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After practicing five years without performing write-offs, he may have accrued over $70,000 of uncollectable receivables, which are still “on the books”! If John were in the 1:1 range of AR to monthly collection, he should be carrying approximately $60,000 receivables. Yet, without the appropriate monthly bookkeeping, his computer is telling him that he has $130,000 outstanding!
not what you will ever allow in the future!), but based upon her history, you can count on her paying down her entire balance fairly soon. Do nothing with Mrs. Jones. At this rate, you’ll never get paid. Mrs. Smith has an overdue balance of $1,000. Over the last six months, she made random payments of $30, $25, $10, and $40. Based upon her history, you’re not only never going to see the money, but you will likely lose the patient as well. This is the point at which you send them the one-time- only “Amnesty Letter,” in which you offer them one-half off their remaining balance if they send in the other half within 10 days. Most won’t. Some will. If they do, terrific. Their balance is zero and you invite them back in for care. Assuming they don’t, then 14 days later, you write it off. Zero the balance out. All practice management software has a code for “bad debt write-offs.” What if Mrs. Smith decides to pay six months later? Simple. Not likely she will, but if she does, then simply reinstate the balance and enter the payment! For full details on how to systematically clean up your overdue accounts receivable, get a copy of my “Amnesty Letter,” and more, check out GoldMine UnderGround Team Training Toolkit 005, “Taming Your Accounts Receivable,” or ask your Personal Gems Concierge for assistance.
“Take a 60-second glance at your Gems Ratio module at least once per week. It will not require more than 60 seconds and could easily help you add tens of thousands of dollars revenue per year.”
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Imagine this happening in major league baseball!
Dashboard. This shows your “Gems Ratio,” three-month floating average net collections, and your accounts receivable, at a given point in time. You should take a 60-second glance at this module on your Gems Dashboard at least once per week. It will not require more than 60 seconds and could easily help you add tens, possibly even hundreds, of thousands of revenue dollars per year. If you are not yet up and running on your Gems Dashboard, ask your Personal Gems Concierge to get you started ASAP. Don’t wait! It’s an included benefit of your membership. The moment it’s fully lit up you’ll have at least one “aha!” moment. One of our Gems Family Members (I’ll call him John) has never written any bad debt off his books. He’s been in practice for about five years and thinks he is doing okay financially. Yet his practice numbers are not as meaningful as they could be if he were tending to the bad debt write-offs. Knowing your Gems Ratio (see the graphic on the cover) can help you make critical decisions regarding when it would be more profitable to allow certain patients longer- term internal financing and when doing so may be detrimental to your bottom line. If you are not routinely “cleaning up” the old accounts, the information available will be less meaningful. John hasn’t performed any write-offs in five years. His production and collection are roughly $720,000 annually. Let’s assume that 1%–2% of his production will become uncollectable. Perhaps $600–$1,200 per month — or up to $14,400 annually.
The Boston Red Sox are slugging it out in the World Series. It’s the top of the ninth inning. The scoreboard tells them they have a very comfortable lead — 18 runs to 3. The Sox
decide to pull their starting pitcher, along with half of the other positions. It’s time to give them a rest while allowing some of the less- experienced players to enjoy a few moments in the limelight. The only thing the Sox didn’t realize was that the scorekeeper accidentally left the prior three games’ runs up on the board! In reality, they were trailing 2 to 1! Once each month, you should determine which accounts are uncollectable. After 90 days overdue (and in the absence of an agreed-upon written extended payment plan to which your patient is adhering), you’ll take one of two actions.
“If your Gems Ratio is < 0.8:1, on the surface that may appear to be a good place to be. But it’s NOT!”
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Based on history, you’ll have your money within 4–6 months. Mrs. Jones has an overdue balance of $1,000. During the last six months, she made three random payments of $250, $380, and $425. It’s not ideal (and it’s certainly
After watching Gems Ratio and AR on your Gems Members’ Dashboard, you’ll understand how to drill down a bit deeper (sorry for the pun). For example, you may see the AR (all money owed to your practice)
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