Debt Recovery

Contingency Collections, also called Traditional Collections, is the most popular debt collection service to recover your money from defaulters.

The concept of “Contingency debt collection” is really simple – Once the Creditor has tried enough to recover his money from the Debtor without success, he finally hires an Expert Collection Agency to collect money from the Debtor. The Creditor does not paying anything for the Collection Agency’s recovery efforts till they actually recover money from the Debtor. The Agency just deducts the contingency fees per the contract and gives the remaining money back to the Creditor. No other costs or hidden fees.

For example: If a Creditor assigns an account to a Collection Agency with an outstanding amount due of $1000, and a collection agency charges a 40% contingency fees then Scenario 1: If the Collection Agency recovers full amount then the Creditor get $600 and the Agency keeps $400 Scenario 2: If the Collection Agency recovers only half the amount ($500) then the Creditor gets $300 and the Agency keeps $200 Scenario 3: If the Agency recover nothing, they get nothing.

Benefits of Contingency Collections:

1. If a collection agency does not recover any amount, it results in a net loss for them. (Why?) A collection agency invests resources, manpower and expensive softwares to collect money from the debtor, regardless a recovery is made or not. Therefore, the Collection Agency puts their best effort and resources to recover your money. 

2. The Creditor has nothing to lose. In fact, most of this past due debt would have been written off as a loss, all recoveries translate into a nice profit.

3. By involving a Collection Agency, you have just given a very strong message to the debtor. He is more likely to pay now than ever before.

4. Collection Agencies are up to date with the latest debt collection laws which lowers the chances of a counter lawsuit verses when your own under-trained employees were doing the recovery.

5. Most agencies can do contingency debt collections in both English and Spanish, even attempt to locate a missing debtor using advanced skip tracing.

6. Biggest advantage is off-loading the hard work of debt collection to a 3rd party. Who wants to follow up with a customer/patient again and again? By outsourcing those hard to collect accounts you have also outsourced all the stress and stopped wasting too much time on accounts which have very low chance of ever paying anyway.

Are you looking for a cost effective collection agency with low contingency rates? Contact us

Note: Contingency collections / Collection Calls are best suited for accounts over 120 days past due, for accounts less than that one should consider the flat fee based Collection Letters service.

Hospitals in America carry a large number of accounts receivable due to the sheer number of patients they have to deal with. Limited insurance coverage and ever increasing cost of health services means patients have a larger share of out-of-pocket costs. Hospitals also have accounts receivable with healthcare insurance companies who delay or dispute a payment for one reason or another. Patients requiring long term care, emergency care and those with critical illness can rack up huge medical debts which they are unable to pay. Accounts receivable is a huge financial strain for hospitals and can turn their income statement in the red.

Collection agencies are an integral extension of any hospital, recovering thousands (sometimes millions) of dollars for hospitals helping to turn accounts in red into black. Hospitals cannot hire just any debt collection agency, they need a collection agency which has extensive experience in healthcare industry and a deep understanding of patient-doctor relationship, HIPAA privacy laws and several debt collection laws which vary by state.

Hospitals also require multilingual collection agency who can recover money from Spanish speaking patients. Collection agency should be able to send diplomatic Collection letters to patients whose date of debt is less than 120 days and intensive Collection calls for older debts or those carrying high balances. If nothing works, than the collection agency should be able to take the patient to the court and attempt to obtain a favorable judgment to recover money from assets or through wage garnishment.

Collection agency must also perform advance Skip tracing scrub on patients who become unapproachable or whose who have filed for bankruptcy. Some collection agencies also perform Litigious patient scrub, this is really important. Some patients have a history of suing hospitals and healthcare practices, a collection agency must inform hospitals about such debtors and an appropriate careful strategy to deal with them.

If you need a Collection Agency with extensive experience in serving large hospitals and healthcare industry, Contact us.

When you’re running your small business it can be difficult to stay on top of everything. In the middle of incessant daily workload, one aspect that may get overlooked is that an invoice may not get paid on time.

Whether you’re a doctor, a lawyer, or a dentist, the chances of a client’s invoice (or several invoices) going awry the inevitable. If you want to decrease the number of unpaid client invoices, your best bet is to stay on top of your practices and look for loopholes in your payment process.

