Tag Archives: Accounts Receivable

Not all Debtors are created equal!

27 Feb
After being in the ARM (accounts receivable management) industry now for many years, I can honestly say I’ve heard almost every story in the book from CEOs, CFOs, healthcare administrators, doctors, dentists, lawyers, accountants, billing managers to janitors as the reasoning or excuses from clients as to why their outstanding balance had not been paid.
Here are some common excuses:
  • They have been traveling.
  • They just lost their job.
  • They just moved and were not getting the invoices.
  • They came across financial hardships and needed some extra time.
  • They just had surgery and have been in the hospital so needed some time to get their things organized.
  • They weren’t satisfied with the service or product so didn’t feel the need to pay for it.
  • They were used to paying all their vendors after 60 or 90 days.
Here are some off-the-wall responses:
  • They said they were going to get their checkbook from their car and never returned.
  • They didn’t remember ever ordering that product or service.
  • They’re going through a divorce and to call the soon to be ex-spouse who is responsible for the balance, not them.
  • They were wondering if their creditor would be willing to barter instead.
It might seem odd to hear even the common excuses listed above if you aren’t in a business that extends credit or if you are in general a good paying consumer.
It may even seem like an episode from a spin off series of the Twilight Zone where customers walk into Costco, load their shopping carts full of items, walk past the cash registers, give the friendly greeters their mailing address to send them a bill and walk right out.  Luckily for Costco, it isn’t the case as they don’t extend credit (only through a 3rd party financing credit card partner).  Unfortunately for millions of other businesses around the world that essentially happens every day.
In my opinion the most vital thing to understand if you are in a business that extends credit or carries an accounts receivable is:
I explain to my clients that they’re only going to have to deal with 4 types of payers.  I laughed the other day when a client told me that 4 payers is 3 more than he’d care to deal with.  Can you blame him?
Here are the 4 Payer Types:
  1. Dutiful  (Always pays their bills on time, probably has an 800 or higher credit score.)
  2. Distracted (That busy working professional who is good for the money but hasn’t yet gotten to all 10-12 monthly bills on their kitchen table.  They simply need a reminder text, email, phone call, letter and they’ll pay up.)
  3. Disrespectful (Has disregarded and ignored at least 2 billing cycles from the same creditor and hasn’t called to explain or apologize about non-payment.  Are paying some bills more timely, but they have chosen which bills to put off that don’t seem so urgent.)
  4. Deliberate (Have expressed to their creditor verbally that they will not pay the balance owed or expressed through non verbal cues of long periods of silence, mail returns and disconnected phone lines.  These are the most high risk debtors.)
Now be honest with yourself, which category do you fall under?
I want to note that, in my experience, these 4 payers types are found in all socio-economic income levels, meaning some wealthy people fall into the category of Deliberate high risk debtors while people from low income levels can be in the category of Dutiful payers.
I won’t get to into details about the psychology of why these 4 types of payers/debtors respond, react or do nothing in this article.  What I can tell you is by simply understanding that there are 4 payer types and that not all debtors are created equal puts you FAR ahead of the game and your competition.
The BILLION DOLLAR question is how do I efficiently and professionally address each of the 4 payer types to recover my past due balances? (That is if you’re in a business that extends credit, if you don’t have to worry about this then lucky you!!)
I would love to hear your comments, create some dialogue around the 4 payer types and hear your ideas on how your business effectively maximizes your accounts receivable in-house.

First-Party vs. Third-Party Accounts Receivable

30 Nov

You know that understanding the details of how your accounts receivable department works is vital to the long-term success of your business. Without diligent attention, it can become one of the biggest financial headaches within your company.

Accounts receivable can be handled in one of two ways: first-party and third-party management. This may seem self-explanatory; first-party means your company manages AR in-house, while third-party means you’ve outsourced to an outside company. This is true on the surface, but there is a secondary way to look at the issue. First-party accounts receivable management can also mean that a separate company handles your AR.

To understand how this is possible, it’s important to look at the process of collecting on outstanding accounts, and at which stage first- and third-party management are best utilized.


Identifying Which Collection Strategy Is Best For You

In the business world, it is inevitable that some of your customers will fail to settle their account in a timely manner. Some may need a gentle reminder or two, while others may need to implement a repayment plan to meet their obligation. Others will simply not pay at all. You know that the longer your company goes without recouping those funds, the harder it is for your cash flow to remain healthy.

If your company is looking for a streamlined approach to collecting on overdue accounts, you can enlist the help of an outside company to handle both first-party and third-party management.


