Prevent Unpaid Invoices From Affecting Your Cash Flow

Every business has customers with unpaid accounts. It’s frustrating and uncomfortable to have to ask people to pay you what is owed. Even if you haven’t had large amounts of bad debt during your time in private practice, unpaid invoices can easily go unnoticed or written off. However, they do add up and have a negative impact on your cash flow.

A healthy cash flow is vital for the daily operation of your practice. Expenses like salaries, operating costs, buying of stock, and paying provisional taxes are part of the daily operations of any business. If your cash flow is limited and does not cover these expenses, you could end up having to close your practice. No business can run at a loss or with an unhealthy cash flow for long.

We have pondered this a lot over the years and have come up with a few strategies to help you collect on unpaid invoices and maintain a healthy cash flow.

Invest in Practice Management Software

This software is designed to assist you and your staff in managing your business’s administrative functions. With good practice management software, your staff should easily be able to track, monitor, and follow up on overdue accounts.

We’ve seen many small businesses that use either Excel or Word as their accounting program. Struggle on a month-to-month basis to keep track of the accounts that are overdue. Some businesses have fantastic invoicing software which ensures that they know when their invoices have gone out. However every month they have to draw a report on their accounts aging or overdue accounts.

Using Excel, Word or reports pulled from software is not the worst way to collect or follow up on overdue accounts but it is very time-consuming. If you are a small business, a one-man show or a business that doesn’t have a large administration team. You need to find ways of managing overdue accounts that are not time-consuming. And ensures that your team is able to follow up effectively and quickly on all accounts that are overdue.

Empower Your Front-desk Staff

If your business is large enough front-desk staff are critical to the success of your payment collections process. They deal directly with your clients every day and have insights that could enhance the success of your business.

Here are a few tips on how to empower your staff.

• Make them aware of changes in policies as soon as possible.
• Get their input on your payment policy. Set up an in-house brainstorming session to review your payment policy and see if anything should be added or updated with your current policy.
• Listen to their experience of collecting. Talking to clients about outstanding payments can be challenging and uncomfortable. Your staff has to be comfortable with discussing all parts of your collection process. This means that they have to understand the payment policies. Ideally, your staff needs to be professional and effective across a variety of scenarios when it comes to collecting overdue payments.
• Get their take on the practice technology. Having practice management software is only half the equation. To truly reap the benefits of this technology for your practice management, you need to talk to your staff about how user-friendly it is. Do they know how to use all the features? Is it enhancing your collection process by enabling them to check benefits, and send real-time claims and invoices at the end of the consultation? Can they identify any gaps in the functionality or usability that you need to know? 

Determine Your Payment Policy

Now is a good time to review your payment policy if you have not done so in the last two years. Update your payment policy with any changes that you want and make sure that you share those changes with your staff and your clients. You want to keep the following in mind when you are updating your payment policy.

• Your payment policy is the basis of your collections journey. Importantly, once those responsibilities have been communicated – they must be enforced, or the policy is meaningless.
• Update the policy with the payment methods you accept. Remember to include cashless or contactless payment options you may have implemented.
  Include payment terms & processes for collecting payments & reimbursement from medical aids.
• Make a point of using conversational, easy-to-understand language to explain client responsibility. Your policy shouldn’t read like a legal document, it should be accessible for all to understand & comply with.

Know When to Stop Chasing

There will always be the delinquent unrelenting non-paying client despite your best efforts to recover the funds. In the end, you have to consider every phone call, email, and SMS to try to bring in the payment. If the cost of collecting on an invoice is more than the value of the invoice don’t keep chasing the non-payer.

Set very clear rules on how many reminders a client will receive and at what point your collection process ends. However, if your cash flow is at risk due to large numbers of clients not paying it may be beneficial to look to a debt collection firm to take over the collections.

If you would like to book an appointment with our team to chat about your private practice and see how we could assist please click here to book an appointment