Issue link: https://www.e-digitaleditions.com/i/1469972
7 Spring/Summer 2022 | Equine Solutions Avoiding overdue accounts receivable "There's nothing—nothing—better in terms of collecting the debt than not incurring it in the first place," noted Palmer. In that roundtable discussion, participants were asked what should be the norm or the "gold standard" regarding how clients pay equine veterinarians for services. Wendy Krebs, DVM, a partner and co-owner at Bend Equine Medical Center in Oregon, said "The short answer is payment at the time of service." Many practices, especially those established in the last decade, follow the business model of payment at the time that services are rendered, noted Grice. "Typically, the veterinarian prepares a medical record and invoice on practice management software installed on a laptop that travels with him or her in the truck. Then the veterinarian emails these documents to the client at the end of the visit. "If the client is attending the appointment, payment by cash or check can be collected while the doctor is present, or an authorization to charge a credit card on file is given," she explained. "In the case of absent owners, typically the invoice is emailed. The client has the opportunity to send an electronic payment, mail a check or have the amount charged to a credit card on file with the veterinary practice." This is a far cry from practices that only bill once a month and have clients that sometimes don't pay anything on the bill for 60 or more days—or sometimes months! Monthly billing always reduces cash flow, said Grice. The biggest cause of business failure is poor cash flow, she added. Payment at time of service Creating a financial policy that payment is due at time of service, communicating that to clients clearly and frequently, and holding all clients (and veterinarians) to that policy are the first steps in controlling accounts receivable. "Creating a FAQ document can be very helpful when rolling out a new policy," said Grice. "All clients should sign a form acknowledging they understand the payment policy and perhaps giving permission to charge their credit card for each invoice." Making it easy for clients to pay at time of service (i.e., by having a credit card on file) and veterinarians to get that payment (either by asking to charge that card or taking payment on the spot) will reduce your accounts receivable. Grice noted, "Business health requires reliable cash flow, and payment at the time of service can minimize accounts receivable and maximize efficiency. Consistent financial policies and deliberate methods for collecting overdue accounts can change the landscape. Equine practices can successfully adopt new paradigms with leadership from practice owners." Veterinarians should realize that accounts receivable are monies owed to you from invoices that clients have received for your services but have not yet paid. These funds are considered current assets on your practice's balance sheet. Current assets are those that can be converted to cash within 12 months. Although a few accounts receivable at some practices are many years old, most are more current. A practice's accountant generally will write off markedly aged AR as uncollectible. The best way to handle accounts receivable is to not have any! – Noted by CVT and practice manager Kyle Palmer in a 2021 CareCredit roundtable of veterinary industry professionals.