Early Stages – First-Party Management

When the account is only slightly overdue, first-party management is recommended. This is when all communication with the customer appears to come directly from your company, even if a separate company is handling it. First-party management is about trying to cure an account or prevent a loss, so early intervention is crucial. The treatment of accounts worked first-party and in a pre-charge off situation, is often the same.

At TSI, our goal is to become an extension of your back-end operations, streamlining the first-party collection process for you. Your branding and communication guidelines are strictly followed. Reminder letters and calls are common during this stage. We strive to maintain a relationship with the customer and help everybody reach a workable solution.


Later Stages – Third-Party Management

The decision to move to third-party management is usually due to the failure of a customer to respond to earlier messages. People commonly refer to this stage as ‘being in collections;’ communications are now coming directly from a separate company. The third-party is still acting on behalf of your business. Post-charge off work would also fall under this stage.

With third-party management, other tactics can now be used to locate the customer and bring the account up-to-date, aiming to instill a sense of urgency in the debtor. Third-party management is often more regulated than first-party and is always covered under the FDCPA (Fair Debt Collection Practices Act).

Ultimately, third-party management is about liquidating the total balance written off, and TSI can help. Our diplomatic process is designed to maintain a positive relationship with the customer while encouraging them to settle their account quickly. We utilize our proprietary data analytics platform and collection tactics including skip tracing, credit bureau reporting, and bankruptcy monitoring to increase your liquidity rates and develop more accurate revenue forecasting.

But the real value of our operations is in our people. You can rely on our seasoned collection experts to work diligently on your behalf, backed by extensive training and support.


Reach Your Goals With A Trusted Partner

Working together with a partner from the early stages can benefit both you and your customers. It allows the partner to become familiar with an account in receivables right from the beginning, so they can better judge if and when to move an account from first-party to third-party status.

It also relieves the burden from your in-house staff of having to chase down overdue accounts. Your team can focus on other areas of the company to keep operations running smoothly, knowing that a trusted partner is acting on your behalf to bring your accounts receivables up to date.

Finally, you can develop a customized approach to give your customers an integrated experience, which could result in a higher percentage of accounts being settled during the early stages.

TSI is committed to providing personalized services to your customers, maintaining and enhancing relationships while helping you recoup lost revenue. Our integrated collections platform combines best-in-class technologies with data-driven workflows to facilitate effective and compliant operations for our clients. Contact me today to explore your options.

Source: TSI

Statistics That Will Shake Up Your Accounts Receivable

31 Oct

If you sell products or services on credit, then chances are that the words “accounts receivable” are enough to give you a headache.

Nevertheless, successfully managing your collections department is critical to your growth as a business. Recent numbers suggest that uncollected receivables could cost your company into the hundreds of thousands of dollars. Plus, surveys show that most businesses aren’t that great at staying on top of them.

Let’s take a closer look at how much your collections are costing your business, and what you can do to fix it.

Numbers Don’t Lie

Figures from Inside Account Receivables Management clearly illustrate how receivables lose significant value over time. By the time they are 90 days overdue or more, they could be worth only 20% of their original value:

Not only is value lost on the money owed, but overburdened AR departments can cost your company in other ways. Increased workload, reduced productivity and resorting to bank debt to maintain cash flow are all symptoms of poor collections practices.

A payment practices study in 2016 proving that even though it’s costing them money, many American companies have room for improvement when managing their collections:

  • On average, companies write off 1.5% of their receivables as bad debt.
  • 93% of businesses experience late payments from customers.
  • 47% of credit sales are paid late.
  • Average payment terms are 27 days, but actual payment period averages 34 days.
  • Survey participants see maintaining cash flow levels as a key challenge that is critical to business profitability.


Clearly, your accounts receivables could be costing your business a sizeable sum. However, there are a few best practices that you can implement today that will help to tighten up your collections department and allow you to put money back into your business.

Do The Math

The first step is to calculate your average collection period. This will give you a clear idea of the number of days on average it takes for your business to see receivables turn into cash.

very informative post on The Balance outlines exactly how to perform this calculation. It requires some basic financial information about your business:

Days in Period x Average Accounts Receivable / Net Credit Sales = Average Days to Collection

Let’s break that formula down to its basic elements:

Days in Period — This can vary; it could be 365 days or 90 days; whatever works best within your business. The key is that however long this period is, all other parts of the formula must span the same number of days.

Average Accounts Receivable — Using the period of time established above, total the accounts receivable both at the beginning and at the end of the period. Then divide it by 2.

