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A dun deal: Collect on past-due accounts

March 1, 2006

Does your accounts receivable make up more than 2.5 percent of your practice's yearly gross income if you're a small animal hospital and 4 percent to 5 percent if you're equine or large animal? If so, it's time to take action.

Does your accounts receivable make up more than 2.5 percent of your practice's yearly gross income if you're a small animal hospital and 4 percent to 5 percent if you're equine or large animal? If so, it's time to take action. Read the recommendations below, then visit www.vetecon.com and click on "Forms" to download the sample final collection letter.

You wish it never had to happen. But you sometimes put your heart and soul into saving a pet and the owner never pays. It's easy to feel disheartened and scrutinize every client with a jaundiced eye—will this person pay when the bill is due? But that's not the most productive approach. Instead, let's look at some concrete strategies your team members can use to keep past-due accounts from taking a big bite out of your practice pocketbook.

Do you know who's late?

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Shelly Farber, the office manager at All Creatures Vet Clinic in Almena, Kan., tracks her past due accounts when she generates statements and sends letters for accounts that are 60 and 90 days overdue. Farber says she has a 50 percent response rate for her first past-due notice, and her second notice usually resolves any other overdue accounts. "The second notice reminds the client that the account is seriously delinquent and must be paid in full by a certain date or it will be sent to collections," Farber says.

Final collection letter

Pamela Stevenson, CVPM, a practice management consultant who owns Veterinary Results Management Inc. in Durham, N.C., says collection letters are more successful when they're personal. "You want to appeal to the trust factor," she says. "For example, you might say, 'You placed your confidence in us to care for your pet and now we're placing our confidence in you to pay the bill.'"

Of course, the sad truth is sometimes your practice has to prosecute to collect. You may choose to send the bill to a collection agency or an attorney or you may decide to pursue legal action in small claims court.

Farber says the fact that she's not afraid to prosecute is one reason that her letters work so well. "Of course, it's a lot easier to try to work out payment arrangements with clients if at all possible," she says. "After all, even if you receive judgements against clients, it doesn't mean they'll pay. Then you have to follow through with garnishment to collect."

Make sure it doesn't happen again

There's a simple solution to preventing overdue accounts: never extend credit. It's a choice some practices make, and it's up to you and your team members to decide whether you feel comfortable turning away clients who can't pay.

Stevenson suggests taking a look at your clientele. Are most of them loyal and closely bonded with your practice? If yes, you'll probably see fewer problems collecting later.

Your team members could also discuss pet insurance with clients before their pets face illness or injury, Stevenson says. And keep in mind, third-party payment options offer an easy alternative to extending credit.

Remember, most of your clients are people who love their pets. "We've all had a month when we faced unforeseen circumstances and we just couldn't pay, so it's important to give clients the benefit of the doubt," Farber says. "I've always had more luck catching flies with honey than vinegar."

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