So, here are 10 signs your invoice may not get paid on time.

1. Your Client’s Contact Information is Wrong

The most common way that a client invoice will not be paid on time is if their contact information is wrong. This is usually done in error, but if the client’s email, phone number, and address all are wrong, then it’s safe to assume this was done intentionally. These are the people who never planned on paying for your services in the first place.

The best way to catch these scammers is to test their contact information before delivering your service. If they don’t reply or answer to phone calls, emails, or other forms of communication, then you may want to consider handing them an invoice ahead of time or request a prepayment.

2. Your Client Pays with a Check

In today’s tech-savvy world, it seems safe to assume that your clients will want to pay by credit card, cash, or a mobile payment service like Venmo or Paypal. However, there are those select few who still hold fast to their written checks and try to use them as a payment method.

One of the reasons that payment in checks have fallen by the wayside is because they take longer to process, they can bounce, and they are ultimately less convenient. If your client tries to pay with a check, make sure to routinely follow up with the payment process or else your invoice may not get paid on time.

3. They Aren’t Organized

A client who is disorganized is instantly going to cause you problems. While being scatter-brained isn’t a deal-breaker, it should serve as a red flag about how the payment is going to be. These clients may be picky about what they want or they may change their mind multiple times during your agreement with them.

Either way, this sort of mentality should be a clear indicator that this client may have trouble remembering to pay their invoice. Either that, or they may ask for revisions for the delivered work or clarification before relenting to payment.

4. You Aren’t Organized

Understandably, running a small business requires you to lean on other people for support. But even if you have someone in charge of your invoice processing, it is still up to you to make sure that your invoices get paid on time.

Being unorganized is not a luxury that entrepreneurs can have. If you haven’t laid out terms for your services or you procrastinate on sending invoices, you will create a snowball effect that will ultimately collapse your enterprise. Not only should your finance department be organized with payment spreadsheets and reminders, but your employees should be dutifully aware of the process to get invoices paid on time.

5. You Don’t Have Multiple Payment Options

Payment options are a lucrative strategy to have in place simply because it serves as an incentive to get invoices paid on time. If you only allow for credit cards or checks, then you are doing you and your clients a disservice. Multiple payment options make it effective and easy for clients to pay you (on-time).

Payment channels such as PayPal offer safe and secure deposits. Most people these days are familiar with these services, so following up with a variety of payment options will motivate your client to pay on time.

READ MORE: Customer Relationship Management for Small Business

6. Your Client Questions The Invoice

Another obstacle that results in late payments is if your client questions your invoice. It could be that they are just confused about the formatting (which we’ll get to next) or there are additional fees that you didn’t disclose upon your initial agreement.

This is why it is vital to have a clear outline of your service or product and that your invoice directly reflects what your client received. Having a questionable invoice sets a precedent for your clients not to trust your business – and that can lead to a downfall in your reputation.

7. You Don’t Have Correct Invoice Formatting

Following up with that, it’s always important to have a cohesive and clear format to your invoices. Make sure to brand your invoice with company logos, contact information, and an address. Your invoice should also always be itemized, even if there is a contract in place that specifies the extent of your services. Having a clear invoice will make it next to impossible for your clients to question your services, therefore leading to invoices getting paid on time.

Here are a few other items you should have in your staple invoice format:

• Invoice number
• Invoice billing date
• Service start date
• Service end date
• Payment terms and options

8. You Don’t Follow Up

One misstep that will lead to a pile of unpaid invoices is not having a follow-up schedule system in place. You should always be aware of when your clients’ invoice should be paid, that way you can send out payment reminders. One study confirms that only 18% of 90-day invoices will actually get paid. So essentially, if you wait more than 30 days to send follow-up reminders, you are less likely to get paid at all.

On top of sending out invoice reminders, it’s important that you are sending the invoice to the correct person. This falls in line with your company’s organization. If you are a B2B business, then you may have to send the invoice to another department who takes care of payments. Ask the person you are working with directly who to send the invoice to. Then, do your due diligence to send the invoice and reminders to 2-4 people in that company so that someone knows to pick up the bill.

9. There Isn’t a Contract

Some freelance businesses don’t work on a contract basis for lack of knowledge on how to set them up. But working without a contract is like accepting a job without knowing the payout.

