Minimize Accounts Receivable and Increase Cash Flow in your Dental Practice

Key Takeaways:
  • Documenting clear financial policies and SOPs is essential for enforcing an effective collection process in dental practices.
  • Collecting the patient portion at the time of service is crucial for maintaining cash flow and minimizing accounts receivable.
  • Regularly managing accounts receivable and offering strategic financing options can help dental practices stay profitable and efficient.


Cash flow is an important part of any business, and it’s no different in dental practices. Without a system for minimizing accounts receivable, those numbers can quickly get out of hand and difficult to reign in. Here are best practices for minimizing accounts receivable in your office. 

Document Your Policy and Systems 

In order to enforce anything within your practice, you must have documented policies and systems. A strong collection process requires two things.  

  1. First, you need a clear financial policy. This policy should leave your team and your patients with no questions about how billing works at your office. It should include how insurance claims are processed, when payment is due, any fees for broken appointments or returned checks and financing options. 
  2. Second, you should work with your team to establish Standard Operating Procedures (SOPs) for discussing finances and accepting payment. Who talks about payment in your office? When does this conversation happen? Make sure your team understands every step of the process and hold them accountable for following those procedures. 

Collect at the Time of Service 

It’s imperative that dental practices collect the patient portion at the time of service. You wouldn’t dream of leaving the grocery store without paying for your groceries, would you? Apply the same standard to your dental practice. 

Every practice management software can calculate the patient’s portion if the patient is using insurance benefits. Be sure to import all contracted fee schedules and enter specific plan information, including the coverage table, benefit maximum and deductibles. Entered correctly, this information will allow you to estimate the patient portion on the day of service rather than waiting for the explanation of benefits. 

Offer Strategic Financing Options 

Collecting at the time of service is the best policy, but that doesn’t mean your office can’t offer financing options. The key here is to offer structured financing that doesn’t significantly impede profitability. 

Dental practices have several options for financing.  

  • You can implement an in-house option if you’re willing to take on that risk. In this case, it’s best to run a credit check and not offer payment plans that exceed 90 days. This is a riskier option, but it will also save on fees. Before you implement an in-house payment plan, research the lending laws and regulations in your state to ensure compliance. 
  • Third-party financing options include those like CareCredit, a popular choice among dentists, medical providers and veterinary offices. By using a third party, you remove all risks associated with collecting the outstanding debt. However, this often comes at a cost to the practice, which is why it’s important to be strategic about which patients are presented with this option.  

For example, say you are treating a patient whose insurance plan you’re in network with, and the procedure calls for a 35% insurance adjustment. If you also offer a 12-month payment plan that costs the office around 10%, you‘re now facing a total adjustment of 45%. Can your office afford that? Will you be profitable? You may only want to offer this option in certain instances or when the total dollar amount is over a certain number.  

Manage Your Accounts Receivable Weekly 

Even the best dental teams with pristine collection processes must manage their accounts receivable. Begin by creating goals for collections in your practice. Here are several helpful measurements to get you started. 

  • Collection to Net Production Ratio: Aim for an average of 99% or higher 
  • Total Accounts Receivable: No more than one month of the average net production 
  • Accounts Receivable over 90 Days: < 5% of the total accounts receivable 

Manage your accounts receivable on a weekly basis. Make a note of when each insurance carrier often pays and call or check the online portal as soon as that amount of time has passed. Many carriers pay within two to three weeks, especially if the office is sending electronic claims and accepting ACH payments. Any outstanding patient balances should be sent as soon as the balance is accrued. In the past, many offices sent statements monthly. Now that dental practices can email and text patient balances, it’s easy to send statements on a more frequent basis. 

Need Help with the Collections Process? 

Does your practice need help implementing an accounts receivable system? Reach out to a dental practice advisor at Adams Brown. We can help your team create systems that work for you and ensure you minimize the accounts receivable in your dental practice.