If you take insurance and even if you are a cash practitioner, you should run an aging of accounts every month. What I mean by an aging of accounts is just a report that tells you who owes you money and how long they've owed you that money. And you have to decide based on that report what you need to do for collections.
I have here a hypothetical aging of accounts that I'd like to go over with you and show you what we would do if we found these on our aging of accounts. Let's look at the aging of accounts.
You can see the first person there is Bill Jones. Now he doesn't owe anything for 30 days, 60 days, 90 days, but from 90 days to 120 days he owes $100 and for over 120 days he owes $400. So he owes a total of $500. Now it appears to me that he has stopped coming in some time ago, about three months ago, and we have not collected from the times previous. Something went wrong, we sent it to the wrong insurance company, or we didn't bill it because we didn't have the right information, but something has gone wrong with this account. And we have to check it out right away because it's getting past the timely filing limit.
I think most of you know that some insurance companies now have a timely filing limit of just 90 days. So really, in theory, this money that is owed could all be lost because we didn't collect it quickly enough.
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