Consider this scenario. You’ve sent a statement to your patient or customers several times. It’s now three months later and the bill remains unpaid. There has been no response to your calls and letters. You have a collection agency in place to handle your debt recovery so when is enough, enough? When is it time to put your frustration away for good and move your accounts over to the collection agency?
| Only you can answer that. But there are some telling signs that it’s time… Some people will continuously ask for an updated statement. If the balance due is small, you need to consider the cost of manpower, supplies and postage it takes to mail out statement after statement and take call after call. This is a classic stall tactic – death by paperwork! Some people will wait until the very last minute they can (usually this is marked by the account moving to collections). Some people just honestly need time for their financial situation to change – this is particularly true with medical services, especially those that take the consumer by surprise. And, unfortunately, there are of course those consumers who just never intended to pay in the first place. |  |
And you remember the “Irate Caller” from our previous blog post? – Well, how many times have they called? How many times have you had the same conversation with the same person? Is the balance worth tying up your staff when everyone knows they’re not calling to pay?
We know the need to stand on principle is strong and the chances of receiving payment from even an ethical person after 30 days… 60 days… 90 days… grows smaller and smaller with each passing day. For every month that goes by the “law of diminishing returns” shows a marked decline in recovery by age of the account. And, while it certainly does happen, sadly in today’s world, it is rare for a first-party to be able to recover a debt owed to them after the thirty-day mark. Now it’s not impossible – after all this is where collection agencies earn their stripes – but it becomes a much more specialized and dedicated process than most organizations are built and trained for.
This means it is important to know when enough is enough. For a smaller organization making that difficult decision to send a patient or customer you’ve come to know to collections can be an emotional task. For a larger organization, sitting on a backlog of non-paying consumers can be fiscally challenging to say the least. For these reasons we recommend that you formulate an Accounts Receivable Plan that details how many statements you send, how many phone calls you make and at what point (and for what amount) the plan triggers further action or a protocol to stop your recovery efforts and place the account with your collection agency. Put this plan into action immediately and make sure your staff knows about it so they can use these “cut-off” dates to express a bit of urgency when they talk to your customers and patients who owe balances. This will give you the best chance for success with your early-out and self-pay efforts while also assuring that past due accounts you placed with your collection agency are putting them in the best position to collect the remaining balances for you. This work plan and team effort approach are guaranteed to increase your revenue from all of your collection accounts.
In our next article we will further examine how to create an Accounts Receivable Plan that will work for your organization.
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