receivables and collections

[JMN]

Spinning out some thoughts and wondering what is the best ideas of all of us on this.
I'm still small, and living case to case with supplies as I can. I've learned to turn Lean Manufacturing into more like Emaciated. But whats bugging me is Slow payers that are putting speed bumps in my growth.

Each case is it's own bill, due 30 days from delivery. No statements
Non payment of any case's bill after 30 days makes all cases for any office, practice, or group in which the dds is a participant a cod only client until all bills are current. I have also that they will indemnify and defend on any case if they accept delivery and deliver to the pt. And that they are responsible for reasonable atty and collection costs. I added last month verbiage that they'd get a 10/month/case rebilling and finance fee added.

I'm still having people go over 30 days!? I know I was optomistic, now, but I never dreamed someone would do that knowing the results. I haven't had any issue yet where I'd had to pull out the cod stick, because they don't send work until they send the check. Is this the wrong way, or is it smart to keep from loosing more than less?
One ran me 30 days for 75 stinking dollars, and after me going by once with a sealed copy of the invoice, he waited another 15 days and hasn't sent anything again. C'mon. You got that much before the pt got in the chair.

What suggestions are there for good language, terms, and methods.

I am finding that my 15 year old rusted professional collections skills don't work when you can't visit them at work and visit them at home and call their friends like I used to for a payday loan chain...I hated doing that too. Why I left.

If it matters, Virginia is the location.

Is expecting eveyone to pay on time unreasonable?

@AJEL I've seen you reference something called UCC. What is that?

 

[JMN]

Would it be worth paying a lawyer for good language? Has anyone and found it worthwhile?

 

[JKraver]

Credit card auto pay Drs love that crap points point points.

 

[JKraver]

Also lack of payment is on Credit card company not on you. Your bill is no different than an office lunch on the office card. Billed upon delivery.

 

[JKraver]

5% off for payment upon reception of case. Though I have found it very hard to want to work on something of which I have already been paid. No motivation.

 

[Gru]

Before I started my own, I had conversations with some of those who became my accounts. I found that their offices are already overwhelmed with busy work, and more paper (i.e. bills) only made my lab less desirable. A single monthly statement with a discount for quick pay helped in their minds, and in actual 6 year function. Credit cards billed at time of invoicing so there is no paperwork involved on their end also was a solution. Clearly laying out the payment expectations-some do it on the back of the rx forms, acknowledged by signature on front- and consequences of non-payment help some labs, but only if you follow through and are willing to lose the account.

No matter what size, we are not banks. I wouldn't have been surprised if the high-end lab I had been at had well over a million in outstanding balances.

Never forget, a non-payer who makes no arrangements to right the situation is a thief- of your time, product and many times your credit. Also, you could be doing other work for which you would actually get paid, so you lose twice.

 

[JKraver]

CC billing is what all the big guys do. The days of 30 day billing are coming to an end. Its silly and outdated practice for the paper pushing age. Welcome to the 21st century.

 

[Gru]

While all of my current accounts are faithful, on time payers, none of them desire c.c. billing. As of the turn of the year, all new accounts will be c.c. billed at time of invoice. Credit card billing has become easier and more cost effective with the myriad options available.

 

[JMN]

Before I started my own, I had conversations with some of those who became my accounts. I found that their offices are already overwhelmed with busy work, and more paper (i.e. bills) only made my lab less desirable. A single monthly statement with a discount for quick pay helped in their minds, and in actual 6 year function. Credit cards billed at time of invoicing so there is no paperwork involved on their end also was a solution. Clearly laying out the payment expectations-some do it on the back of the rx forms, acknowledged by signature on front- and consequences of non-payment help some labs, but only if you follow through and are willing to lose the account.

No matter what size, we are not banks. I wouldn't have been surprised if the high-end lab I had been at had well over a million in outstanding balances.

Never forget, a non-payer who makes no arrangements to right the situation is a thief- of your time, product and many times your credit. Also, you could be doing other work for which you would actually get paid, so you lose twice.

I hadn't thought of the paper mess on their end until you said that just now. I understand better how something can get lost having ralized that.Thank you for that insight

 

[JKraver]

Interesting, haven't met a Dr not interested in CC billing.

