Cutting accounts receivable

Cutting accounts receivable

May 01, 2005

I read in a past issue about an equine practitioner who requires payment when services are rendered. I'd love to do that, but my clients expect me to bill them. How can I change my system this late in the game?

"Talk with your clients, and gently inform them that you'll expect payment at the time of service," says Dr. Emily Williamson, owner of the Sixth Day Vet Practice in Bargersville, Ind. "Keep in mind, you need to send this message yourself. If staff members send out the word, some clients may think they're a special case and you'll allow them to continue charging."

You may find these conversations difficult, and it's OK to hedge if you need to, Dr. Williamson says. "For example, you could blame the change on your nameless accountant who decided it isn't feasible for the practice to extend credit after reviewing the 2004 books," she says.

Dr. Williamson says it may take clients six to nine months to get used to the idea. "Note the date you explained the policy change on the record and every time you reminded them. If they keep 'forgetting,' gently remind them of these past discussions," she says.

Worried about losing a client by demanding payment up front? "If someone really has a problem and he or she is a good credit risk, I'll hold a check for half the amount of the invoice for a week or two," Dr. Williamson says. "But I've found that if clients continually give me a hard time, they weren't planning to pay anyway. And in my book, it's better not to work than to work for nothing!"

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