|7 Ideas to Minimize Late Payments and Overdue Balances|
It's the end of the month, and you are dreading looking at your monthly income report. Why? Because every month you see unpaid balances on your accounting ledger, and you need that cash flow to help pay those end-of-month business expenses. How do you currently go about resolving this every month? You could send out new invoices to your clients, but that will result in duplicate costs in time and money required to re-print invoices and envelopes, stuff the envelopes, and pay for another round of postage to re-send the invoices. Another option is to spend hours on the phone chasing insurance companies for payment updates. Finally, there is also the “Ostrich” approach, whereby you simply stick your head in the sand and hope that you get paid soon.
Better yet, why not take your billing and accounts receivable practices from the ridiculous to the sublime by implementing the following tips to help you get paid faster:
Offer payment options: Most of us don't carry cash anymore, and checkbooks are becoming non-existent. Offer clients the option to pay their fees by credit or debit. While there are fees associated with this form of payment, the costs related to overdue balances can be crippling to your practice, and they often far exceed the relatively nominal fees for processing credit and debit payments.
Offer pre-payment programs: If you charge $125 a session, offer 4 pre-paid sessions a month for $440. When your client comes in for their first session of the month, process their payment for the monthly program fee, keeping a credit balance on file for their remaining sessions that month.
Use a Fee Agreement to clarify your policies: Your Fee Agreement should not be just for outlining your fee structure. You should also use your Fee Agreement to explain your payment policies. Include a section where clients can enter their credit card information that may be used to pay off overdue balances on a monthly basis.
Use a practice management system or credit card processing service that can store client credit cards for virtual payment processing: Getting your client to pay by credit card while they are in your office is easy. Getting your client to pay an unpaid balance once they have left your office can be a bit more complicated. Systems that have the ability to store client payment information within a secure and encrypted environment can help you get paid immediately. By employing this type of secure, encrypted, and PCI-compliant tool, you can store a client's credit card to process future payments and overdue balance at time of service or at end of month (or whatever your policy stipulates in your Fee Agreement). As an added bonus, virtual credit card processing is another step toward a paperless office, reducing both your required storage space, as well as your environmental footprint.
Don't use end-of-month credit card payment policies: Once you have implemented the system recommended above, you can store client credit card information and process payments as they come due. You may encounter problems, however, if you delay payment processing until the end of the month. Although processing payments on a monthly basis may seem like a more efficient use of your time, such a policy can actually end up being more burdensome as it may result in payment delays and associated efforts in chasing payments. Processing a client's credit card on a weekly basis for $150 is more likely to get approved than processing $500 at the end of the month. While we would like to believe that all of our clients carry available balances on their cards to pay for your services, this is not always the case. Taking the time to process a payment at the time of service guarantees you speedy payment. Furthermore, if you attempt to process the payment while your client is in the office but the payment fails, you can discuss this with your client right then and there, and you can also make alternative payment arrangements if necessary.
Payment at time of service: We have heard this one for years, but is this your practice's policy? Making a practice of taking payment at time of service is one of the most important policies to implement in your practice. If you have a fee-for-service practice, this should be an easy strategy to put into action. particularly if you take credit cards, or have a credit card on file. If you take insurance, make sure to check co-pays with the insurance payer prior to the client's initial appointment.
Use a clearinghouse to process insurance: There are two main benefits to adding a clearinghouse to your accounts receivables strategy. First, if you are make a mistake or miss entering information on paper claims, you will have to wait several weeks to receive notification of the problem. When you use a clearinghouse, you usually receive notification of the issue within 24 hours of submitting the claim. Second, claims processed through a clearinghouse often get paid faster than paper submissions.
Also in this issue: How Do I Process a Credit Card with a Chip?
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