Keeping An Aging Of Accounts

Hi, this is Dave Kats with Therapist Consultants, and I have a tip for you.

Most of you know that I work as a consultant only to mental health therapists, but that my background was in chiropractic. I originally had a chiropractic consulting firm which was, by the way, the largest one in the United States. Well, I still own a couple of chiropractic offices. I bought a new chiropractic office not too long ago. I said, "How is your accounts receivable?" In other words, the amount people owe you. They said, "Oh, we do a really good job of that. Not too many people owe us anything." Well, at our insistence, I said, "I want you to run an aging of accounts and see what people actually owe us."
They called us back, they were absolutely shocked. They had $260,000 that people owed them from the past that they hadn't collected. Now, I'm not saying you're going to have $260,000. If you're on a cash basis, you may have very little, but if you are on an insurance basis, you accept insurance, you should be running an aging of accounts report every month. Now, here is what an aging of accounts report is. It's a report that you run off your computer that just says, here's everybody who owes you money, here is how much they owe, and here is how many days they've owed it to you from 0 to 30 days, 30 to 60, 60 to 90, 90 to 120.
Now, 0 to 30 is not too bad if you're collecting insurance because the insurance probably just hasn't paid yet. 30 to 60, you have to start saying, "Why haven't they paid yet?" 60 to 90, you have to start saying to yourself, "If I don't get this collected pretty soon, it may be past the timely filing limit, and I won't be able to collect it." If it's over 120, you got to say, "There's something wrong with this account, and I got to figure out what's wrong because it's going to turn into bad debt real fast."
Here's what I would encourage you to do especially if you do insurance billing, run a report, every software is capable of doing this, run an aging of accounts report that tells you what everybody owes you on 30 days, 60 days, 90 days, 120 days, over 120 days. You might be surprised what money you have out there that with very little effort you could collect and really improve the income in your practice. You should run an aging of accounts every single month and work on that aging of accounts. You either bill it again to the insurance, you bill it to the patient, or you write it off. You have those three options. That will keep your accounts receivable current.
That's my tip for the week, run an aging of accounts every month. You'll collect more money, you'll be glad you did.

This is Dave Kats. Thanks for listening