Account for receivables with a written policy

Account for receivables with a written policy

Your team needs to know what to do when payment isn't received at appointments.
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Oct 01, 2010
By dvm360.com staff

If you're like most veterinary practice owners, somebody owes you money—maybe a whole lot of somebodys. And those accounts receivable can really hurt your bottom line. Gary Glassman, CPA, a partner with Burzenski and Co. in East Haven, Conn., says small animal practices need to hold accounts receivable at 2.5 percent or less of gross sales. If you're faced with a higher number or if your team isn't delivering a consistent payment message to clients, pay attention. Glassman, a Veterinary Economics Editorial Advisory Board member, has a little guidance for you and a sample accounts receivable policy, to boot.

Avoid accounts receivable

The best way to deal with accounts receivable is to avoid them. Team members should explain to clients in person and over the phone that payment is due when services are rendered. Receptionists can pleasantly ask, "How can we expect payment today?" or "How will you be paying for this visit?" This approach requires consistent and thorough training to make sure every team member knows what's allowed and what's not when it comes to client payment.

Craft your policy

Do you take credit cards? Checks? Do you offer third-party payment plans? Do you bill later for expensive procedures? How do you handle those payments? These are all questions for you to think through, communicate to team members in training, and include in your practice procedures manual. "Team members need to know how they should react to someone who didn't bring a form of payment with them or can't make a payment," Glassman says.

Provide treatment plans

For expensive procedures, provide a treatment plan with estimated fees to be signed by the client before work begins. "You don't want to hear, 'But you never told me it was going to cost that much money,'" Glassman says. And never deal with client money issues at the front desk. Take them to an exam room for a discussion.

Nix nonpayment

If a client hasn't fully paid a bill, your policy should spell out when to send notices and take action at 30 days, 60 days, and 90 days after services are rendered. After 90 days, Glassman recommends either shrugging off the debt, handing it over to a collections agency, or, for particularly expensive procedures, pursuing it in small claims court.

Turn to team members

For many practices, the biggest accounts receivable issue isn't with clients. "I've consulted with practices with $5,000 in accounts receivable, and $4,000 was extended to employees," Glassman says. Your policy should explain how outstanding employee accounts are handled. Glassman recommends you set things in motion 30 days after services are rendered. Consider withholding the employee discount until the account is paid and sitting down with the team member to arrange payment. If the team member wants charges withheld from paychecks, be sure to get his or her written authorization beforehand.

Whatever you decide with regard to billing and accounts receivable policies, put it in writing and make sure team members are trained and compliant. "Every important accounting policy you have for your practice should be in your manual," Glassman says. "You're setting up the financial controls in your practice so new hires and current employees know what the policies are, communicate them to clients, and enforce them."

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