Managing old balances can be one of the most daunting tasks in a dental practice. Unresolved AR (accounts receivable) not only hampers cash flow but also creates stress for your billing team and decreases overall financial stability. If your practice is overwhelmed by old balances, don’t worry—you’re not alone, and there’s a path to recovery.
The Problem with Old Balances
Many practices end up with old balances because they lack consistent billing processes. Whether it's unsubmitted insurance claims, patient balances that were never followed up on, or simply outdated systems, old balances can quickly pile up.
A common scenario: One practice we worked with had over $2 million in uncollected balances across several locations. After diving in, we discovered the main problem was a lack of consistent follow-up and systems to keep the billing on track.
Step 1: Break Down the Problem
When dealing with old balances, the first step is to quantify the problem. Start by analyzing your AR report and identify the total amount due and the number of outstanding accounts. Sort your balances by age (30, 60, 90, and over 90 days) to see where the problem is most concentrated.
For example, if you have 5,000 accounts to go through, divide that number by the number of billing days available within a set period (e.g., three months). This breakdown will give your billing team a manageable daily goal.
Step 2: Prioritize High-Value Accounts
Once you have the data, focus on accounts that will have the biggest impact. Sort your list by the highest balances first. Often, a small number of accounts will make up a significant portion of the total AR.
Your goal should be to contact these patients or insurance providers first. Make it a priority to resolve these balances before moving on to smaller ones.
Step 3: Set Up a Consistent Workflow
Billing can become overwhelming when it's sporadic. Create a billing calendar to schedule regular follow-ups. Dedicate specific days each week to focus solely on collecting old balances. This prevents your team from being sidetracked and helps maintain steady progress.
- Daily Tasks: Work on new claims and current balances.
- Weekly Tasks: Follow up on accounts that are 30–60 days old.
- Monthly Tasks: Focus on older balances and develop strategies to clear them.
Step 4: Implement Collection Strategies
Collecting old balances requires a multi-pronged approach.
- Send Statements: Start by sending updated statements to all accounts with outstanding balances. Sometimes, a simple reminder is all it takes.
- Make Direct Calls: Train your team to make outbound calls and offer convenient payment methods. Scripts like, "We're updating our system and noticed an outstanding balance. Can I take care of that for you over the phone?" can be effective.
- Use Online Payment Options: Make paying easy with online portals, reducing friction for patients.
- Offer Settlements: For significantly aged balances, consider offering a partial write-off if the patient agrees to pay immediately.
Step 5: Decide on Write-Offs
After multiple attempts to collect, some balances may not be worth the effort. Decide on a cut-off point where small balances (like $20 or less) are written off. Document your efforts thoroughly and make sure to block patients with unpaid balances from future appointments until they resolve their debt.
Step 6: Create Long-Term Prevention Strategies
After clearing old balances, implement long-term solutions to avoid this problem in the future.
- Training: Educate your front desk team to collect payments at the time of service.
- Verification: Always verify insurance before appointments to minimize surprises later.
- Regular Audits: Schedule routine checks of your AR to catch issues early.
Managing old balances is not just about cleaning up a financial mess—it’s about setting your practice up for long-term success. By establishing consistent billing practices, prioritizing high-value accounts, and maintaining patient communication, you can reduce your AR and improve your cash flow.
Need help managing your practice’s finances? Dental A Team is here to support you. Schedule a call to get started!
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