DENTAL PRACTICE ARTICLES
Turn Your Accounts Receivable into Accounts Received
Do you go to your hairdresser or grocery store and leave without paying? Does any business do this?
Collecting money at the time of service is mandatory to keep your business running. All of your team members needs to be on board with this concept. They have to believe in the value of the services that you are providing and that there is a financial value also.
To keep your business viable, there should be no accounts that are outstanding for 90 days- in fact, there should be no accounts outstanding more than 30 days! .Bank managers consider 90 day accounts to be uncollectable and Statistics Canada states that if your accounts are over 90 days outstanding, you are running at a 15% loss. Logic indicates if you have an actual loss, you will require an equal or greater amount of new sales just to offset the loss. That means that you must have a method of attracting and retaining new patients at a rate that is at least equal to or greater than your financial loss
Example – Based on total revenue of $1,000,000. If you are running at a 15% loss due to uncollected and uncollectable accounts, you must generate $150,000.00 in new revenue just to offset the loss
Think about this, if your patients have received dental services and have not paid you in 3 months, there is no intention of paying you – ever. Also, once an irreversible change has been made to the tooth, the dentist must complete the service. It doesn’t matter if the patient has no intention of paying for the service.
Cash flow is necessary to pay your bills, including your staff costs. Expect your patients to pay for the valuable services that you provide. Confidently say, “how will you be taking care of your bill today?”. You are not offering free dentistry – are you have bills to pay.
Author: Sandie Baillargeon