A contract is necessary to outline your company’s restrictions, payment options, fees, and expectations. It may seem like an unnecessary maneuver, but realistically it protects you and it protects your client should any of the conditions change throughout your business together.

10. You Don’t Assign a Late Fee

The most striking motivation to have your invoice get paid on time is to set up a late fee. Without implementing a late fee charge, your clients have nothing to lose by paying you late (or not paying you at all).

If you make it clear in your contract, invoice, and initial meeting that all invoices must be paid in full within 30 days, you will be more than likely to start seeing regular payments. If not, clients may take that as a sign that they are free to pay as much as they can whenever they can.

Contact a Collection agency

If your are finding it hard to get things in order or are stuck with too many accounts receivable, the do not hesitate to hire a collection agency. Do not hire a collection agency near you, instead hire one which is good, has higher collection rates.

Calculating your dental office overhead can be intimidating, but as soon as you lay out the groundwork, you can look forward to decreasing it. A limited line of overhead means a larger net income from your dental practice, whether you are a solo practitioner or you are working within a team. It’s important to have working systems for both your accounting needs as well as your personal goals for your dental office. Without these in place, decreasing your dental office overhead is going to be a bumpy ride.

You should have some form of accounting process in place to keep track of your profits and losses. That way, when it’s time to reevaluate your overhead, it will be clear where you need to make some cutbacks. Likewise, reaffirming your business plan can help lead you in the right direction, should you need to recalculate your expenses later on.

Step 1: Look At Your Profit And Loss

The first step in calculating your dental office overhead is to look at your Profit and Loss sheet from the previous year or quarter. The P&L should start with your quarterly gross income, followed by a layout of your expenses. These expenses, naturally, indicate a loss of your profits which in hindsight will determine what causes your greatest overhead.

If you don’t have a P&L, well, it’s no wonder you’re stressing about your overhead costs. A P&L should always be intact for an easy reference.

Step 2: Add Up All Your Expenses

Once you have an accurate P&L in hand, you will need to add up all of your expenses.

Your dental office expenses should include:
• Staffing (typically 30% of your overall expenses)
• Property and Mortgage Expenses
• Loans and Credit Cards
• Insurance
• Licensing (business, DEA, etc)
• Office Supplies
• Lab Expenses
• Continuing Education
• Advertising
• PR and Promotions

Once that’s all added up, you can calculate your dental office overhead by dividing the total amount of your expenses by the gross income.

For example, if your expenses are $70,000 and your gross income is $1,000,000 then 470,000 divided by 1,000,000 equals .7 or a 70% overhead.

How Much Should Dental Office Overhead Be?

The national average is 75%. But considering that most offices are spending 30% of their income in staffing alone, the profit margin tends to get a lot more skewed. Staffing makes up the majority of your expenses, regardless of the size of your staff. This is due to the fact that your practice probably offers health, pension matching, and other benefits on top of salary or hourly compensation. Not to mention the employer taxes that are tacked on top.

Many offices won’t want to consider reducing their overhead costs in staffing because that generally means letting someone go or a decrease in pay. Instead, they’ll try to cut corners by buying lab supplies in bulk or by canceling magazine subscriptions, which only shaves off a fraction of the overhead in the grand scheme of things. Thankfully, there are other ways to reduce costs without having to downsize your staff.

How To Decrease Dental Office Overhead

Taking your P&L and expense sheet into consideration, there are a few simple, yet effective ways to decrease your dental office overhead.

Increase Lab Bills

You may be thinking, “Isn’t this counterproductive?” Actually,- not really.

Think about it: if you aim to increase your patient service by just 10%, that instantly cuts into your overhead. You can do this by up-selling patients during appointments. If they come in for a cavity filling and you end up finding one more, you should inform the patient that you can fix both during the same appointment. That way, you’ll be saving money in terms of dental office salaries and equipment. It’s more beneficial for you and your patients to offer full dental services in one sitting instead of the atypical one-tooth-at-a-time strategy.

Marketing

Again you may be thinking this is a step in the wrong direction, but you have to spend money to earn money. One of the most common reasons dental offices produce such a stagnant or increase in overhead is due to the fact that they are underproducing. And the most effective way to get patients through the door is by marketing online or with direct mail brochures.

