July 2024
In today’s world of rising inflation and lower financial profits, many physicians find their cash flow dwindling with every passing day. Waiting for payment of accounts receivables, while struggling to meet business expenses can create an insurmountable burden for a medical practice.
More than ever, physicians find it imperative to make the most of their hard-earned revenue. Solutions that shorten and improve cash flow are necessary for healthcare organizations to thrive.
Faster Payment of Receivables Leads to Fiscal Strength
The number of days it takes funds owed to your practice to be paid by the responsible billing entity directly affects the financial health of your practice. This is true for both insurance and self-pay patients. Practices must be aware of the number of days their office’s receivables remain unpaid and seek solutions that improve efficiency in their billing process.
Every Day an Account Remains Unpaid is Lost Revenue
Collection of outstanding receivables is the fastest way to garner capital and positively impact your cash flow cycle. By the time an account is in collection, your business has already made the financial expenditure for treatment and the money sitting in A/R belongs to your practice. It makes sense to collect accounts due immediately to reduce the financial chokehold on your organization and settle patient accounts to complete the revenue cycle. Offering partial discounts for time-of-service payments and requiring deposits for products and services with patients who have a history of slow pay makes fiscal sense. Keeping credit terms at 30 days or less, organizing your accounting policies, and implementing RCM software solutions that include patient reminders are often effective. Virtual OfficeWare Health Solutions has the tools to speed payment within your practice’s receivable cycle, reducing the number of days financial accounts remain outstanding, which results in a tighter revenue cycle for services previously rendered.
A past-due account has less likelihood of payment in full every day. Continue to regularly follow up with past-due accounts and work with patients who are reticent to implement and adhere to payment schedules. Once the patient’s financial relationship has become adversarial, you may want to consider using a claims collection agency to recover outstanding balances. In collection, a commission fee will apply, adding to the financial loss. If a patient is new to your practice, collecting payment upon registration or requiring a credit check can be beneficial. When you establish firm payment policies, your accounting staff can feel more confident in extending credit to your reliable paying patients.
Improve Patient Intake and Follow-up
How well you follow up with your client base often determines the speed of your business cash flow. Often, people need nothing more than a friendly reminder to satisfy their outstanding invoices. Many patients wait for multiple reminders or the threat of collection before paying monies owed. Therefore, keeping track of your accounts receivable should be a top priority for any practice. Connect regularly with your clients by advertising new products or specials on treatments that include friendly payment reminders to improve your patient relationships. These tactics can not only increase sales, but they are also more effective in collecting outstanding invoices and can result in client loyalty through beneficial referrals and reviews.
Reduce Terms to Identify High Financial-risk Clientele
Depending on your medical specialty and demographics, your practice may benefit from reducing payment terms to shorten the cash flow cycle. Most physicians now collect co-pays at the time of registration. When services are not covered by insurance, patients who object to faster payment terms are less likely to improve practice cash flow. Patients understand that the economy is changing. A credit check for patients who finance service is becoming standard. Patients who object are more likely to be a financial risk. It makes sense to provide longer payment terms if the clients have a reliable payment history. If a patient needs urgent treatment and longer payment terms, charging interest or small fees can offset credit costs.
Should You Factor Invoices?
Factoring invoices means selling accounts receivable when your customers have paid but are likely to satisfy the invoice. Different rates for this pre-payment are often mandated by the age of the outstanding invoice. Factoring can be a risky business that may affect your insurance rates and credit standing. As an example, when you set payment terms of net 90 days for your customer, but find your practice cash-poor, you may choose to factor the invoice and reimburse your financer, minus fees, when and if the customer pays. If the customer does not make timely payments or satisfy their invoice with your practice before your financing is due, your business is left holding the account. Although factoring accounts receivables may seem like a solution to generate fast cash, it should almost always be considered a last resort as the process can lead to financial insolvency.
A better option is to begin by collecting outstanding receivables that are low-hanging fruit whilst implementing improved payment policies and including efficient RCM software. Collecting current accounts receivable and co-pays at the time of treatment should be an automatic built-in policy that works with your practice and current accounting methods.
Forecasting Revenue and Profit
With the advent of advanced software solutions, it is now easier for your practice to shorten the days accounts remain unpaid and help build a more stable and predictable financial business model. AdvancedMD combines exacting RCM automation with the flexibility to deliver precise and powerful forecasts in a fraction of the time spent working in spreadsheets. Their top-rated medical billing and revenue cycle software is built just for healthcare to reduce the burden of unpaid receivables and improve a practice’s financial future. With features that streamline the reimbursement process, providers can spend more time on patient care rather than chasing overdue invoices.
Ready to Shorten Payment Times for your Practice?
Medical organizations need access to technology that works for them. Our customizable RCM services and end-to end billing solutions are reliable and affordable solutions to billing inefficiencies. When you choose Virtual OfficeWare Healthcare Solutions (VOWHS), partnered with AdvancedMD, you can depend on medical receivable automation with unmatched flexibility to deliver clear, powerful payments in a fraction of the time spent normally manually processing revenue.
See for yourself how our state-of-the-art, user-friendly software and services will help you streamline your practice with an easy, virtual demo and simplified onboarding. Our knowledgeable no-pressure customer advisors can help evaluate your needs and give you a snapshot of potential savings. Enjoy predictable pricing and a full suite of customized solutions with easy transition and no added equipment expenses.
Our products are supported by cloud-based access, exceptional products, rapid support, and automated system upgrades. Book your demo today to get a peek at our unique, customizable features, along with your potential savings.