The Importance of Collecting at Time of Service

All patients are responsible for the payment of practice fees. Some have dental insurance to help cover the cost. Some participate in a practice-provided membership plan. Some expect to pay directly for their dental care. Regardless of the source of payment for practice fees, the practice should collect that patient’s portion at the time of service. Collections are so important because businesses need to collect money in order to operate. But it goes well beyond that. Let’s examine the following points:

1. Collecting at the time of service allows practices to manage cash flow. Simply put: Cash is king. It allows practices to pay bills and incomes, manage any unexpected expenses or emergencies, and invest in the practice. If you ask any business school professor what the number one most important factor is for any business, the answer will always be cash. Collections create cash.

2. Collecting at the time of service reduces overhead because it creates high levels of efficiency and saves enormous amounts of administrative time. The cost (in time and money) of preparing and sending statements, even if they can be generated easily with modern software, is the most compelling reason to collect at time of service. Statements can be mailed or sent electronically, but either way it takes effort to send statements, and then there needs to be a follow-up system for patients who do not pay within a certain amount of time. The truth is that most practices are not highly efficient when it comes to following up on overdue payments. Furthermore, after 60 days the chances of collection are less than 10%.

3. Collecting at the time of service is excellent customer service. You may not think of collections as customer service, but here is a new perspective. When people owe money, they are less happy, and if they don’t pay their balance, they will never return to the practice. One way that practices lose patients is when they have patients who owe money. When those patients default on their obligation they never come back. Based on this, it makes more business sense to collect money from patients at the time of service, so they do not have to be in a decision-making position of whether they are going to pay the practice. If balances are collected at the time of service, patients will be comfortable coming back and paying balances at the time of service in the future. It is estimated that practices lose well over $1 million of revenue over the course of a career simply due to patients who did not pay balances and never return.1 Furthermore, when patients owe money, they no longer like the practice, have negative things to say to other people in the community, and may write negative reviews.

4. Collecting at the time of service is easier on the team. By not having to deal with monthly statements and follow-up collections, the stress level for the dental team goes down and they can focus on other responsibilities that benefit the practice. The team will be happier, more efficient, and simply get more done.