Debt Recovery

It’s an unfortunate reality in business that not everyone pays their bills. No matter how careful you are about setting proper payment terms and sending reminder letters, there will always be some portion of your receivables that are difficult to collect.

Classically, the process for recovering a portion of the debt owed has been to either outsource the uncollectable debt to a “Collection Agency”. A Collection Agency will attempt to collect the delinquent debt and charge a percentage of any funds recovered.

Historically the methodology of collecting debt was not amicable at all till the US government intervened and introduced debt collection laws like the FDCPA and TCPA. FDCPA is a consumer protection amendment, establishing legal protection from abusive debt collection practices.

Earlier the Debt collectors regularly badgered delinquent accounts, threatening legal action when necessary. These fear tactics could be effective, but they also soured any future relationship between the debtor and the original company.

And this was a problem because many people that fall behind on payments don’t do so out of malice, or a desire to steal from the companies they do business with. They have a legitimate reason when their bills go unpaid. They even have a strong desire to pay off their bills as soon as their financial condition improves.

They may have lost a job, encountered large, unexpected expenses, or suffered some other financial setback that prevented them from settling their debts. These are people that want to pay, but can’t for reasons outside of their control.

Given time, they would likely return to being customers in good standing, once their circumstances improved. But the likelihood of this happening is drastically reduced when standard, confrontational debt collection techniques are employed.

There’s a Better Way

Confrontational debt collection assumes that your delinquent customers are terrible people, actively trying to rip you off, and it treats them that way. Since this frequently isn’t the case, it’s far better to try and come to an amicable solution that respects your customer’s situation and works to establish repayment terms they can afford.

Consider someone that’s missed a few paychecks and doesn’t have the savings to pay what they owe. Calling repeatedly and threatening lawsuits if they don’t immediately settle their balance isn’t going to change their situation. If they can’t pay, they can’t pay.

A structured payment plan, on the other hand, would reduce the amount they need to pay right now, allowing them to pay off the remainder in affordable increments. Brokered negotiations allow both parties to come to a solution that works for them, allowing the creditor to recover some portion of the money owed them while providing the debtor payments that don’t further damage their financial stability.

Amicable recovery is a fundamentally different way of approaching debt collection because it assumes the best about people instead of the worst. It’s less confrontational and more cooperative. As a result, it’s generally more effective, and it’s certainly less expansive than the legal proceedings that might be necessary without it.

If you’re facing uncollectable receivables, it’s worth considering amicable recovery solutions before resorting to less friendly methods. Your customers likely want to pay you, and if you work with them, they can. And when they do, it’s likely that they’ll be grateful, loyal customers for life.

Looking for a collection agency that employs an amicable approach to collect debt: Contact us

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 a Professional Collection Agency to collect money from the Debtor. The Creditor does not pay anything for the Collection Agency’s recovery efforts till they actually recover money from the Debtor. The Agency deducts the contingency fees per the contract and returns the remaining money 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 fee thenScenario 1: If the Collection Agency recovers the full amount, then the Creditor gets $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 recovers nothing, they get nothing. No Collection – No Fees

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 uses expensive softwares to collect money from the debtor, regardless a recovery is made or not. Therefore, the Collection Agency puts its best effort and resources into recovering 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 powerful 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 versus when your own under-trained employees were attempting to make a recovery.

5. Most agencies can do contingency debt collections in both English and Spanish, even attempting 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 that have a very low chance of ever paying anyway.

7. Many collection agencies offer customizable strategies and plans to meet the specific needs of businesses, increasing the likelihood of successful debt recovery.

8. Collection agencies keep records of the debts they attempt to collect and the process they follow. This documentation can be useful if a business decides to write off the debt as a tax deduction or if it ends up in litigation.

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.

 

Delivering exceptional collection results while engaging in compassionate patient interactions to maintain hospitals’ reputation are the core principles of our medical debt collections. We emphasize patient satisfaction and have a proven track record of successful late-stage debt collections.

Nearly all hospitals in America face a significant burden of unpaid medical bills. Emergency room visits, uninsured patients, those with limited insurance coverage, and the rising cost of healthcare contribute to an increasing portion of out-of-pocket expenses for patients.

Need a Collection Agency? Contact Us Using Epic Systems? Collection Utility is available too! Proudly Serving Hospitals Nationwide, References Available.

