How to Improve the Billing and Collection Process for Your Dental Office

Most dental offices find it challenging to keep track of collection activities. If you see your accounts receivable (A/R) increasing, a poor collection process is often to blame.

Since A/R turnover can significantly impact your profitability, you must address collection issues as early as possible. 

Once you’ve taken steps to consistently convert your accounts receivable into cash, you’ll find it easier to access the funds you need for:

• Upgrading equipment
• Hiring and training new staff
• Implementing more efficient office procedures that can ultimately grow your dental practice revenue

The better you convert your A/R over the long term, the healthier your cash flow will be. 

A good conversion goal is to have 95% of your patients pay their dental fees within sixty days of being billed. The 7 tips below can help you meet that objective by improving your dental office’s billing and collection process.

7 Tips to improve your billing and collections process

1. Verify patient insurance in advance

Your first step in the billing process should always be to ask patients for their dental insurance policies upfront (ideally, when they book their appointments). 

By requesting this information in advance, you’ll know exactly what their timely filing periods are and what their coverage does or doesn’t include in terms of any:

• Deductibles or downgrades
• Annual maximums or frequency limitations
• Missing tooth clauses or non-covered goods or services

This can increase your insurance collection percentages and help you avoid headaches like sending claims to the wrong insurance companies or blindly treating patients without active coverage. 

2. Quote fees before providing treatment

Rather than surprising patients with unexpected fees, they may have trouble paying later, make it a practice to: 

• Provide every patient with a cost estimate before conducting treatments
• Explain your payment terms and policies 
• Recommend alternative payment methods that could help make costlier treatments more manageable

The more your dental practice can do to clarify and streamline payments, the less likely a jumbled billing and collection process is to negatively impact your business. 

3. Collect payment upfront whenever possible

You must outline any early payments your patients will need to pay out-of-pocket before treatment begins. 

While collecting fees upfront for more expensive procedures might not be feasible, requesting payment at the time of service for treatments costing less than $200 can go a long way to reduce your collections.

4. Offer a wide range of payment options 

By accepting cash, debit, and credit cards (and requesting direct deposit or credit card information in advance), you can:

• Encourage more patients to pay on the spot
• Get paid automatically once a service is performed
• Side-step the billing and collection process more often 

If you don’t already, you should also consider offering third-party financing. 

External payment plans don’t just help more patients afford expensive or non-covered treatments—they can help you avoid chasing down payments.

5. Forward your insurance claims daily

The faster you file insurance claims, the faster your dental office gets paid. Investing in dedicated dental software is a great way to file claims electronically and speed up your collections process.

Not only will some software systems validate your claims automatically (allowing you to quickly address missing or incorrect information), but they also make it easy to monitor the status of your claims so you can spend less time following up with insurance companies.

6. Optimize your collections procedure 

Because many practitioners worry about damaging their client relationships (and losing patients to their competitors), it’s not uncommon for some dental offices to send out statements at 60 days and just hope for the best.

While it’s not in your best interest to be too aggressive when following up on unpaid bills, establishing a solid billing and collection process is important to help prevent your cash flow from suffering.

Start by following these 3 best practices:

1. Make sure all your patient communications are friendly, positive, and personalized
2. Find out which communication channels your patients prefer (do they want to be contacted by phone, mail, email, or text, for example)
3. Reach out to patients via their preferred messaging channel as soon as their payment is overdue

Ideally, you should continue to contact these patients with a friendly weekly reminder until their bills have been paid. Better still, you could use your invoicing or accounting software’s auto-reminders to follow up for you.

Not only will this minimize the number of hours you spend following up manually, but by sending weekly reminders as part of your billing process, you’ll also help keep your practice top-of-mind for patients juggling multiple payment obligations.

7. Be consistent about following up on payments

Because consistency plays a key role in the success of your collections, it’s a good idea to have dedicated staff follow up on bills that aren’t paid on time. However, remember that collections may take a back seat to more urgent tasks if you assign them to your bookkeeper or office manager. 

One way to avoid this problem is to outsource your receivables to a third-party collection agency. Since these companies specialize in collecting outstanding invoices, they can ensure your follow-ups are consistent and timely. 

Improve Cash Flow for your Dental Practice

If you want to improve the cash flow of your dental practice, follow these seven valuable tips:

1.  Inform patients about estimated payments before providing service

After you have diagnosed your patient and shared your suggested treatment options, you should also make sure they are fully informed of all the costs involved. 

If they have insurance coverage, you can request their insurance policy number to determine their coverage amount and inform them of the amount of their portion of the payment. This will avoid any issues later on and ensure they can afford the treatment you provide them.

2.  Review your expenses regularly

Minimizing your expenses is an excellent way to reduce the outflow of money from your clinic. Review your expenses regularly and identify those that may be unnecessary. Things like subscriptions or phone plans may be cancelled or reduced.

Also, you should review existing vendor contracts to determine if you are getting the best possible terms and pricing for your practice. Don’t be afraid to ask for a better deal or shop around with different companies to find the best prices.

3.  Follow up on late payments

When payments to your practice are late, your cash flow suffers. You must ensure that you regularly reach out to insurers and patients to follow up on late payments. You can also send automated payment reminder emails to anyone who is late paying you.

If you don't stay on top of your late payments, your cash flow will be reduced, and you may not have sufficient working capital on hand to pay your staff or your expenses.

4.  Ask patients to pay the total amount and file the reimbursement with their insurer

While this may not be a popular choice among patients, it could help improve your cash flow and eliminate the need to wait for payment from insurance companies. 

