Managing an Accounts Receivable (AR) and Collections System

Accounts receivable (AR) management is crucial to managing your cash inflows and creating the practice of your dreams. Historically, a practice was considered healthy if it had one month's net production on the books as AR. However, excessive AR can be expensive and risky for the practice. At ACT Dental, we coach practices prioritizing having cash in the bank rather than on the books as accounts receivable. This approach allows patients to afford dentistry while keeping receivables low.

The Importance of AR

An ideal patient pays for their services on time. Overdue balances can deter patients from completing diagnosed care and reduce the perceived value of your services. Managing collections is essential for the overall health of your practice.

What this Guide Offers

This guide introduces AR best practices a plan for implementing an AR system, and discusses key performance indicators to consider for analyzing your AR system. We believe in empowering practices through continuous learning and innovation.

Accounts Receivable Overview

When evaluating your AR management, consider:

Total outstanding AR compared to monthly net collections
Distribution of AR in categories (30, 60, 90 days)
Control over patient payments
Having a system for accounts receivable
Effectiveness of your financial agreement policy

AR Best Practices

Here are some guidelines for creating an effective AR management policy:

Have patients sign a customized financial policy
Keep a credit card on file for patients
Ensure patients mark every treatment plan
Communicate payment expectations
Collect payments when patients check in
Accept credit cards for payments
Consider outside financing resources
Review AR balances regularly
Follow state regulations for collections

Key Performance Indicators (KPIs)

Tracking these KPIs will help you understand your practice's AR trends and measure the effectiveness of your AR program:

Net collections %
AR aging analysis

Monthly tracking of these metrics will improve your collections activities and cash flow.