By Leo John
It can never be wrong to state that Accounts Receivable determines the cash flow of healthcare clinics. Are you thinking of ways to improve your healthcare revenue? Do you feel that your AR collection process needs advancement? If so, this blog can help you, as it has come up with a checklist that could improve your Accounts Receivable process and enhance your healthcare revenue.
To do every task effectively, we need a checklist, right? Don’t you need a checklist to effectively run your payment collection process? Let’s get started!
What Is Accounts Receivable Management and What Makes It Essential?
Accounts Receivable refers to the payment left unpaid by customers or patients after using the products or services rendered by businesses. These due amounts will be recorded as current assets on the balance sheets. Customers or patients should pay the amount within a year or less.
Accounts Receivable Management is the process of monitoring the status of unpaid dues from your customers and taking steps and measures to get paid at the earliest possible time.
The Importance of Accounts Receivable Management
- Essential to run a business
- Can enhance a business’s cash flow
- Can attract investors.
The Perfect Checklist for Accounts Receivable in 2024
Some of the key factors that you should consider in your AR collection process are as follows:
Utilize Electronic Billing and Online Payment Methods
In today’s world, sticking to traditional ways of doing things won’t be beneficial in every aspect. It is crucial to utilize modern tools and gadgets to bring about a change in your business.
One of the first things you should consider is utilizing modern electronic billing tools and online payment options that allow or encourage your patients or customers to pay the entire amount.
Make Use of the Right KPIs
Here are a few performance metrics to keep track of your AR process:
1. Days Sales Outstanding (DSO)
Fix your DSO below 30 days to ensure quicker payment from your patients’ side. This is an essential metric you should implement to improve your AR process and increase your clinic’s cash flow.
2. Average Days Delinquent (ADD)
Average Days Delinquent (ADD) refers to the number of days that your patients delay paying the due, exceeding the actual limit of 30 days. For better AR collection, keeping the ADD count low is essential.
3. Turnover Ratio
The turnover ratio deals with your proactiveness in collecting revenue from patients and improving your cash flow. It is essential to keep this ratio low, as a high ratio means you have plenty of uncollected revenue.
4. Collection Effectiveness Index
The Collection Effectiveness Index (CEI) refers to the percentage of accounts on which you have successfully collected your revenue. It is important to keep this percentage near 100 for better cash flow.
5. Revised Invoices
To increase the chances of getting paid quicker, avoid making errors in the invoices. If you see an increase in invoice errors and revisions, you should search for and select experienced candidates.
Sketch a Clear Billing Process
Follow a billing process that has clarity, perfection, and precision. Consistency is another key factor that you should consider while sketching your billing process. Following the construction of a billing process, inform your staff about it through a detailed document or a session.
Construct a Credit and Collection Policy to Stick To
Setting a perfect credit and collection policy is essential in the AR collection process. To avoid extending too much credit to some clients, construct a crystal-clear credit policy. Your policy should send frequent reminders to get paid before the due date.
Collect Payments Proactively
You should follow a collection process that is proactive and cautious to collect the due amount. For instance, when your customer fails to pay the amount on the first day of their due date, you should be able to connect with them to remind them about the payment.
Electronic billing and payment systems can help you centralize and resolve invoicing and payment matters with your clients. With this, you can send frequent follow-ups.
Build Automation Options
You can reduce your manual processes and task time by automating communications with your patients by using modern tools and technologies. You can automate repetitive tasks such as crafting emails, sending follow-ups, or sending reminders. This automation in your AR collection process can make a huge difference in your collection and encourage your patients to pay quicker.
Choose Customer-centric Payment Options
It is crucial to allow your patients to use their preferred medium for making the payment. Most of the time, patients may feel indifferent to your payment method and delay paying the amount. However, when you offer customer-centric payment options, it will encourage them to pay their dues on time.
Foster Team And Customer Communication
You should not limit your team interaction with the AR collection and finance handling teams. Instead, expand it with all the teams that engage directly with your patients or customers.
Overall, efficient Accounts Receivable Collection requires a systematic approach. By following the comprehensive checklist outlined in this blog, businesses or medical clinics can optimize their collection processes, minimize unpaid debts, and improve their financial stability. Stay informed about industry developments and regulatory changes, and regularly review and refine your collection strategies to achieve better results. With the right processes in place, you can maximize your collection efforts and achieve greater financial success.
Frequently Asked Questions
What is Accounts Receivable?
Accounts Receivable refers to the payment left unpaid by customers or patients after using the products or services rendered by businesses.
What are the factors that I should include in my AR checklist?
Here are few factors you should consider adding in your AR checklist:
- Collect and store up-to-date customer information
- Follow a solid invoicing procedure
- Construct clear credit terms and policies
- Automate follow-up processes
- Provide customer-centric payment options
- Foster customer and team communication
- Consistently monitor your cash flow and revenue
- Use a third-party AR collection expert like MHRCM
Will MHRCM help my clinic to enhance my revenue and reduce AR accounts?
Yes, our experts have adept knowledge of Accounts Receivable and Revenue Cycle Management. By outsourcing your RCM process to MHRCM, you can visibly witness an effective rise in your revenue and a streamlined cash flow.
Related Resource
About the Author
