Tag Archives: collections

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


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.


Medical Collections Success Guaranteed!

21 Nov

Whether you have a large medical practice or are a single practioner, cash flow is negatively affected by slow-paying patients and unresolved insurance claims.  With Transworld Systems Accelerator, your accounts are worked earlier and this allows your payments to be received faster increasing your cash flow!

Early intervention is the key to successful collections!! Review the infographic below and see what kind of return on your investment you could make when submitting just 100 accounts to Transworld Systems!

RUR-Medical graphic


Is it worth a 20 minute conversation to see how you can get a 6241.81% return on your investment, while decreasing staff time, frustrations and expense at the same time.  Contact me through the contact link below, or call me at 888-780-1333 for more information or a no-obligation demo of our services.

Dental A/R and Collections

3 Oct


Many dental practices are faced with outstanding bills and the issue of collecting on past due payments while trying to maintain patient relationships. There is a solution for you and your dental practice when it comes to recovering past due payments!
Transworld Systems has been helping dental practices and other offices since 1970 with the recovery of slow and past due payments from both patients and insurance companies! Contact me today to find out how we can help you start the road to faster cash flow!

Tools To Help You Get Paid Faster

6 Sep



Are you having a hard time finding the time to contact your customers or patients regarding payments?  Let Transworld Systems help you Accelerate your payments and improve your cash flow with Accelerator.

The below infographic illustrates the benefits of Accelerator and how we can help you get paid faster!  Don’t wait until 60, 90 or 120 days for you outstanding invoices.  The sooner you react, the sooner you can get paid the money you are owed!

Call me, David, directly at 888-780-1333 for a free overview of the tools that can help you motivate your customers and patients to pay you sooner, while maintaining your good relationship with them.

Medical practice executives cite financial management issues as most challenging – MGMA

27 Jun

Medical practice executives cite financial management issues as most challenging – MGMA.

As an MGMA Admini-Serve partner for over 13 years, the tools provided by Transworld Systems are THE best answer to the concerns that medical practices are facing in an ever increasing way.

  • We can help you deal with the new reimbursement models that place financial risk on the practice
  • We can help you better manage your finances
  • We can ensure that self-pay patients, or those with high-deductible health plans pay you sooner and more often.

In 22 minutes, I can help you determine if the tools I can provide will help alleviate these concerns for you and your practice.  I will conduct a brief A/R strategy session at no cost or obligation via phone to help you determine if our tools are a good fit for your practice.

Isn’t it worth a 22 minute investment of time?

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