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August 19, 2002
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McKenzie's Weekly Management e-Motivator---Issue #25
Dr. Fred Friendly is
a chummy, ruddy faced fella with a hearty laugh and an empty wallet.
While fee-for-service is supposed to be his game, Free-for-Service
should be his name. This guy is swimming upstream and is about to
go belly-up. Cash flow? Zero, Zip, Zilch. He’s been in business
in a little Northwest logging community for about 30 years and has
extended credit for generations –grandparents, parents, children,
on and on.
Account receivables were
almost four times monthly production. The worst part, he didn’t
have a clue how serious his situation was, having barely paid attention
to this huge, little detail. Forget your spouse’s cell phone
number – this is the one number you must know. Accounts receivables
is the total amount of money owed to the practice from patients,
insurance companies, or other third parties, and it should never
be more than one month’s production.
If your total accounts
receivable exceeds your monthly production, it's a red flag indicating
problems in one or more of the following areas:
• Insurance system
• Billing system
• Financial policy
• Presentation of financial arrangements
• Consistent inability of financial coordinator to ask for
- Generate an aged
accounts receivable report monthly that lists every account with
an outstanding balance and date of last payment.
- Total all monies
over 90 days delinquent. The percentage should not be over 15%
of your total accounts receivable.
- Examine the charges
in the "current" column of the report. These are uncollected
monies produced in the past 29 days. Because the practice should
have a minimum of 45% over-the-counter collections for the month,
there should be no more than 55% in the current column awaiting
- Always run the report
with credit balances because credit balances need to be added
back to the total accounts receivable.
- Make one employee
accountable for collecting money, generating accounts receivable
reports, and following up on delinquent accounts.
Get the 411 on your numbers;
carefully monitor your accounts receivables.
this week for our newsletter subscribers only! Improve
YOUR Cash Flow!!! Buy the "CASH
FLOW MANAGEMENT" power book
for $35 and save $12
off the retail price. Click
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Technology Tool Box
A series of short weekly chores designed to keep
the return on investment in technology at its highest level.
Mark Dilatush, VP of Professional Relations,
• 1-877-777-6151 Ext. 28
Purpose: Accelerate cash flow, lower A/R, smooth
cash flow, smooth work load
What to do:
- Verify that your
computer system can run billing every day without re-billing patients
who just received a statement.
- Run billing every
- Print and send any
statements that come out of the printer.
- Run you’re
A/R for patients over 30 days at least twice per week. The only
“new” people to show up will be “just”
over 30 days.
- Contact everyone
on the list.
- Start today
- Never stop
- The first 30 days,
you will have very few bills every day and a lot on one day (your
old billing day). Eventually, this will spread out throughout
- Incoming patient
calls regarding bills will spread out.
- Incoming payments
will be up to 28 days early and spread out throughout the month.
- Fewer patients will
make their way to your over 30 day list and you will have fewer
patients to contact.
- More money in the
if your Business Staff had the Training,
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Sally McKenzie, President of McKenzie Management is pleased
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This issue is
sponsored in part by:
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areas of practices nationwide.You can find McKenzie Management at
- More than 30,000 healthcare practices nationwide use CareCredit
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You can find CareCredit at http://www.carecredit.com
Center for Dental Career Development - Providing
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Research - Make Your Practice Profitability Soar! SoftCare
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- Finances, via lease or loan, dental and office equipment, leasehold
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Allow InForms to participate in your successful practice
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