Direct mail can work, but considering the current social climate, you will see better results with consistent online marketing. Entertaining and informative blogs can catapult leads because you are attracting the attention of potential clients without being thought of as “junk mail.” You should also consider hiring someone to optimize your website for SEO and look into social media marketing for faster results.

Aim to spend at least 10% of your gross income on marketing. You can’t depend on new business solely on word-of-mouth. All of the aforementioned services will lead to new patients. Remember:

No marketing = no new patients = higher overhead

Work With Scripts To Reduce Staffing Overhead

Time and money are spent on staffing. This is especially true in instances where you lose an employee or someone calls in sick. Some offices opt to have a trainer in-house in case of these circumstances, but that just adds to your staff overhead.

Instead, have a Standard Operating Procedure (SOP) handbook written up for all new and current employees to refer to. This makes it so that anyone can fill your administrative dental office positions at any time. You can hire a writer to develop your training manual so that your dental office implements strict systems. Your own ideals should be outlined in these procedures and they must be in writing.

You can also have scripts written as a guideline for your employees. This will make up-selling to patients all the more effective. Scripts can also be used for emails and phone calls. That way, your patients will know what to expect when they call and new patients can have their questions answered by any member of your staff.

With all of these devices laid out, you can decrease your dental office overhead from 30% to 20%. These staffing measures will produce less personnel turnover and simultaneously helps to create an effective and cohesive team for your dental office.

And most importantly, it saves you money.

If you are continuously looking for ways to set goals for your dental practice, your best bet could lie in your dental AR benchmarks. Generally, when dentists discuss how to benchmark their practice, they will look at factors such as finding ways to reach new patient number goals. However, taking a look at your accounts receivable and delegating where your practice is having shortfalls will help in building a more profitable business structure.

Assigning dental accounts receivable (AR) benchmarks will help in not only growing a financially healthy business, but it will take off the weight that comes each time you sit down to pay the bills. And outlining methods in which your practice can meet these goals can only be done by laying out your current accounting situation and finding solutions.

Step 1: Set A 90-Day Goal

There is some debate on what the maximum age of your accounts receivable should be. Some believe only 20% of your AR should be over 60 days, while others suggest that you shouldn’t have any after a period of three months.

Falling in line with this strategy, you should at least set a benchmark for 90 days. That gives you three months to regulate your accounts receivable. At the end of those three months, your AR should, at the very minimum, make up 80% of your current patients’ payments. The other 20% can be made up of outstanding balances, but again, this number is pretty high. You can set your benchmarks for even better numbers depending on your current finances.

Step 2: Develop Sheets For Monthly Comparison

In relation to setting your dental AR benchmarks, it’s imperative that your monthly payment spreadsheets can be compared side by side. In other words, make sure you have your AR formatted so that you can compare January to February, February to March, and so on. At the top of each month, list your current AR followed by your goals. You should also have sections in these file dedicated to other contributors, such as the monthly number of credits, the amount or percentage of payments that are over 90 days, and the insurance estimation.

These sheets can also help highlight over the counter (OTC) collections which, as a general rule of thumb, should not exceed 45% of your office’s current production rate. In essence, a side-by-side spreadsheet of your AR will be immensely helpful if you are looking into news ways on how to benchmark your dental practice.

Step 3: Ensure Consistency in Payments

Besides automated computer filings, the spreadsheets like the ones mentioned above can help you see where there are inconsistencies in payments. Moreover, they will be able to easily indicate who is behind and by how much. These are the people you will need to reach out to first for payments (or risk sending them to collections). Then you can set a benchmark to determine the percentage of your collections so that you can make adjustments in processing payments.

In order to ensure consistency in payments, you need to have a strict regime about billing responsibilities. How often are reminders being sent out? Who is sending them out? Even with the trust in your team, it’s important to set standard operating procedures that indicate these responsibilities. You can implement a call log that references each time your office calls a patient for payment. This should be done for all email correspondences as well.

If your specific clientele is prone to missed payments, one way to help both them and your AR is to offer them a solution. It would be beneficial to accept credit partners like CareCredit from your patients to ensure your costs are being met at all times.

Step 4: Set Your Dental AR Benchmark at 1.0

This can be hard to master in a month-to-month benchmark goal. Having a dental AR benchmark at 1.0 can be difficult, but definitely not impossible. At this rate of performance, your production will be on par with your AR. In other words, if you’re producing $50,000 worth of production in your dental office in July, then your accounts receivable in July should reflect the same number.

