Days in Accounts Receivable

February 15th, 2009 - Codapedia Editor
Categories:   Accounts Receivable|Payments   Benchmarks   Collections  
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Practices should monitor their days in accounts receivable monthly and compare their days with the average days of other practices by specialty.  

Days in Receivables Outstanding:

A/R/(last 3 months of gross charges/90) = Days in A/R

Example:  3 months of charges= $927,009; A/R = 567,828

Average charge per day=$927,009/90 or 10,300.  (90 days in a 3-month period.)

567,828/10,300=55 days

Specialty normative data is available from the Medical Group Management Association or from Practice Support Resources.  Many specialty societies publish it as well.  

A practice with 45 days of accounts receivable has 30 days of average charges waiting to be collected.  The lower the number of days, the better the practice is doing.  

This measure is part of a management set of tools, which should be reviewed monthly to assess how well the staff is doing in collecting accounts receivable.  It can have a short-term increase after a month when there were significant charges or a short-term decrease after a month when there were high collections.  But, in general, it serves as an excellent early warning system of problems in the collection process.

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