The Top 11 Ways To Maximize Internal Collections

When a business provides a product or service, it has the right to be paid on a timely basis. With smaller margins due to increased competition, good collection procedures can increase your cash flow very, very fast. Here are 11 ways to maximize internal collections.

1] Have a Defined Credit Collection Policy. One of the major causes of overdue receivables is that the business has not defined to its customers and staff when accounts are to be paid. If customers are not educated that accounts are to be paid on time, then chances are they'll pay late or sometimes not at all. Make sure that your company's terms of payment are clearly stated in writing to each customer.

2] Invoice Promptly and Send Statements Regularly. If you don't have a systematic invoicing and billing system, get one. Many times the customer hasn't paid simply because they haven't been billed or reminded to pay in a timely manner. This situation usually occurs in smaller or newer businesses where they're short on staff to invoice and bill.

3] Use "Address Service Requested." One of the most difficult collection problems is tracking down a customer who has "skipped". All businesses should be aware of a special service offered by the Post Office. Any statement or correspondence sent out from a business or professional office should have the words "Address Service Requested" printed or stamped on the envelope, just below your return address in the top left corner. If a statement or invoice is sent to a customer who has moved without informing you of their new address, and the words "Address Service Requested" appear on the envelope, the Post Office will research this information and return the envelope to you on a yellow sticker that gives the new address or other updated information. If the customer has placed a "forwarding order" with the Post Office, the Post Office is required to forward the envelope to the customer and give you a form #3547 with the new address and charge you approx. 50 cents. This will keep your address files up to date.

4] Contact Overdue Accounts More Frequently. No law says you can contact a customer only once a month. The old adage "The squeaky wheel gets the grease" has a great deal of merit when it comes to collecting past due accounts. It's an excellent idea to contact late payers every 10-14 days. Doing so will enable you to diplomatically remind the customer of your terms of payment.

5] Use Your Aging Sheet, Not Your Feelings. Many businesses (or well-meaning people on their staff) have let an account age beyond the point of ever being collected because he or she "felt" the customer would pay eventually. While there are a few isolated cases of unusual situations, the truth is that if you aren't being paid, someone else is. So stick to your systematic plan of follow up. You'll soon know who intends to really pay and who doesn't. You can then take appropriate action once you know where you stand.

6] Make Sure Your Staff is Properly Trained. Even "experienced" staff members can sometimes become jaded when dealing with past due customers. This usually occurs when they have made and broken promises for payment. Make sure the staff is firm, yet courteous when dealing with them. Your collection staff could benefit from customer service training because, in effect, they must "sell" your customers on the idea that you expect to be paid. Make sure that your collection staff is trained to not only bring the account current, but to also maintain good will with them.

7] Keep Accurate And Timely Payment Records. Once a new patient is accepted for treatment, it is vitally important to maintain accurate and timely records on their payment history. If you see any deviation from past payment patterns, and especially if payments become unusually slow, immediate follow-up is warranted. This not only gives you an early alert to impending payment problems, it also gives you the chance for early intervention if there is an outside influence.

8] Follow the Collection Laws in Your State. In many states, businesses are governed by the same collection laws as are collection agencies. For example, calling customers at an odd hour or disclosing to a third party that they owe you money are just a couple of the numerous collection practices that can cause serious repercussions. If you're not sure, call your state's department of finance which governs and monitors collection agencies. Click Here for a summary of the Fair Debt Collection Practices Act.

9] Use a Third Party Sooner. If you've systematically pursued your past due accounts for 60 to 90 days from the due date, (and they still haven't paid) you're being delivered a message by your client. More than likely, you've requested payment four to six times in the form of phone calls, letters and statements. Statistics show that after 90 days, the effect of in-house collection efforts wears off 80%". That means that the time and financial resources budgeted for collection efforts should be focused within the first 90 days where the bulk of your accounts can and should be collected. From that point on, a third party can motivate a customer to pay in ways you cannot, simply because the demand for payment is coming from someone other than you. Before paying a percentage to a collection agency, or using small claims court or an attorney, check into using a fixed flat fee collection service such as Transworld Systems Inc. Transworld has 140 licensed offices nationwide, has the highest recovery rate in the industry, and charges a fixed fee of around $10 per account, regardless of the amount owed, or where the debtor is located.

