We covered Accounts Receivable Ratio in our last Data Snapshot, so this week we’re going to look at how long it takes for you to get the money you’re owed by breaking down your Accounts Receivable Percentage. This metric tracks how long your uncollected balances have been outstanding, and what percentage of your total A/R falls into each time interval:
- 0-30 Days. This is your healthy and expected range, and you want to see a majority of your balances here — 65% or less ideally.
- 31-60 Days. When your balances become overdue, it becomes mildly concerning, as it signals possible delays in collections or claim denials. The benchmark here should be no more than 20%.
- 61-90 Days. This is when you start seeing red flags, so you don’t want to see more than 10% here.
- 90+ Days. This is an area for major concern, as you’re unlikely to collect these balances without significant effort or write-offs. Ideally, you want this category to be less than 5%.
Tracking this metric is crucial, because it impacts your cash flow. You need to be able to pay the bills, pay your team, and invest in growing your practice, and that cannot happen if the money isn’t in your bank account.
You can make a difference today with a few strategies:
- Develop a clear financial policy and communicate your expectations with patients.
- Review your A/R balances on a weekly basis.
- Implement a collections system and make sure someone owns the process.
- Tackle the balances in the 31–60-day range first before moving on to older ones.
- Stop rescheduling patients with overdue balances without a collection plan.
The important thing is to get started. As you make progress, you’ll build momentum that will create real, noticeable results that truly improve the practice!
