The 12 Days of Critical Factors: The 2nd Day

The 2nd Day of Critical Factors:  Collections

2.  Collection.  Establish a goal of collecting a minimum of 97-98% of all dollars produced.  You will, certainly, have some months that exceed this minimally acceptable goal.  You might collect a total fee before treatment begins.  Or, you might collect some outstanding accounts.  These will both push those collection percentages over the minimally acceptable-which is great.

Multiply your percentage of lost collections times the total amount of your production and you will, probably, feel sick about the loss.  You work too hard to absorb those kinds of losses.  So, monitor this carefully. If your collection ratios are out of whack-investigate the reasons behind this "glitch".  Then, develop specific protocols to correct the "glitch".  Collection experts will tell you that if an account is 120 days old and the person who owes you money has made no effort to pay or to negotiate a settlement of the account that this account is uncollectable. Plus, carrying an account on your own books is expensive and time consuming. Low collection ratios will drive your overhead percentage out of proper alignment.  Watch this critical factor carefully.  It can be managed.

For more information on how Jameson Advisors can help you with your production and collections, click here.