 

[MAFCDL]

Only about 6% of our accounts want to use a credit card. We are thankful that collections have not historically been an issue for us. Any problem I have ever had has been with an out-of-state account that found us via our website. Luckily, I did a year of research in business law at a local law school for my graduate studies - so my Rolodex is full of blood-thirsty lawyers who love sending threatening letters in exchange for a nice bottle of scotch. As a result, any new account that we sign up fills out a credit app and leaves a credit card on file.

The important thing to remember is that payment terms are only a suggestion until they are enforced. we invoice each case and send a statement - we expect payment on the statement balance within 15 days of the statement being sent out.

The best weapon in the battle against receivables is your bank. I understand this isn't as helpful when you are starting out, but any bank worth working with should offer you a line of credit equal to AT LEAST 60% of your receivables. Most banks will stretch it to 80-85% for their good customers. Stay on top of your clients to pay on time, but use the line of credit so that you don't have to become an annoyance.

Debt is part of the risk of starting a small business - it's horrifying - but it is all part of the game!

 

[JohnWilson]

The easiest thing for a small to medium size lab can do is to set up credit cards. My ar is perfect because of it. I run half of my account base on the 15th and half on the 30th.

I sleep much better not guessing if those long hours I put in are going to be collected.

Its your business YOU MAKE THE RULES.

 

[JKraver]

Blood thirsty lawyers are nice to know. Just don't feed them after midnight.

 

[Gru]

...so my Rolodex is full of blood-thirsty lawyers....

Are there any other kind???

The important thing to remember is that payment terms are only a suggestion until they are enforced. we invoice each case and send a statement - we expect payment on the statement balance within 15 days of the statement being sent out.

Exactly.

The best weapon in the battle against receivables is your bank. I understand this isn't as helpful when you are starting out, but any bank worth working with should offer you a line of credit equal to AT LEAST 60% of your receivables. Most banks will stretch it to 80-85% for their good customers. Stay on top of your clients to pay on time, but use the line of credit so that you don't have to become an annoyance.

Hadn't thought of it. I'll have to look into it- good suggestion.

Debt is part of the risk of starting a small business - it's horrifying - but it is all part of the game!

The easiest thing for a small to medium size lab can do is to set up credit cards. My ar is perfect because of it. I run half of my account base on the 15th and half on the 30th.

I sleep much better not guessing if those long hours I put in are going to be collected.

Its your business YOU MAKE THE RULES.

Was hoping you'd chime in! Thanks.

 

[JMN]

The easiest thing for a small to medium size lab can do is to set up credit cards. My ar is perfect because of it. I run half of my account base on the 15th and half on the 30th.

I sleep much better not guessing if those long hours I put in are going to be collected.

Its your business YOU MAKE THE RULES.

and I need to get that through my head. Sometimes I guess I do need someone to yell at me what should be obvious. Thank you!

 

[JMN]

I'll be having another chat with my bank today then. Thanks. I keep putting off CC acceptance as one more thing to keep up and worry with but it's dawning on me it actually comes out with less to worry about.

 

[JKraver]

If you show your dentist you are a punching bag, they will beat you up like one.

 

[JMN]

If you show your dentist you are a punching bag, they will beat you up like one.

As I've said before, I'm as nice as they let me be.

 

[nvarras]

I'll be having another chat with my bank today then. Thanks. I keep putting off CC acceptance as one more thing to keep up and worry with but it's dawning on me it actually comes out with less to worry about.

don't just run to your bank....look around and compare rates. when i looked into it a few years ago the rates and hidden fees can vary quite a bit depending on where you go.

 

[MAFCDL]

The easiest thing for a small to medium size lab can do is to set up credit cards. My ar is perfect because of it. I run half of my account base on the 15th and half on the 30th.

I sleep much better not guessing if those long hours I put in are going to be collected.

Its your business YOU MAKE THE RULES.

This is a perfect business model - how did you transition long standing accounts? Our situation doesn't seem to lend itself to a sweeping transition.

The lab has been around since 1962 - I have dozens of accounts that have worked with us for over 20 years. Like I said before, payment is not generally a problem with any of our clients so it is hard to justify forcing them to change a system that is working well overall.

The other issue I ran into when rolling out the credit card process was the demographic of our clients - Many are located in the areas in and surrounding Concord and Lexington Massachusetts. We are dealing with old Yankee money that doesn't prescribe to modern financial thinking which includes having credit cards - many of our doctors admitted to not using them at all. Who needs a credit card when there is money in your account that came over on the Mayflower??

Like I said - we are making it work. All new accounts are treated differently - I'm more interested in hearing the process you followed to get an entire client list to transition to this system?