3 Ways to Reduce Bad Debt and Make Sure Your Customers Pay
When your business is having trouble collecting debt or experiencing a trend of non-payment from your customers then better start considering on hiring a collection agency. But here are some steps that you can take to deal with problems like these yourself. This could work for you.
Whether you’ve got a few bad debts that need to be collected or a noticing that non-payment seems to be a trend for your customers, getting a collection agency on your side will set things into motion immediately. Here you’ll find some essential reactive and proactive steps you can take to ensure that your business doesn’t lose money because of your customer’s unwillingness to pay.
Send a 10 Day Demand Letter
Customers make decisions about which companies they need to pay right away and which ones they can put off. Don’t let your company be the one they think is soft and can be strung along for payment. Inform customers that you’ve got a collection agency on your side by sending a 10 day demand letter. Oftentimes, receipt of a demand letter from a collection agency is enough to get customers in default to start making payments. If not, the collection agency will begin pursing the funds after the 10 day period.
Be proactive: Collect detailed information from your new customers
You never know when a good customer will turn into a bad debt. The fact is that when companies experience difficult times, there is usually some money to pay bills, but perhaps not enough to pay all of them. Make sure your customers know that your company is one they should pay first by having them sign an agreement that informs then that your debt collection process include a collection agency. When opening a new customer account, ask for all of the necessary information a collection agency will need in order to pursue payment and update information regularly. You’ll need to have certain key customer information in order to contract a collection agency for recovery:
·Contact Name(s)
·Business Type (LLC, Inc, Sole Proprietorship)
·Physical and billing address
·Multiple contact numbers (direct line, cell, fax, etc)
Implement a consistent billing and collection process
As a business owner, your goal is to make and retain good relationships with customers. This means treating them fairly but firmly during times when they may be experiencing financial difficulty. The key to accomplishing this is to establish a set of expectations through your billing process that begins with a monthly bill, then a late notice, followed by a 10 day demand letter, followed by collection agency contact. By doing this consistently, your established clients aren’t likely to get offended or scared off, but rather understand that this is part of your process and not personal.
The older a debt gets, the less likely you are to collect the full amount. It’s important to clean up old debts and start a proactive billing approach that involves a collection agency in order to avoid future bad debt. According to statistics from the Commercial Law League of America, after a debt is 3 months old, you’re likely to receive only a 73% return on every dollar. As time passes the amount of payment you’re likely to receive decreases drastically. Teaming up with a high quality collection agency can have an incredible impact on your ability to recover funds and greatly improve the overall profitability of your company.
Ruben Soliman is a freelance copywriter. For more information about what a collection agency can do for you, visit www.abusa.com.
Non-payment of customers should not be the main problem you’re facing. You can devote your time with more important matters and leave the collection problems to agencies. Teaming up with the right collection agency will help you to recover funds that will affect the status of your company.
Collection Agencies; Not Just for Big Business
Hiring a collection agency is not exclusive to big businesses. It is easy and affordable to acquire help from these agencies. Small businesses does not have to suffer from great loss from long standing debt that will eventually put their company down. Follow these simple steps to consider in choosing a collection agency.
One of the reasons small businesses write off a great deal of loss is that they don’t realize how easy and affordably it can be to hire collection agencies to recover bad debt. Developing a success-driven mindset and taking action like your larger competitors is the first step to growing your business. Many of today’s collection agencies are small business friendly and can improve your company’s bottom line drastically with smart solutions for collecting bad debt.
Look for collection agencies that offer several collection tier levels
Small businesses often don’t utilize collection agencies like their larger competitors because they feel the debt owed may be insignificant to large collection agencies. Small businesses should look for collection agencies that offer different collection amount tiers. Debts as low as $1000, regardless of the size of the contacting business can be easily recovered by collection agencies.
Verify that the collection agency uses legal collection methods
The days of collection agencies harassing friends and family and calling late at night in an attempt to collect unpaid debt is long gone. To comply with today’s regulations, collection agencies must adhere to strict laws that require them to use more brains than brawn in an attempt to collect debt. Check to make sure that the collection agencies you’re considering belong to either the International Association of Commercial Collectors or the American Collector’s Association. Admittance to either requires that collection agencies adhere to the legal standards and ethics of third party collection agencies.
Collecting the debt yourself verses contracting a collection agency
First party collectors (i.e. business owners) are not bound by the same set of federal regulations when it comes to collecting debt. However, attempting to collect debt if not handled properly can result in poor client relations at best and a hefty fine at worst. A systematic, proactive first party collection approach works well for the first 30-60 days of delinquency. If the client hasn’t paid by that point, you’re at risk statistically for losing a substantial part of the balance.
