Dental Practice Accounts Receivable: When to Worry
AR over 90 days has less than 50% chance of collection. Aging benchmarks, 5 warning signs, and a system to keep your receivables healthy.
If more than 15% of your accounts receivable is over 90 days old, you have a collections problem that's costing you real money (ADA Survey of Dental Practice benchmarks, 2024). AR that ages past 90 days has less than a 50% chance of being collected. Past 120 days, that drops below 30%. Here's how to know when your AR needs attention and what to do about it.
AR Aging Benchmarks: Where Should You Be?
| AR Age Bucket | Healthy % | Warning % | Problem % |
|---|---|---|---|
| 0 - 30 days | 60%+ of total AR | 50 - 60% | Under 50% |
| 31 - 60 days | 15 - 20% | 20 - 25% | Over 25% |
| 61 - 90 days | 5 - 10% | 10 - 15% | Over 15% |
| 90+ days | Under 15% | 15 - 25% | Over 25% |
Sources: ADA Survey of Dental Practice 2024; MGMA benchmarking data; Dental Economics collection benchmarks
Another key metric: your total AR should be no more than 1 - 1.5 months of production. If you produce $80,000/month and your AR balance is $160,000, something is seriously wrong with your collection process.
The Operator Math: What Bad AR Costs You
Operator Math: AR Aging Impact
Total AR balance: $120,000
Percentage over 90 days: 25% ($30,000)
Collection probability on 90+ day AR: less than 50%
Expected loss: $15,000+
If you could keep 90+ day AR under 15% ($18,000), expected loss drops to $9,000
Improving AR management saves $6,000+ per cycle on a $120K AR balance
Based on MGMA collection probability data by aging bucket
Insurance AR vs. Patient AR: Different Problems, Different Solutions
Insurance AR
Insurance AR should turn over in 14 - 30 days. If claims are sitting unpaid past 30 days, the problem is usually:
- Missing or incorrect information on the claim (wrong subscriber ID, missing attachments)
- The claim was denied and nobody reworked it
- Electronic claims rejection that went unnoticed
- Coordination of benefits issues (patient has two insurances and neither wants to pay first)
Fix: Run your insurance aging report weekly. Flag anything over 14 days. Call the carrier at 30 days. Rework denials within 48 hours. Most PMS systems can automate claim status checks.
Patient AR
Patient balances are harder to collect because you're dealing with individuals, not companies. The collection rate on patient statements drops dramatically over time:
- Within 30 days of treatment: 90%+ collection rate
- 30 - 60 days: 70 - 80%
- 60 - 90 days: 50 - 60%
- 90+ days: Under 40%
Source: MGMA Practice Operations benchmarks
Fix: Collect at time of service. Offer payment plans for balances over $500. Send text-based payment links (patients respond to texts at 3x the rate of mailed statements). At 90 days, decide: write it off or send to collections.
5 Signs Your AR is in Trouble
- Total AR exceeds 1.5 months of production. This means money is piling up instead of flowing through.
- More than 25% of AR is over 90 days old. You've got a backlog of uncollectable debt that's masking your true financial position.
- Your collection rate is below 95%. AR problems are the most common reason collection rates drop below target.
- Insurance claims are pending 30+ days with no follow-up. If nobody's working the insurance aging report, claims fall through the cracks permanently.
- You're writing off large balances "to clear the books." Writing off AR without attempting to collect is just accepting lost revenue as normal.
Building an AR Management System
- Daily: Check electronic claim rejections and fix same-day. Collect patient portions at checkout.
- Weekly: Run insurance aging report. Follow up on anything over 14 days. Send patient statements for balances over 30 days.
- Monthly: Review full AR aging report with percentages by bucket. Identify trends. Review write-offs for appropriateness.
- Quarterly: Evaluate whether your AR management staffing is adequate. If AR is growing faster than production, you need more bandwidth on the billing side.
Want a fuller picture of your practice financial health? Use our Overhead Calculator to see how AR management connects to your overall overhead picture.