In order to get to this benchmark, it’s important to follow the aforementioned procedures. But, like most financial hiccups, these things take time to remedy. If your AR is nowhere near this number, you should take your most recent AR numbers and use them to reflect in a year from now.

That’s right; you can take a full year in order to balance out your finances. But at the end of the year, if your dental AR benchmark isn’t met at the recommended 1.0, you may have bigger problems. However, a year will give you enough time to determine how much your collection rate is after taking out yearly production adjustments (i.e. charity or discounted procedures).

Step 5: Reduce Your Billing

And on top of everything, another benchmark that you should implement for your accounts receivable is a reduction in your billing process. And while you still need a regime for reaching out to patients for payment, this should be done in moderation.

Billing is radically overpriced; a single statement can cost anywhere from $5 to $10. Multiply that by the number of patients in your AR, and you have another hefty bill to deal with. And unfortunately, billing is a service all dentists need in order to run their business.

To cut back on costs, set a benchmark on how often you will bill your patients. By the end of the year, cut that number in half. You will want to send out bills well before the 90-day benchmark, and you can always send emails as an additional reminder. Whatever the case may be, a reduction in your billing will help ensure that your production and AR balance each other out by the end of the year.

If you need collections assistance in order to set benchmarks for your dental practice, contact us, we will ensure that your dental AR benchmarks will get easier by the year.

Credit Unions issue variety of loans in form of auto loans, student loans, mortgage debt, small business loans and credit card balances. They are also entitled for overdraft fees when a payment or withdrawal from a bank account exceeds the available balance. However many customers are unable to return the principal amount and interest back to the credit union. Similarly, many customers fail to pay the overdraft fee or dispute it. Unfortunately, accounts receivable is an ongoing problem at the Credit Unions.

Nearly all credit unions have an internal team which follows up with customers who are running behind their payment obligations and attempts to recover money from late paying customers. Depending on the type of loan and internal policies, an account is considered delinquent after it is more than 60 to 180 days past due. However certain accounts become tough to recover or risky, and require to be handled by an external third party collection agency.

Delinquent accounts of a credit union are often transferred to a reliable debt collection agency for recovery. The efficient recovery process of a collection agency helps banks and credit unions to maximize their profit by reducing charge-offs while maintaining positive customer relations.

Credit unions are known for innovative products and friendly staff. Unlike big banks which have a nationwide presence, credit unions cater a limited region and usually have less than 5-10 branches. Debt recovery is a very tricky situation for credit unions in particular. If they apply too much pressure on customers to recover money, they can get upset and may easily spread a negative word in the community where the credit union is located. Having bad reviews in form of word of mouth, media or online reviews on platforms like Google may do an instant damage to the credibility of a credit union.

Hiring a collection agency takes the pressure away from credit unions since demands are made in the name of the agency. Equipped with advanced collection techniques and tools, the staff of collection agencies use diplomatic approach to recover money from clients. According to the federal debt collection laws, debt collectors are prohibited from using abusive, unfair or deceptive practices to collect debts. Debt Collectors work with debtors in a respectable approach which is empathetic yet very effective. Debtors who cannot pay the entire amount are offered to make payments in installments.

Calls originating from Collection Agencies are impactful and effective. Collection agents are seasoned professionals, recovering money for their clients all day long. They are well trained how to handle debtor excuses and their mild pressure tactics are just adequate to collect money from those hard to handle debtors. Collection agencies are also required to follow certain security standards to ensure the safety of client data.

Collection Agencies offer variety of services including Collection Letters, Collection Calls and Filing a legal suit if absolutely necessary. They offer both fixed fee and contingency services.

Summary of Collection Agency’s Services

Collection Letters Service

Upfront cost for 5 Collection Letters is about $15 per account.  Debtors pay directly to you, no other fees. Low cost option.  Good for accounts less than 120 days past due.

Collection Calls Service

Contingency fee only. No upfront or other fees. Agency gets paid a portion of money they recover.  No recovery-No fees. Best for accounts over 120 days. A debt collector calls the debtor many times. If everything fails, a possible Legal Suit if recommended by the attorney.