Why My Passion for Accounts Receivable?     

I will never forget that warm spring day in April.  I was a sophomore in college and it was the beginning of Spring break.  I was all packed and ready to head home.  In an attempt to save time and make it home as soon as possible, I decided I would carry all of my luggage out to my car in one trip.  There were two flights of stairs between my room and the ground floor to my car.  No elevator.  I made it down the first flight – about 20 stairs just fine.  In my confidence, however, the final six steps is where I took my fall.  I sprained one ankle and strained the other. 

The dorm director heard my fall and came to help me.  She asked whom I wanted her to call and like any good daughter I said, “My mother” and gave her the information.  About 30 minutes later my father showed up to my rescue.  I said, “Oh my gosh, Dad, I am so sorry.  Did you have to close the shop?”  His response was simply, “Don’t worry about that right now, let’s get you to the emergency room.”

 My Dad owned a TV sales and repair shop in Flemingsburg.  He had two gentlemen who worked for him doing repair work, but he was the salesman.  If he couldn’t be there, the shop had to close.  I felt guilty for making my Dad have to close his business for my misfortune.

 That afternoon, when I finally arrived home in crutches with both ankles wrapped up, I told my Dad I was fine and gave him clearance to head back to his shop for the day.  He said, “There is no more shop.” 

“What?” 

“I had to close it up.” 

“Why?”

“People won’t pay me.”

“Why?”

“I don’t know – they just won’t.”

“Can’t you take them to court?”

“That would cost more than what they owe me.”

“So what are you going to do?”

“What everyone else does I guess – get a job.  Your mother has her job.  We’ll be fine until I find something.  Your education is paid for – don’t worry about it.  It’s my problem.”

You see, my father lost his business because he couldn’t collect what was owed to him.  He allowed his accounts receivable to get out of hand and, for whatever reason, did nothing to get in under control.  Now there were lots of things he could have done.  He could have researched collection agencies.  He could have taken a few of the larger accounts to court.  But about the most anyone owed him was $200.00, and the total he was owed was about $12,000.00  That’s a lot of accounts and a lot of people.

So why didn’t my Dad seek out help?  For one reason, help was not as readily accessible as it is today.  We lived in a small town and he was a small business owner.  Collection agencies charged a fee back then and taking someone to court looked bad on you as a business person. 

But the biggest reason, I believe, is because his spirit was crushed.  Imagine that you’ve worked with someone to help them, but they don’t appreciate you enough to pay you.  What would that do to you after awhile?  Make you feel unappreciated?  Cause you to loose your excitement for your work?  Cause you to suspicion all of your customers?  Make you change your policies?  Would you become bitter?  Question every potential client that came into your office?

This is what I see when I work with Dentists.  They come to me and literally say, “Debra, this is it.  If your system doesn’t work, I’m closing my doors.  I’m tired of working on people for free.  I’m tired of being lied to.  I’m tired of losing staff.  I’m tired of not getting paid.  I and my team work hard for these people and they should pay.  That’s the bottom line and if they don’t want to pay, I’m not going to help them anymore. I’m getting out.”

 But it doesn’t have to be that way.  I have been there, and I got out.

 When I married my husband and “acquired” his dental practice, his total accounts receivable were around $48,500.  At that time, he was producing about $20,000 per month.  People could come in and get their dentistry and pay when and if they felt like it.  It was not a good approach and it was killing the business.  I didn’t understand the concept of not paying at time of service.  I always paid my bills. I remember watching my mother right checks after every procedure I ever had done whether it was the dentist’s office, doctor’s office, or wherever.  So I didn’t understand why some people could get away with not paying.  It just wasn’t right.

So I set out in search of a system.  I knew there had to be a way to get people to do the right thing and pay – or they would suffer some kind of consequences.  I didn’t know how or what the consequences would be, but I was determined that my husband was not going to lose his business like my father did.  At least not on my watch. And fortunately, he was not ready to give up either.

My educational background and related experience from my Bachelor of Science degree taught me that accounts receivable is a good thing.  As an accounting major, I learned that A/R is an asset on a business’ balance sheet.  An asset is a good thing, right?   What they don’t teach until the more advanced courses, is that at a certain point, in reality, A/R becomes uncollectible.  The business world calls this uncollectible accounts or bad debt expense.  In Dentistry, it’s just accounts receivable – why? – because, unfortunately, most people who owe a Dentist simply are not going to pay. 

 So in my motivation of wanting to solve this problem and develop a system to keep our accounts receivable under control, I started doing some research.  I read everything I could get my hands on from Dental consultants reports and seminars to regular small business books and journals.  I talked to other office managers, collection agencies, outside financing firms, dentists who had solved the problem and those who were in the same situation.  As a result, I developed this system.  It was specific to the needs of our patients and our practice, and it worked.  Now, our over 90 days hovers around $1500.00.  Our total A/R varies greatly, but is always negative – that’s right – it’s not a misprint – we have negative accounts receivable.  We owe more dentistry to our patients than what they owe us.  Does that mean that no one owes us money?  No.  Of course we have people who owe us – the insurance companies owe us – we still accept assignment of benefits.

I’m proud to say that we did all of this without losing any patients that we wanted to keep.  (Notice that wording – that we wanted to keep!)  And no one got offended or left the practice upset. 

Our number of new patients grew, and our practice grew as a result of this system.  I started with a positive $48,500.00 and just a couple of months ago was at a negative $48,500.00.  My goal was Zero and I accomplished that and more – and I’m going to show you how as well.

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