners. Kathy completed her Degree in Health Education at Dalhousie University and began sharing her training methods with the dental world. She quickly progressed to office management of group and multi-office practices and then entered the world of consulting. Some of her accomplishments were training and monitoring teams in HR, practice management, practice dynamics, accounting, productivity and ideal scheduling.

Kathy complimented her repertoire working with dental teams and added CPHR – Certified Professional Human Resource to her toolbox. Kathy continues to attend and has presented many professional association meetings including The Golden Girls of Dentistry, Dental Assistants National Conference for Excellence, and has become a vetted member of the Academy of Dental Management Consultants- ADMC. She became Prosperident’s Chief Operating Officer in 2021.

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