How to Keep Your Practice's Finances in Check

Managing your Accounts Receivable (AR) is one of the most critical steps in maintaining a healthy financial operation within your dental practice. Not only does it ensure that you get paid for your services, but it also keeps your books clean and your revenue cycle running smoothly. Ignoring AR can lead to old balances lingering on your books, which will ultimately drag down your practice's financial performance. So, let’s break down how you can stay on top of your AR with simple, effective steps.

1. Run Your AR Report Weekly

Running your AR report is a must—ideally every week. Consistently working through these accounts helps keep them updated and ensures that you’re not letting old balances hang around for months on end. Regular attention to your AR also means fewer surprises and less scrambling to figure out where a balance came from.

A great way to stay organized is by establishing an AR timeline. This is a set schedule that dictates when and how you communicate with patients about their outstanding balances. For instance, you might send a statement at 30 days, follow up with a statement and letter at 60 days, and issue a final notice at 90 days. Having a thought-out process like this helps prevent balances from piling up—and ensures that your team knows when it's time to escalate collection efforts, like sending accounts to collections.

2. Collect on the Date of Service

One of the easiest ways to avoid adding accounts to your AR list is by collecting payment on the date of service. This way, you’re not waiting on insurance payments, which can take anywhere from 30 to 120 days to process. If you wait that long, you’ll be left chasing patients for their portion of the payment after the fact, adding unnecessary work and stress to your team. Over-collecting is always better than under-collecting; you can always issue refunds later if necessary.

3. Keep Clear Notes in the Family Financial Box

As you're working through your AR, make sure to keep detailed notes on where each balance is coming from. Using the Family Urgent Financial box in your practice management software is a great way to do this. Not only does it save you time when reviewing accounts, but it also ensures that your team isn't scrambling to find information when talking to patients about their balances. Having a clear record makes future AR runs more efficient and helps prevent any awkward moments with patients where you don’t have the answers.

4. Audit Patient Accounts Thoroughly

When running your AR report, it’s crucial to conduct regular account audits. This involves reviewing each patient's account and ensuring that everything checks out. Look at all payments, procedures, and insurance claims to verify that the balances match what the patient owes.

Start by looking at the last zero balance on the account and work your way forward. This ensures you’re only reviewing active charges. Double-check that all procedures are listed and that any unsent claims are addressed—because if something hasn’t been sent, the patient could be charged incorrectly. This is also the time to review EFTs or EOBs to make sure insurance payments have been applied correctly.

Thorough auditing helps catch errors that might otherwise slip through the cracks, like unallocated patient payments or missed procedures. By staying proactive, you can ensure that you're sending accurate statements and maintaining patient trust. Plus, you avoid the headache of sending a statement for a balance the patient doesn’t actually owe.

5. Establish an AR Timeline

As mentioned earlier, having a solid AR timeline in place ensures that you’re not sending statements “willy-nilly” without knowing where your patients stand. At 30 days, send a statement. At 60 days, follow up with a statement and letter. If by 90 days the balance is still unpaid, send a final notice.

It’s equally important to set clear guidelines for how long balances can sit on your books before taking further action, such as collections. Without a timeline, balances can sit for months, or even years, which negatively impacts your cash flow.

By combining these strategies—running AR reports weekly, collecting payments up front, auditing patient accounts, and sticking to an AR timeline—you can significantly improve your practice's financial health while making the billing process smoother for your team and your patients.