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The 7 Credit Granting Policies All Medical Practices Should Implement

December 4, 2014

medical billing
In order to minimize the time and energy spent on past-due account collections, your practice should start by creating a credit policy. Large corporations use strictly enforced guidelines for whom to grant credit to, and these practices can greatly impact the amount of bad debts that must be written off over a year. Small companies, particularly medical practices, can benefit from creating similar policies for their extensions of credit. This will help minimize your practice’s losses and will help to bolster your overall profitability.

Step 1 – Define Terms

Net 30 is the most widely known, acceptable, and easy-to-implement term used for extended credit. This allows customers to plan around their cash flow needs, allows the company to be able to more accurately when their received payments will arrive. It also gives a clear, concise and defined payment schedule for both parties. By understanding when the customer will have money and clearly telling that customer when payment will be due, confusion is no longer an excuse.

Step 2 – Have a Signed Credit Application

Creating a signed agreement between provider and customer is a key step in establishing a working credit policy for your practice. This will outline expectations for both parties and help to identify potential customers who might become a problem later on. Customers who are able and willing to pay for services rendered will not blink at the expectation of signing such an agreement, so this will help to protect the business if collection action becomes necessary.

Step 3 – Invoice Promptly

Invoicing for services rendered at the point of sale will remind customers what was provided, what payment is expected, and when it is due. Giving a piece of paper they can take home with them will help to remind them of the agreed upon schedule and will help to ensure that payments are received promptly and in the full amounts.

Step 4 – Send Monthly Statements

Creating a written reminder of the date of service and the payment that is still due is a way to keep the bill fresh in a customer’s mind.  Generally, sending statements twice a month for medical practices is suggested. This will allow for sufficient reminders to be received by the outstanding customer before the bill has become past due.

Step 5 – Charge Interest and/or Collection Fees

Another way to promote prompt payment would be to create an encouraging reason to make the payment on time. By charging monthly interest rates or collection fees, customers are likely to want to save on those charges and typically become more likely to pay before being affected by such a fee.

Step 6 – Follow Up When 30 Days Past Due

A defined in-house collection procedure, which is followed each month, will help to alleviate some past-due accounts. This collection procedure should include phone calls, emails, or additional statements to be sent to the customer, making sure they are aware of the charge, and to determine if there have been any issues with the billing.

Step 7 – Use a Collection Agency at 60-90 Days Past Due

No matter the procedure in place to ensure only good customers are extended credit, there will come a time in every business where a payment is not obtained through the means available to your staff.  Collection Agencies are familiar with ways to obtain payment and are specialized in this process. When an account is at 60 or 90 days past due, it may be time to allow another company to take over, so that your staff can concentrate on keeping other business operations flowing smoothly.

If you would like to learn more about how best to make sure all your billing needs are handled professionally and efficiently, please feel free to contact us at any time.


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