Benchmarking Accounts Receivable 90 Days Old or Older

Benchmark for Receivables Over 90 Days

As you know, accounts Receivable (A/R) is crucial for any practice's financial health, often categorized into aging buckets: 30, 60, 90, and 120 days. The bucket for A/R aged over 90 days is particularly significant. Many professionals ask, "What is a reasonable benchmark for receivables over 90 days old?" The answer is 18-22% of your total accounts receivable. 

A/R exceeding 90 days is a clear indicator of how well your practice manages reimbursements. High or increasing percentages can signal problems in your revenue cycle management, such as delays in handling denials or aged claims. If your practice struggles with collecting claims before they reach 90 days, it might be time to consider outsourcing your revenue cycle management to improve efficiency. 

The Impact of High Receivables Over 90 Days

While the benchmark of 18-22% for A/R over 90 days serves as a good starting point, it is essential to understand the broader implications of excessive receivables in this category. High levels of receivables over 90 days can indicate significant issues that could affect both your financial health and operational performance. 

1. Cash Flow Pressures

A high percentage of receivables over 90 days can severely impact your cash flow, making it challenging to meet financial obligations such as payroll, supplies, and other operational expenses. Maintaining a steady cash flow is crucial for smooth operations and ensuring the stability of your practice. 

2. Increased Risk of Non-Collection

The longer a receivable remains unpaid, the less likely it is to be collected. Payers may delay payments due to disputes, documentation issues, or administrative errors. Addressing these issues promptly can prevent them from becoming more challenging to resolve. 

3. Patient Satisfaction Concerns

Excessive receivables over 90 days can also negatively affect patient satisfaction. Patients may receive multiple bills or reminders, leading to frustration and confusion. Streamlining your billing process and resolving claims promptly can improve the patient experience and build trust in your practice. 

Strategies to Manage Receivables Over 90 Days

To manage high A/R over 90 days effectively, consider the following strategies: 

1. Implement Rigorous Follow-Up Procedures

Establish a systematic approach for following up on overdue accounts. Regularly review aged receivables and prioritize efforts to address the oldest claims first. This proactive approach can help reduce the amount of outstanding receivables and improve cash flow. 

2. Invest in Staff Training

Ensure your team is well-trained in managing and processing claims efficiently. Providing your staff with the necessary skills and knowledge can help them handle denials and aged claims more effectively, reducing the amount of A/R over 90 days. 

3. Leverage Technology

Utilize technology to track and manage claims efficiently. Implementing advanced billing and accounting software can provide real-time insights into your accounts receivable, making it easier to identify and address issues promptly. 

4. Review and Optimize Your Revenue Cycle

Regularly assess your revenue cycle processes to identify areas for improvement. Seek advice from experts such as Reed Tinsley, CPA,  who can offer valuable insights and recommendations to help you manage your accounts receivable more effectively. 

5. Consider Outsourcing

If managing your accounts receivable in-house proves challenging, consider outsourcing your revenue cycle management. External experts can bring specialized knowledge and resources to handle your A/R, allowing your practice to focus on core activities while improving overall efficiency. 

Maintaining a benchmark of 18-22% for receivables over 90 days is an excellent starting point, but it’s crucial to address the underlying issues that contribute to high levels of aged receivables. By implementing rigorous follow-up procedures, investing in staff training, leveraging technology, and regularly reviewing your revenue cycle processes, you can effectively manage your accounts receivable and enhance your practice's financial performance. If needed, seek guidance from professionals to ensure your practice remains on track and financially healthy.