A timeline of diminishing returns
Statistically, the longer a debt becomes overdue, the less likely that you will ever recover the full amount from the customer. Figures from collection agencies show that after 3 months of non-payment you can expect about a 73% return on every dollar, 50% on every dollar after 6 months, and 25% after one year. If you’ve got bad debt that’s piled up over long periods of time, your time may be better spent by hiring a collection agency to recoup some of your old debt and implementing a plan to prevent new bad debt.
Partnering with a collection agency
Some collection agencies offer an accounts receivable management program to help businesses manage their AR effectively. With this service, collection agencies print and send letters on your letterhead, contact clients under your name, handle disputes, and send the payment directly to your company. Most business owners don’t enjoy trying to track down their payments. It’s draining, frustrating, and most would rather spend their time working on creative ways to bring in new clients. For collection agencies, securing payments is what they do best.
Small businesses, perhaps more so than their larger competitors, can’t afford not to have a solid plan for collecting bad debt. Small businesses often operate on much tighter budgets and just one or two delinquent accounts can stop a small business in its tracks. Fortunately, modern collection agencies are small business friendly and are often just what small businesses need to become more profitable and take their business to the next level.
Ruben Soliman is a freelance copywriter. For more information about what a collection agency can do for you, visit www.abusa.com.
Small businesses should provide for the best protection available for their company. Protect your company from suffering big losses due to non-collection of debts. There are a lot of collection agencies that you can work with to avoid this. When you already have somebody to take care of your long standing collection then you concentrate now on implementing a plan to prevent new debt.
Denials and Delays in Your Medical Billing Claims
Denials and delays in medical billing claims will cost you a lot of money. Sometimes error, be it mechanical or human or an outdated codes, can cause this delays. It is important for you to appeal these claims. You might want to consider acquiring help to do this like outsourcing your medical billing.
Are you wary about fighting a denial on your medical billing claim? Don’t be. Sometimes medical billing claims are denied for legitimate reasons and other times a claim that should have been approved might be denied payment. Once in a great while your staff may miscode an item because they simply are not up to date on the CPT and ICD-9-CM rules and just plain old human error will factor in now and again.
Appealing a claim you feel should have been reimbursed is the way to maximize the revenue into your practice. Many practices lose great sums of income every year because they don’t appeal denied claims due to either staff constraints or they simply didn’t do it. Sometimes those claims get filed away by your staff with the good intention of handling them later but with day to day goings on, later just seems to be pushed further and further away and then your window for appealing a claim denial is gone.
Most denials can be grouped into a few categories:
*recording errors – simple mistakes like an incorrect insurance number or a mistyped date of birth can be all it takes to get a claim kicked back.
*coding errors – these will sneak through now and then even with all the checks and balances.
*processing errors such as incompatible edits.
Delays in medical billing are another issue that will cost your practice a lot of money. Delays can happen due to not getting a preapproval on a procedure or DME item. It also can happen when you forget to include documentation such as time line or medical necessity. Delays in payment due to errors are frustrating. They cost time and money in the form of someone on your staff will have put whatever they are doing aside and research the claim, pull files and resubmit.
If this is happening frequently in your practice, it may be time to consider outsourcing your medical billing. Your medical billing partner will pursue any denials in payment for you. If you get a claim denied for any reason, let your medical billing vendor look into the reason. In many cases they can go over the claim, find the error and/or recode if necessary and re-submit to the carrier and clearinghouse. When you consider claims submitted by professional medical billing firms have a less than 1% error rate, you can look forward to seeing your rate of denials and delays due to errors in coding decrease dramatically. This equals more revenue for you practice and also more time to run your practice and service patients instead of chasing paperwork.
Denials and delays are a fact of dealing with medical billing but you can make the incidence of this occurrence much less if you outsource your claims filing.
Kurt Clark is a freelance writer & CEO of Kurt Clark, Inc, a web development firm. Learn more at: www.kurtclarkinc.com Based on interview with the Director of Billing at OMG, www.outsourcemanagementgroup.com
It is important for you to consider acquiring help from outsourcing company to do your medical billing. You can outweigh its cost versus the possible revenues that they can recover through appealing your delayed or denied medical claims. The burden of filling all necessary documents, follow up and other related task on medical claims, will be taken out of your concern so that you can concentrate on the more important matters.