How to Evaluate Your Account Receivables

How to Evaluate your Account Receivables:

Here are two ways to analyze your current A/R.

1. Averaging- Take your last 3 month’s total charges for the practice and average them to determine your current average monthly charges. Then take your Account Receivable and divide your total A/R by your current average monthly charges. (Source: provided by a billing consultant.)

If the results are:
1.5 Or Less- Stop reading, you do not need any help
Less than 2.0- Pretty good, can use some fine tuning
2.0 to 2.5- You’re starting to get in trouble
2.6 to 3.0- You need help
Over 3.0- Your A/R is out of control

2. Number of Weeks- Take your average week’s total charges for the practice and multiply them by 6 weeks or 7 weeks (ideally a 6 week A/R). This total should equal your current practice A/R. If it does not, increase the amount of weeks 8, 9, etc. until the totals match.
(source: a seminar on billing)

If the results are:
6-7 or less- Stop reading, you do not need any help
8-9- Pretty good, can use some fine tuning
10-11- You’re starting to get in trouble
12-13- You need help
14-15+ Your A/R is out of control

What the number means in both equations is how long it is actually taking your billing department to collect 100% of your charges.

The ideal composition of your Accounts Receivable would be something like this:

Current 50%
31 to 60 15-20%
61 to 90 15-20%
90+ Days 20%

If your A/R is not what it should be Medical Software & Services may be able to help you use your billing software more effectively. We can provide training on Medisoft and other products. For a nominal cost, we can do an audit of your billing process and provide a report making specific recommendations on how to improve your collections rate.


TJ Johnson
Senior Support Technician
Medical Software Tools
http://www.medicalsoftwaretools.com/