Do your collections accurately represent your adjusted production? Is your bookkeeper collecting everything charged? Are your past due accounts minimal? Are your Credit Card, Direct Deposits and Insurance payments under control? If not, maybe this management pearl can help.
Once your starts and miscellaneous charges are properly posted, you need to collect all of them. Unlike charges, which are instant the day they are posted, collections are posted over many months or years and require more control.
The factors that affect an increase or decrease in monthly collections, in order of probability are:
1) A significant change in the amount of the initial payments collected
monthly payments
2) Insurance payment changes that can get out of control
3) A sudden change in past due accounts do to economic conditions or poor past due control.
4) A sudden change the typical monthly payment amounts
5) Embezzlement of practice collections and lack of daily cash control
Factors to make sure that your collections are under control include:
1) Collect the initial payment on the IP date; and if not follow it up
2) Having only the bookkeeper post charges and payments (note about many adjustments in practices that don’t).
3) Controlling the daily collections; accounted for by more than one person
4) Control of contract adjustments: are those adjustment categories understandable? Are the contract adjustments monitored weekly/monthly and if so by whom?
5) Is the bookkeeper billing and going after the miscellaneous charges?
6) If the unknown drop in collections can’t be accounted for, is it embezzlement?
Refer to the attached PDF for a better understanding of why your collections change.
