Late payments are a major issue for all businesses. This issue is possibly even more pronounced in medical and dental practices. About one-third of patients receiving any type of medical service walk out the door without paying a dime, according to the Medical Group Management Association (MGMA). Payments can linger for months – or even years in some cases – bogging down the financial success and smooth operations of your practice. Collecting revenue faster increases profitability and productivity.
How to View Accounts Receivable
As a doctor, it is important to realize that accounts receivable is money out of your pocket. When a patient’s account goes into accounts receivable, you have already incurred all of the costs on those dollars. You have paid your staff to be there and you have paid all of the facility expenses. This means that $1 in accounts receivable is literally $1 that should be in net income. This view of accounts receivable sheds some light on why it is so important to get that income into your practice as quickly as possible. Put simply, if your goal is to make more money, keep your accounts receivable as low as possible!
64 percent of practices said that they had unpaid invoices more than 60 days old, according to a 2012 survey by the Wall Street Journal, and 20 percent of those surveyed said the issue is getting worse. In the MGMA survey, respondents said they just wrote off about 11.9 percent of total accounts receivable from patients within the previous fiscal year.
Five Ways to Collect Revenue Faster
- Send a detailed invoice right away rather than waiting until the end of the month; many patients may not perceive an obligation to pay you until they receive an invoice. Make invoicing a priority to ensure payment for all the work that you and your staff do for each patient. Your successful orthodontics practice can get hectic. Calm the storm by prioritizing invoicing. Speedy invoices also help your patients’ budget payments, rather than waiting for weeks to find out what they owe.
- Send follow-up invoices regularly. MGMA says you will have to send an average of 3.3 invoices to receive payment in full. Make sure to send reminder invoices before the payment is due to give your client a couple of days to pay before incurring a late fee. Look for software that lets you set up automated reminders. Systems that allow you to text back and forth with patients make it easy to collect revenue faster.
- Say “thank you” on your invoices. According to Inc., simply adding the words “thank you” to an invoice can increase the pay rate by 5 percent. Saying “please” also helps create a personal connection between you and your patients. Make sure wording on all your automated texts and personal interactions with patients is polite. This friendly attitude will help your patients feel comfortable about paying their bills.
- Send text reminders. One study shows that sending text reminders increases the probability of paying on time by 7 to 9 percent, and the average late period drops by two days a month.
- Get Weave. Weave makes it simple to collect revenue faster. This smart system syncs with your orthodontic software so that everything about a patient – including his payment information – is available the moment your client rings your phone. Weave can automate your text reminders to reduce the likelihood that an account will become delinquent. Your clients can also text you back, creating a line of communication that can facilitate payment in a friendly and personable manner.
Use these five tips to collect revenue faster and you can improve the financial success and overall efficiency of your orthodontics practice. Contact Weave to learn more ways to collect revenue faster at your orthodontics practice.