10] Admit And Correct Any Mistakes On Your Part. Sometimes your customers do not pay because they feel you have made a mistake. Unfortunately, many customers believe that "the owner/president doesn't need the money". Denying an obvious error only fans the fire of resentment your customer may already feel. If the basis of the non-payment is a dispute over the quality of your product or service, a mutually agreeable settlement between you and the customer should be arrived at promptly. The customer may use a minor dispute to withhold substantial payment. Insist that the undisputed portion get paid immediately, indicating the balance will be negotiated. This will not only help to collect payment payment, it shows the customer that you are listening to his or her concerns.

11] Remember that Nobody Collects Every Account. Even by setting up and adhering to a specific collection plan, there are a few accounts that will never be collected. By identifying these accounts early, you will save yourself and your company a great deal of time and money. Even though a few may slip by, you'll find that overall the number of slow pay and nonpaying accounts will greatly diminish, and that's a victory in itself!

Courtesy of Collection Agency Services

Hospitals Look For Ways To Stop Hemorrhaging From Bad Debt

Spiraling health care costs spawned a little-noticed side-effect: More hospitals are stiffed for the bill.

At Albany Medical Center Hospital, the charity and "bad debt" bills last year totaled $24 million. That's about 5 percent of the net revenue of $490 million.

At Northeast Health's two hospitals--Samaritan in Troy and Albany Memorial Hospital--unpaid bills run about 6 percent annually and the number is climbing, according to Lori Santos, chief financial officer for patient care. Northeast is exploring one suggested remedy: Immediately after treatment in the emergency room, patients are escorted politely to the admissions office to settle up the bill or set a schedule for payment.

"Some studies show that you're more likely to get a full payment if they're coming directly from treatment," said Santos. It's cheaper than tracking them down later. In some parts of the country, hospitals request advance down payments for elective procedures.

Some of the rise in unpaid bills can be attributed to the increasing number of uninsured, calculated at one of every six Americans. Of growing concern are the insured patients who can't afford, or simply don't want to pay, the higher co-payment deductibles. "When most of them come into the emergency room, there is no time for financial screening," said James Barba, president and CEO of Albany Medical Center. "We ask only one question: Do you need care?"
No one is turned away for financial reasons. Federal regulations require that nonprofit hospitals provide care for all, regardless of financial status.

The percentage of unpaid bills continues to grow at Albany Med. The increasing number of Medicaid patients also puts a burden on the facility. "We are providing 35 percent of all Medicaid care for all of the four-county area and 61 percent of the Albany County Medicaid," Barba said. At the emergency room of Albany Memorial, the uninsured account for about 17 percent of the patient load. Sorting out the charity cases from the deadbeats is not simple. In some instances, those patients that will not pay up are simply written off. Sometimes the cost of chasing down deadbeats is prohibitive.

Depending on the terms of the contract with the outside collection agency, the hospital's return on an unpaid bill sent to collection is 60 to 70 cents on the dollar, said Santos. Albany Med goes to collection agencies for about 10 to 15 percent of the deadbeat cases. By policy, Albany Med does not seek arrest or to attach personal residences. In the recent past, Albany Med had an uninsured patient who simply refused to pay his bill even though he had personal assets of more than $1 million. His case was pursued aggressively and the bill was collected. Barba counters critics who say hospitals should simply write off bad debts as a contribution to community service. "We must operate prudently with sound business practices if we are to stay in business. Otherwise, there is no health care." Additionally, state regulators require hospitals to pursue all available revenues.

Hospitals make several efforts to secure payment before passing a case on to a medical collection agency. At Northeast, it's a minimum of four months. In assessing pure charity cases, Albany Med uses federal guidelines based on income. Some patients pay nothing. Some pay on a sliding scale.

For charity cases, hospitals receive modest reimbursement under federal Medicare formulas. A "bad debt pool" managed by the state Department of Health pays a pittance. Hospital officials aren't yet at the point of chasing patients out the door to collect the bill. But they are finding new ways of getting the money upfront.

R.W. Groneman