So you have decided to get really serious about cleaning up (AR) accounts receivable…..where do you begin?
The logical place to start is by running reports to analyze exactly where AR stands. Today you should be receiving year end reports that will undoubtedly include an ATB. In fact the computer room may have called you and said…..do you really need this report? It’s huge. Your appropriate answer is yes……I need that report. If you haven’t set the parameters for the report recently……..go in and check on how that report will be sorted……..highest balance, oldest date is the right way to look at it. You will also want to look at a summary of the ATB to calculate what percent of AR is in what aging bucket. You will want to keep this ……when you give your improvement report to upper management (in about 90 days) …..this will be the starting point.
You will also need a “no activity” report………I know you run this regularly, but you need to take a close look at it and see if there are patterns of no activity……..do a re-bill on those transactions, or get on the phone with carrier to determine why payment has not been made. Or you may want to do both.
You will need a “remark code” report……….and I really hope you have stored the original remark code from the carrier someplace on transactions……or have invented your own…….but have always thought inventing your own is redundant …..carriers supply them and they mean something to them…use them. The remark code report will help you identify “low hanging fruit”. Assign some folks to go after that fruit. Be specific about expectations……give them a plan.
Back to the ATB……..after analyzing the report…….distribute the report to your best AR specialists…….working the ATB can be complex…..but also brings resolutions to accounts….not just transactions. There are usually multiple transactions on a problem account that need to be resolved……by working the ATB…….thousands of dollars can be handled by one person at one time. You may even want to assign a team to work the ATB…….highest balances, oldest date report. By working this report diligently for 90 days……..you will find dollars you didn’t even know were there coming in the door.
You will also need to keep a team working on the denials that come in the door today. The right expectation is work what comes in today first…….then work the backlog. Does that sound counter-intuitive? By working the backlog……you perpetuate the backlog until you draw a line in the sand and start working what comes in today….today. It’s the only real way to stop aging.
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