Net Credit Sales — This is the total of your gross sales minus the total of all returns during the set period.

For example, Company XYZ sees that their outstanding account receivables sit at $30,000 at the beginning of the year. By the end of the same year, they have risen to $36,000. Net credit sales came to $100,000 by the end of the year.

Using this example, the formula looks like this:

365 x 33,000 / 100,000 = 120.45

According to the math, it takes an average of 120 days for Company XYZ to see their account receivables resolved and translated into all-important cash flow.

Next Steps

Now that you have an idea of how long it takes credit customers to pay you, you can implement strategies to improve. For instance:

  • Narrow your credit requirements to cut down on credit-consumers
  • Train staff to clearly illustrate credit payment policies
  • Be prepared to enforce your credit policies
  • Incentivize early payment
  • Consider enlisting outside help to manage accounts receivable

We are dedicated to helping companies collect their accounts receivable while maintaining customer service excellence. Our years of experience can help you streamline the process of debt collection, now and for the future, while optimizing cash flow and increasing productivity in all areas of your business. Contact me today to learn more.

Source: TSI

Top 10 Reasons Why Dentists Should Carry Their Own Dental Coverage

8 Jun


If you have a dental practice, you should seriously consider setting up your own self-administered dental plan.  Here’s why:

  • Dental insurance covers less and costs more every year for patients
  • Dental insurance pays the dental office less and less every year
  • You can customize a dental coverage plan to meet the specific needs of your practice
  • Patients and staff always know how much is covered and what remains
  • Far easier to administer than conventional insurance plans
  • Makes dental care more affordable to the patient, resulting in more treatment plan acceptance
  • Provides treatment to patient immediately
  • The dentist earns a greater portion of service than paid by insurance companies
  • Patients will stay in the practice longer
  • Patients will get treatment they would otherwise neglect.

The purpose of the Private Dental Plan program is to help the patient receive immediate and personalized service through a dental service plan and allow the dentist to keep more money for their services.  This self-administered dental service plan allows dental offices to offer access to dental coverage for those who would not normally be able to afford it.

Through my new affiliation with Dental Practice Services, Inc., I am now able to assist practices in getting set up with such a plan.  Please contact me for more information about how your practice can benefit from a personalized self-administered dental plan.

Cash Flow For The Medical Practice

25 Feb

I was a guest on the Top Docs Radio Program on Business Radio X, talking about Cash Flow For the Medical Practice with host, CW Hall.  Here is what he wrote about the interview:


I sat down with David Wiener, aka “Mr. Cash Flow” on this week’s episode.  I connected with David first on LinkedIn a few weeks ago.  After learning more about the various ways he is able to help a medical or dental practice recapture revenue that is currently being lost, I knew I needed to have him on the show.

David spent numerous years as a practice manager for a doctor’s office, so he knows very well the challenges these practices face trying to maximize the revenue they get to keep for the care they provide.  With patient out-of-pocket obligations significantly on the rise, physicians are experiencing a corresponding increase in the number of patient balance bills they must collect upon to be paid for their services.

David provides access to a service that for only $12 per claim (instead of a typical % of the amount to be collected), that dramatically increases the success rate for bills collected to over 80% in the first 30-45 days from date of bill.

We also talked about other ways Cash Flow Strategies, Inc., is able to help their medical and dental practice clients drop more revenue to the bottom line.  One such way is to enroll their staff into a wellness program as provided for by the ACA.  Businesses that do so can save as much as $500 per employee per year on the Federal income tax they must pay for each of them.  Additionally, as employees take advantage of these wellness benefits, they tend toward better levels of health, decreasing the company’s expenditure for health benefits.

David also talked about a company he’s partnered with that can help a business change all the lights within the building to LED lights, saving enormous amounts of money on utility bills.  They offer a plan through which the business can pay for the lights over time, with the payments + new utility bills amounting to less than previous utility bills were, providing savings from the first month.

There are several other ways David is likely able to reduce amounts being spent by the business, such as procurement costs for necessary supplies through a competitive group purchasing organization and others.  It is clear that any medical or dental practice can benefit from taking a few minutes to talk with David to determine just how much additional revenue they can capture—all without having to work longer or harder.

For more information on how this might help your practice, call David at 888-780-1333 or email him at david.wiener@cashflowstrategies.us




12 Feb

The way that healthcare approached patient payers in the past no longer works nearly as effectively as it once did.  With the dramatic rise in high deductible health plans (HDHP) and higher co-pays, collecting patient balances quickly and effectively is imperative.  The “one size fits all” approach is dead, both in follow-up and collections of slow-pay and delinquents accounts.

