2020 Sept Newsletter, Practice resources

Tabitha’s Tip: Best Practices To Handle Old Patient Receivables – From Guest Writer Tabitha Lugo

Q: I’ve been in practice for over 20 years and my books are full of uncollectible Accounts Receivables. Do you have any best practices for how to handle this?

A: What I usually suggest to clients is that once they turn an account over to a collection agency, or in this case have uncollectible accounts sitting on the books, is to write off the balance with a unique adjustment type used only for these adjustments, i.e. Bad Debt Write Off. If the patient ever wants to return to the practice or starts paying on the account, the balance can be reinstated with a different adjustment type, i.e. Reinstate Balance. They may also need an adjustment type for Collection Agency Fee if they are using one.

I also recommend that they inactivate the patient and put a pop-up alert on the account in case the patient were to ever call and try to schedule, which they do. Some offices will change the name to ALL CAPITAL LETTERS or something similar to be a quick flag to the team that this is a collections account. Some software also have account statuses or billing types that can be changed to reflect that the account is a BAD DEBT ACCOUNT.  Some offices may archive the account, but I prefer to keep them as an “Inactive” patient on my patient list just in case they do call and try to schedule an appointment in the future.

For most offices, this works just fine and cleans up their A/R, making it easier to track actual collectible money. Also, as long as the practice is on a cash based accounting system, writing off the accounts does not effect their taxes since they never collected the money anyway. If they are on an accrual based accounting system, then this process should be discussed with their CPA.


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Shelley@ShelleyRenee.com

Tabitha@ShelleyRenee.com

Practice Management Consultants

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