No better time to pay than now

It was a serious red flag, says CFO Chris Overend of the Escondido, Calif.-based Creekside Veterinary Service. Accounts receivable had crept up to a formidable figure, a common challenge in equine ambulatory practices. She went right to work on the problem. The practice was successful, but collections were out of hand, she says.

In the field: See the sign?

Overend sat down with the doctors one October night and told them it was time to make a change. The doctors agreed.

Practice manager Tim Brown sought out veterinary consultant Dr. Phil Farber of Fortune Management. With Dr. Farber's guidance and input and ideas that Overend had already begun implementing, the team was able to send accounts receivable plummeting by six figures in just four months.

The adjustments were simple in theory, but getting everyone to communicate better was no simple task. Farber led the team through sessions on changing old ways of communicating (see "Culture War? Not Here"). This work, along with a carefully planned increase in fees and better fee presentation to clients, were keys to the quick recovery.

Creekside was doing a great job taking care of clients and patients. Senior partner Dr. Steven Colburn focused on the value of customer service from day one: "Veterinary practice is all about taking care of people and letting them know what you can do for them," he says. With that good attitude and slightly higher fees, all that was left was a better system for collections.

No burning the midnight oil

Creekside's veterinarians—Drs. Colburn, Andrew Walker, Daniel Grove, and Jeffrey Moss—weren't discussing billing during their medical visits. They'd write up the bills when they got home at night and send out invoices once a month. The doctors wanted to focus on customer service, not take time to write out bills on the spot.

Practice psychology: Culture war? Not here.

A new plan, though, kept customer service front and center and also brought in the money. Dr. Farber told the team at Creekside they needed to think of billing as part of every appointment, and Overend produced a daily "hotsheet" for veterinarians going into the field so they knew which customers weren't paying in a timely fashion.

The benefits were obvious: faster payment and no writing up bills at night at home. But the new plan brought up a classic fear: What if clients who were used to delayed billing complained? The last thing the veterinarians wanted to create a lot of angry customers.

The new plan had that covered. After selling the veterinarians on the importance of prompt billing, it was time to sell the clients on it.

Fast receipts, better care

Overend wrote a letter to clients explaining the new policy. It stated that the clinic wanted to continue to provide the highest standards. To do so, Creekside needed prompt payment at the time of service. Overend made sure the entire team was on board with the new payment policy and could explain calmly and carefully to clients why the change was necessary.

Some regular clients wanted to know why the policy was changing, but most were comfortable with it after an explanation. The practice did make a few exceptions for clients with a long payment history, giving them up to 30 days to pay. For others, Overend was willing to charge $10 a week to their debit card. Then when the client needed new work done, he or she would be able to pay at the time of service.

The new billing policy is working well for Creekside. Accounts receivable show no signs of climbing anytime soon. Accounts 90 days late have fallen from 150 to 15 clients. The practice is making more money. Overend spends less time on collections and more on growing the business. With this first hurdle cleared, Creekside is moving ahead with plans for starting a small animal clinic to serve its large animal client base and is still working with Dr. Farber to improve.

"We were at the fledgling phase of growth when we first started meeting with him," Brown says. "With our ideas and his ideas, we've got the confidence to make it happen." Now the challenge is handling the accelerating growth. And that's a great challenge to face.