In addition to unpaid patient bills, hospitals often have outstanding receivables with insurance companies, which may delay or dispute claims for various reasons. An experienced hospital collection agency can manage these unpaid patient bills and even handle collections from insurance companies when necessary.

A medical collection agency should have a deep understanding of the patient-doctor relationship, insurance laws, HIPAA privacy laws, and several debt collection laws that vary by state. Hospitals also require a multilingual collection agency to recover money from Spanish-speaking patients.

Unpaid medical bills remain a persistent challenge for healthcare providers, impacting both financial stability and patient well-being. Here’s a closer look at the issue and contemporary strategies for tackling it effectively:

The Scale of the Issue

Unpaid medical bills constitute a significant financial strain on hospitals and healthcare facilities. According to the latest figures from the American Hospital Association, uncompensated care—which includes charity care and bad debts—totaled approximately $41 billion annually. These numbers can fluctuate due to changing economic conditions, evolving insurance landscapes, and healthcare policy modifications.

Why Do Medical Bills Go Unpaid?

Several factors contribute to patients failing to pay medical bills:

• High Deductibles: Rising popularity of high-deductible health plans leaves many patients facing large out-of-pocket costs.
• Insurance Issues: Lack of insurance or inadequate coverage leads patients to shoulder significant expenses.
• Complex Billing: Patients often find medical bills confusing and challenging to understand, causing delays or non-payment.
• Financial Priorities: Patients might prioritize other immediate expenses, such as housing and utilities, over medical bills.

Impact on Healthcare Providers

The financial strain from unpaid bills forces healthcare facilities into difficult decisions:

• Reduced Resources: Hospitals may cut budgets, reduce staffing levels, or eliminate less profitable services.
• Debt Sales: Many hospitals resort to selling unpaid debts to collection agencies at significant discounts, incurring considerable losses.

Consequences for Patients

Patients also face substantial repercussions from unpaid medical bills:

• Credit Damage: Unpaid debts sent to collections can severely damage credit scores, limiting patients’ future financial opportunities.
• Stress and Anxiety: Debt collection actions increase stress, exacerbating health problems and negatively affecting overall well-being.

Available Assistance Programs

Recognizing these challenges, healthcare providers and governments offer various assistance programs:

• Charity Care Programs: Many hospitals provide financial assistance or sliding-scale payments based on income and financial need.
• Government Assistance: Medicaid Disproportionate Share Hospital (DSH) payments help partially offset hospitals’ costs for treating low-income, uninsured patients, though gaps often remain.

Modern Solutions to Tackle Unpaid Medical Bills

Hospitals and policymakers are increasingly adopting innovative solutions:

• Transparent Pricing: Clear, upfront pricing helps patients understand expected costs, reducing surprises and disputes.
• Improved Financial Counseling: Enhanced counseling services guide patients through available payment plans and assistance options.
• Technological Innovations: Leveraging technology to simplify billing processes, enabling easy-to-understand digital bills and online payments.
• Insurance Reform: Policies advocating for broader insurance coverage and lower deductibles can significantly reduce unpaid medical debt.
• Collaborative Debt Resolution: Hospitals collaborating proactively with patients through structured payment plans or settlements, preventing debts from escalating to collections.

By adopting comprehensive, patient-focused financial practices and policies, hospitals can significantly reduce the impact of unpaid medical bills, improving financial stability for providers and patients alike.

Healthcare finance can change over time. It’s a good idea to check the latest statistics and policies for the most up-to-date information on this topic.

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 processor 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 you 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 attempt to 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 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, Leasing or Mortgage Expenses
• Depreciation of equipment and office furniture
• Loans and Credit Cards
• Insurance
• Licensing (business, DEA, etc)
• Office Supplies
• Lab Expenses
• Continuing Education
• Advertising
• PR and Promotions
• Sanitation Expenses ( PPE suits, Sanitizers, etc)

Variable costs that can change depending on the volume of your practice. They include:

• Dental supplies (gloves, masks, dental materials, etc.)
• Lab fees
• Marketing costs
• Continuing education or training costs
• Salaries for dental staff (dental assistants, hygienists, etc.)

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 on 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 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 ideas 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.

Focusing primarily on getting new clients and ignoring overdue accounts receivable can reduce your cash flow too. Invoices that remain unpaid during the first 90 days have a significantly higher chance of becoming delinquent.  Hire a collection agency if needed.

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. We will assist you in reducing your accounts receivable by collecting money from unpaid bills, thereby improving your cash flow.