Accounts Receivable Best Practices: Daily Aging of Receivables

Traditionally, receivables are tracked based on 30-day increments – different actions are scheduled depending on whether a receivable is 30 days old, 60 days old, 90 days old, etc.

But each payer a medical practice deals with operates on its own schedule. Only a software system that enables the daily aging of your receivables can allow you to take action with each payer at the right time.

Power Your Practice understands the financial challenges medical practices are facing and is here to help. Every week during our A/R Best Practices series, we’re describing the must-have features managers need to look for in practice management systems to manage and collect all of their receivables.

Payer Schedules Vary – Take Action at the Right Time

Two receivables that are 30 days old could require completely different actions if they’re from different payers. Therefore, the 30/60/90 model is no longer applicable.

For example, a practice may typically receive payments from Medicare in 14 days, whereas they must wait 40 days for a regional payer to pay. If the practice follows up on unpaid claims after 30 days, the action is way too late regarding the Medicare claim, but way too early for the regional payer claim.

A practice’s best bet is to act on claims based on each payer’s individual schedule. That can’t be accomplished with a manual process, so it’s important to use a system that allows for daily aging of receivables.

Those systems can automate collection incidents – for example, generating a letter, resubmitting a claim, or creating a collection incident and sending it to the collector’s queue – on outstanding claims to make sure the practice is taking the right action at the right time.

That gives practices several tangible benefits:

1. Faster collections – Practices improve their days’ sales outstanding (DSO) figures because they can ask for payments as soon as they’re considered late. And the sooner the practice follows up on late payments, the lower the likelihood that the claim will become lost or ignored.

2. Improved staff productivity – A/R staff members are automatically notified when collection incidents are needed so they don’t need to spend time manually tracking claims.

3. Less money left on the table – Automatically tracking outstanding claims ensures that no lost or ignored claims slip through the cracks and that the appropriate action is taken for all of them.

How does your system monitor receivables?

Next week, we’ll discuss the importance of using practice management software that automates your workflow.

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