Time Really Is Money in Veterinary Debt Collections
What is the most difficult part about running a successful veterinary business? Is it maintaining a consistent and dependable customer base? Is it meeting the ever-changing demands of a continuously evolving industry? We often hear from veterinary professionals that the hardest part about operating a profitable veterinary practice is simply getting paid for the services you provide. Managing accounts receivable and recovering unpaid customer debt is likely not one of the reasons you got into the business of pet care. But the reality is; these are critical responsibilities for any veterinary clinic that wants to stay in business and maintain a healthy bottom line.
When discussing accounts receivable management practices with our clients, two questions we hear time and time again are “How long should I pursue unpaid pet owner accounts internally?” And, “When should my accounts be outsourced to a collection agency?”
When answering these questions, we always find ourselves using the phrase, ‘time is money.’ But what does that really mean? The graph below helps explains this fact and shows how the longer an account goes unpaid, the less value that receivable has (as an asset) on your balance sheet.
The takeaway from this graph is the universal truth that the faster you act on an unpaid customer account, the better chances you (or your collection agency) will have of a successful recovery. Time really is money when it comes to debt recovery because, as the graph above depicts, the more time a bill goes unpaid, the less money your veterinary practice can expect to earn from that account.
So to answer the questions, “How long should I pursue unpaid pet owner accounts internally?” And, “When should my accounts be outsourced to a collection agency?”
Veterinary clinics will typically pursue an unpaid customer bill for up to 120 days (usually 3-4 months) before sending the account out for 3rd party collection. Many veterinarians turn unpaid accounts over for collection even faster if they are targeting a higher recovery rate on their receivables or want to minimize the amount of effort required on their end in managing pet owner debt. Veterinary collection agencies also commonly advise that accounts be turned over before 90 days (or as fast as possible) if a veterinary practice wants to maximize the likelihood of collection.
So keep these industry norms in mind and determine the debt recovery and accounts receivable management goals you will set for your veterinary practice. Just remember to not waste any time when recovering your unpaid receivables and don’t hesitate to call in the experts. After all, providing superior pet care is what you do best. Getting you paid for the services you provide is what we do best.
YOUR TURN: How long do you pursue pet owner accounts internally before sending them out for 3rd party collection? Are you achieving your desired recovery rates and A/R management goals? What could you be doing different? We’d love to know!
No Legal Advice Intended: This communication is for informational purposes only and is not intended, and should not be taken, as legal advice on any particular set of facts or circumstances. This communication does not create an attorney-client relationship between you and I.C. System, Inc. You should contact an attorney for advice on specific legal issues.