Effective credit & collection techniques (Proceedings)

Credit

I. The Big Question – Should I Extend Credit?

     A. Do you have a choice?

     B. Large animal versus small animal practice

II. How To Prevent Accounts Receivable

     A. Effective record keeping

          1. Client information card – "let's get acquainted form"

               a. Name, address and telephone number

               b. Occupation

               c. Business address and telephone number

               d. Social security number

               e. Driver's license number

               f. Credit card name and number or other credit reference

               g. Information about spouse or nearest relative

          2. Allows information to be obtained once, but should be continually updated

          3. Don't get burned twice!!

     B. Effective financial communication – Clear financial policy

          1. Internal credit and collection policy

          2. Handout

          3. Post sign at front desk

          4. State in hospital brochure

          5. Conditions of admission

          6. Verbal reinforcement

     C. Written estimates

          1. Trauma/emergency cases

               a. Twenty-four hour estimates

               b. Complete estimate

          2. Elective procedures

          3. Non-elective medical and surgical procedures

     D. Deposits

          1. Established clients versus new clients

          2. As percentage of medical care plan

          3. Opens door to effective communication

     E. Proves financial integrity of client

     F. Check guarantee services – cost versus loss

     G. Credit bureau – ability to obtain credit files

     H. Allowing use of major credit cards

     I. Payment contracts

III. Use of Hospital Manager as Financial Mediator

     A. Relieves practitioner of this burden – less stressful for doctor and client

     B. A more professional approach

          1. Prevents "giveaways"

          2. Better latitude for discussion of financial matters

IV. The Only Debt Incurred Should Be Those You Authorize

     A. Calculated risk?

     B. Debt or charity?

Collection

I. To Pursue Collection or Not?

     A. What is the reason for non-payment?

          1. Lack of funds

          2. Dissatisfaction with services rendered

          3. Unwilling to pay

     B. Effect on practice—public relations

     C. Amount of outstanding debt

     D. Are you trying to "get blood from a stone" or are you "throwing good money after bad?"

     E. Internal collection versus outside agencies

II. The Four Most Common Collection Problems

     A. Bounced checks

          1. An innocent mistake? (May be the easiest to solve)

          2. Overdrafts

               a. Call client and note statements made

               b. Call bank

               c. Send to bank for collection

               d. Have warrant issued for client's arrest

               e. Small claims court

               f. Send to lawyer or collection agency

     B. Stop payments

          1. Ascertain reason for this action

               a. Dissatisfaction

               b. Lack of funds

               c. Mediate or negotiate

               d. Small claims court

               e. Attorney or collection agency

     C. Default on financial arrangements

          1. Review or revise contract

          2. Trade services for payment (e.g. janitorial or maintenance work)

          3. Small claims court

          4. Attorney or collection agency

     D. Deceased or abandoned animals

          1. Most difficult collection situation

          2. Deposits are a must

          3. "Why should I pay for a deceased pet?" – queries should be answered by effective communication

          4. Abandoned pet letter

               a. State laws pertaining to abandonment

               b. "Conditions of Admission"

          5. Small claims court

          6. Attorney or collection agency

          7. Always make sure there are sufficient assets available before

          8. Proceeding with collection activity!

III. Cost-effective Management Of Accounts Receivable

     A. The longer the money is owed, the less it is worth

          1. No reinvestment potential

          2. Poor interest rate – if any

          3. Cost of billing

     B. Age your accounts receivable

          1. 30 days

          2. 60 days

          3. 90 days

     C. Efficiency of the billing system

          1. Computer

          2. One-write billing system

               a. Ledger cards

               b. Photocopying – internal or commercial

          3. Single type collection reminders

     D. Institute a billing charge

          1. Helps defray costs of billing

          2. Helps to reduce accounts receivable and the billing process

          3. Establish policy

               a. Send letter to accounts receivable and the billing process

               b. Establish policy

                    i. Send letter to accounts receivable clients

                    ii. Rubber stamp statements

                    iii. Post notice or sign

                    iv. Billing fee versus percentage

IV. Refer Delinquent or Non-Active Accounts Immediately

     A. The older the account, the harder to collect

     B. Establish rapport with lawyer or collection agency

          4. Review their performance

          1. Monitor effectiveness

          2. Determine collection costs

     C. Review account for collect-ability

V. The Human Factor

     A. Sympathizing with the collection

          1. Real or "bogus"

          2. The "professional"

     B. Give away or take away – who is in control?

     C. A business approach – services were requested and rendered; Payment is thereby mandatory

Internal credit policy

1. No client is to be allowed to charge any portion of their bill without the doctor's permission. Either a note can be made on a client's record or a colored dot used to indicate clients who are allowed to routinely charge for services rendered.

2. Clients should be encouraged to pay with cash, check, care credit or charge cards.

     • Always ask for government issued identification to compare the name, address and signature

     • Write down the information on the check

3. Clients are to be informed that any bill that is not paid by the end of the month will be charged a service charge $_____ per month.

4. Written health care plans are to be provided by the practice. For first time clients and all emergencies, a 50% deposit on the estimated charges will also be required and obtained.

5. Pre-dated and post dated checks, held check, will not be accepted as banks do not guarantee the funds when they are processed and this is a risk to the practice.

6. Written estimates are to be provided by the practice. For first time clients and all emergencies, a 50% deposit on the estimate will also be required and obtained.

Internal collection policy

1. Bills are to be sent on the first of the month.

2. At 30 days, a client should be sent a standard statement indicating their balance, as well as the service charge assessed.

3. At 60 days, any client who has failed to pay on an outstanding account bill be sent a second statement along with a first collection letter. Additional service charges are to be assessed.

4. Any client who has failed to pay any amount on their outstanding account after 90 days will be send a second and final collection letter. Additional service charges are to be assessed.

5. If the client does not respond within 15 days, a telephone call should be made to that client. The phone conversation should request payment in full or a payment plan should be set up with that client.

6. If the account is not satisfied in a reasonable period of time, meaning 15 days after the telephone conversation occurs, the account should be reviewed for collectability and if deemed collectable, it should be forwarded to a qualified collection agency or collection lawyer. If the account is not deemed collectable, the account should still be forwarded to a qualified collection agency and then written off.

First collection letter (sample)

(DATE)

Client's Name

Address

City, State, Zip Code

RE: Past due balance: $XXXXXX

Dear Client:

I am writing to you regarding your account with our hospital, which is considerably delinquent at this time.

As you are well aware, all the doctors and staff at the (Practice Name) strive to provide the utmost in quality care and service to our clients. It is distressing to us when our valued clients allow their accounts to age without any payment on them.

If there is a problem regarding your statement, please call our office. If not, please help to retain your credit status with us and forward payment in the amount of $___________________.

Your help and cooperation in this matter would be greatly appreciated.

Sincerely,

(Name)

Bookkeeper

Final collection letter (sample)

(DATE)

Client's Name

Address

City, State, Zip Code

RE: Past due balance: $XXXXXX

Dear Client:

Continued requests have been made by this office for you to settle your outstanding account with us. To date, you have failed to respond or indicate any type of repayment plan to us.

Due to these facts, we feel that we have no alternative other than to refer your account to our attorney for collection. In addition, any future services requested by you will require full payment on your outstanding balance plus C.O.D. on current services provided.

Once your account is referred to our attorney, we will request that he pursue collection through litigation. At that time, you will be held responsible for all attorneys' fees, court costs, and costs of litigation.

We feel it is very unfortunate that we have been forced to pursue this course of action. If you wish, payment in the amount of $___________________________can be made to our office on or before___________________________to avoid this process.

Sincerely,

(Name)

Bookkeeper