Dental fees can be expensive, and most patients prefer not to pay these high amounts out of pocket. However, insurers can take quite a while to process the payments owing to you, which can negatively impact your clinic's cash flow. They may take up to thirty days from the date you file the claim to pay, and if this occurs, you need to have sufficient cash on hand to pay your employees and other expenses.

5.  Build a cash flow forecast

Cash flow forecasts are an excellent tool for precisely predicting your future cash flow based on your clinic's historical data. They allow you the ability to anticipate busier months and slower times and can help you determine when your business might experience positive or negative cash flow situations. 

Based on the data in your forecast, if you anticipate a tighter cash flow period in certain months, you can proactively plan to cut costs or reduce staffing. You can also choose to postpone significant purchases such as new equipment.

It’s important to remember that a cash flow forecast does not guarantee 100% certainty. You will still need to compare it with your actual data and adjust it accordingly for a more accurate forecast.

6.  Review your cash flow statements every month

A cash flow statement is key to understanding where your cash is going. You may have some money tied up in inventory or in your accounts receivable for dental practices. You may also be paying more bills than you originally anticipated. 

By reviewing your cash flow statements every month, you will be able to identify where your cash is tied up and how you can improve the inflow of money to your clinic. For example, you can look at ways to collect payments faster or negotiate new payment terms with your vendors.

7.  Set aside a reserve fund

You are probably well aware that year-end is the busiest time for your dental practice. Your patients want to maximize their insurance coverage and use up any remaining amounts before the year ends. 

You want to set aside a reserve fund using retained earnings from these busy seasons to help cover slower times when this time comes around.

Keeping a close eye on your dental clinic's cash flow and identifying methods to improve the inflow and slow down the cash outflow from your practice can go a long way toward improving your business's financial health. 

6 Ways to Increase Dental Practice Revenue

1. Increase capacity

The simplest way to increase production and generate more practice revenue is by treating as many patients as possible. To bolster the capacity of your dental office, you might try:

• Relying more on your dental assistant to perform routine tasks like x-rays and cleanings
• Adding extra treatment rooms and hiring another dentist or hygienist 
• Streamlining patient interactions by shortening wait times, upgrading equipment, and ensuring every team member is well-trained

You should also consider outsourcing your bookkeeping and other administrative duties to make more time for income-producing treatments that can increase dental practice revenue. 

2. Offer more high-profit procedures

Certain dental procedures tend to be more profitable than standard care treatments. It might make sense, for example, to increase your focus on:

• Implants
• Porcelain veneers
• Crowns and bridges

However, while some treatments command a higher fee, they don’t always translate into a higher profit margin. You should weigh the financials carefully before offering costly or time-consuming procedures. 

3. Raise your fees

One way to increase dental practice revenue is to schedule an annual, across-the-board fee hike of 2-3%. You could also raise the fees for select procedures intermittently. 

Start by evaluating your services in terms of:

• Their cost
• The patient value they provide
• How much your competitors charge

You may find some of your fees are right on point, while others warrant a 5-15% increase right away. 

Whether annually or intermittently, not only can tiny fee increases add up over time, but rebalancing your fee schedule ensures you’ll start earning extra income immediately.

4. Boost patient retention

It’s generally less expensive to retain an existing dental client than it is to acquire a new one. Plus, employing basic customer service tools like these to improve patient relations can also increase your income.

Email marketing. Automated emails with direct booking links make it easy to follow up with patients at designated intervals and encourage them to schedule their next appointment. Dental marketing emails are also great for promoting time-limited offers on profitable, non-standard procedures.

Customer feedback. Patient satisfaction is the key to keeping more clients and improving your dental practice's success. Make sure you talk to your patients about their experience with you after each visit and follow up with a customer survey request via email.

Referrals and rewards programs. Loyal patients are crucial for repeat business and recommendations. Consider offering incentives (like a free product or whitening services, for example) to patients who refer friends, family, or coworkers and a membership program that rewards them for repeated visits. 

Remember: Gathering patient input isn’t just a cost-free way to discover how to improve your dental practice management; it also plays a big role in revenue growth. 

5. Offer financing options

Not every patient has dental insurance for non-standard procedures—and even those who do may have to cover certain out-of-pocket expenses themselves. 

For example, offering alternative financing options (like internal or external payment plans) can increase dental practice revenue by making your treatments more affordable for clients with insufficient insurance plans. 

You should also aim to work with more providers that enable direct insurance company billing. By allowing patients with cash flow difficulties to avoid paying for dental treatment upfront (and having to wait to get reimbursed), you’ll make it easier for them to take advantage of your services. 

6. Improve your financial visibility

Do you know how much revenue your practice generates or how profitable your dental clinic is? Questions like these can only be answered when your bookkeeping is accurate and up to date. 

It’s not unusual for dentists to neglect their books due to insufficient financial knowledge or time. Monthly bookkeeping is essential for gaining ongoing visibility into financial data, understanding cash flow, and making efficient business decisions.

Proper bookkeeping, for example, can show you: 

• Which dental procedures yield the highest profit margins – and where you might be overspending and eating away at those profits
• Where your costs are increasing – and what pricing changes you’ll need to make to cope with inflation
• What your peak or slow seasons are – and when you can afford to upgrade your equipment, hire another dental assistant, or expand your marketing campaign

Getting help with your billing and collection process is a great way to optimize your A/R conversions and manage past-due balances. Looking to outsource accounts receivable for your dental office? Enkel can help!