Reasons for a patient not paying the bill when due can be varied.  Some don’t pay on time because of financial reasons, many times because of the high deductibles in their health plan.  Others have the funds but, due to confusion surrounding their insurance policy, aren’t sure the balance is correct.  Others are simply too disorganized to remember to find the statement and pay the bill when they have the money.  Still others feel that their insurance has paid enough and the practice should be satisfied with that.  Some will say, “that doctor is rich, he doesn’t need my money!”

It is a delicate balance that practices must strike to be aggressive enough to motivate the patient to pay the bill without being so aggressive that the practice risks losing what might be a profitable patient in the future.  Some practices spend great deals of money with internal follow-up through statements, phone calls and letters, not realizing that each contact with a patient in follow-up internally can cost the practice between $10-12.  That expense, not to mention the staff time and attention this takes, can wind up making the whole follow-up proposition more expensive than it is actually worth.

So what is a practice supposed to do?

We, at TSI (formerly known as Transworld Systems) have determined that there are actually four distinct types of patient payers.  Each is motivated in a different way to pay the bill, and it is a mistake to treat them all the same.  They are:


The dutiful payer feels a keen responsibility to pay their debts in a timely manner.  They are motivated to pay the bill by the initial statement you send following patient responsibility.  Fortunately, they are (or should be) the largest category in your practice.


The distracted payer has the very best intentions to pay your bill, but they seem to be so busy and distracted that they misplace your statement or just forget to pay it.  Timely reminders are sufficient to motivate them to get that bill paid.


The disrespectful payer tries to see what they can get away with, and hope that you will give up trying to collect the bill if they dodge you long enough.  They do not respond to your statements, letters, or phone calls.  Rather it will take a contact by a third party collection agency for them to be convinced that the practice is serious about collecting the debt.  That alone will motivate them to pay, and they will generally pay the bill after they receive the first contact by that third party.


The professional debtor never intended to pay the bill when they received service.  They are likely in collections with other creditors already.  These, and these alone, need to be in the hands of professional collectors, familiar with medical debt, before too much time has elapsed and too much money has already been spent chasing them.

TSI offers a free interface that works with virtually all dental software to help you identify which type of category each patient falls into, and tools to communicate with them in an appropriate manner.  The practice retains control of each account, and the type of communication that is being used on a particular patient.  These tools eliminate the need for the practice to continue time-consuming internal chasing of accounts at a cost that is generally less than they are spending on follow up currently.

For a full description of the tools and services provided by TSI, please call 888-780-1333 to speak to me personally, or email me at david.wiener@transworldsystems.com.



16 Jun

I was told today by a doctor that he refrains from pushing too hard to collect from a patient who owes him money, because of all the money he makes on the patient from insurance companies.  He is willing to write off patient balances, to keep making insurance money from the patient visits, and doesn’t want to offend the patient into leaving the practice by insisting he pay his bill.

This is the general attitude many doctors had 25-30 years ago.  It may have had some validity back them but times have changed!  Insurance money alone will not keep your doors open and your lights on any more doc.  You are putting your practice in jeopardy by not seeing what is happening around you!

High deductible health plans are the norm these days, and co-insurance is rising all the time.  Despite what the government tells us, there are more and more patients who do not have insurance, or have adequate insurance.  Self pay is now the highest payer in the medical world behind Medicare and Medicaid, and it is catching up fast.  According to recent statistics, patient balances now represent over 35% of a doctors income and soon, if major changes aren’t made, will be over 50%.

You can’t wish it away, or ignore it away.  You MUST find a way to motivate patients to pay you, and pay you faster than before.

Medicine, whether you like or not, or understand it or not, is a business.  You are trading a service for money, and the patient knows it.  They also know when you are leaving them alone about their bill so that you can continue to collect insurance money. Not only do they know, but guess who they tell?  EVERYBODY!!!  And guess what happens?  You get all the patients who don’t want to pay their bills.  Great!  Until, that is, until you watch your patient A/R go through the roof.  By the time you see this happen, you are already in trouble.

Don’t waste time.  There are automated tools to help your practice both maintain your good relationships with your patients, AND get them to pay you their portion of the bill sooner.  Call me today at 888-780-1333 and I will tell you about them.  Isn’t it worth 20-30 minutes of your time to keep the lights on in your practice over the long haul?

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