Dental practices need to pay more attention to the significance of their accounts receivable in the operation and success of their business. You must understand what it is, and we'll discuss the steps to improve them. A dental clinic can recover its bad debts by following the tips below.

What are Accounts Receivable? 

Accounts receivable or AR is a term used in accounting to refer to money that customers or clients owe a business. When a company provides goods or services to customers, it typically invoices them for payment. That amount of money the customer owes to the company is AR.

For example, if a dental practice provides treatment to a patient and bills them $100, that amount is recorded as accounts receivable. The patient pays the bill, and the AR reduces.

It is a current asset on a business's balance sheet, along with cash, inventory, and investments. You should collect AR within one year or less.

Dental practices can improve their financial health and operate more efficiently by effectively managing accounts receivable. It is the money customers or clients owe a business. Managing AR is essential to running a successful business, and there are several ways to improve it.

How to Improve Accounts Receivable For Your Dental Practice

Credit card on smartphone screen near debtor documents

Improving AR is critical to running a successful dental practice. If accounts receivables are high, it can lead to cash flow issues and financial stress for your practice. On the other hand, when accounts receivable is well-managed, it can improve the practice's finances and allow it to operate more efficiently. 

Here are some ways dentists can improve their accounts receivable:

1. Implement an electronic billing system: 

One of the most effective ways to improve AR is to switch to an electronic billing system. These systems allow you to send invoices and receive payments electronically, speeding up the payment process and reducing the risk of errors. It’s beneficial because you don’t have to deal with cash which can often go missing or cause other issues. 

2. Follow up on unpaid invoices: 

You should regularly review and update billing and payment policies and procedures and train staff. It's essential to follow up on outstanding invoices. You can follow up by sending reminders via email, snail mail, or contacting patients directly to inquire about their payment status. You can offer flexible payment options, communicate with customers, and take the service of collection agencies to recover bad debts.

Hiring a debt collection agency can do more harm than good. Instead, automated accounts receivable software can do all that and more without jeopardizing your patient relationship.

3. Offer flexible payment options: 

Some patients may have difficulty paying their bills in full for their dental procedure or treatment. To make it easier for your patients, consider offering flexible payment plans, dental financing, or paying via credit card if their insurance doesn’t cover the cost. These options make it more convenient for patients to pay for your services and improve your chances of receiving payment.

Many dental clinics prefer to offer in-house financing as they work with platforms like Denefits. 

Denefits works with you to offer your patients financing options while managing your accounts receivable. It simplifies the procedure for your patients. Any issues concerning payments, financing plans, or term lengths are dealt with through Denefits, allowing you to be stress-free throughout the process.

4. Communicate clearly with patients: 

Open communication can lead to a better understanding of payment expectations and unpaid bills. Before offering your dental services, you should communicate your payment policies and expectations to patients.