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Accounts Receivable Aging Reports And How to Prepare Them

An accounts receivable aging report organizes all unpaid customer invoices based on how long they have been outstanding. The report is generally divided into intervals that help practices in monitoring receivables in a timely manner which ultimately helps practice owners identify why their revenue may be going down. Accounts receivable aging reports also help track their outstanding payments from clients which helps them identify those clients who are becoming credit risks. Practices aim to provide treatments and other services and receive timely payments. Hence, they must always keep track of their receivables and stay on top of who owes them to maintain their financial health.

How to prepare accounts receivable aging reports

An AR aging report is generally prepared by listing the names of the patients, the amount of money they owe the practice at different time intervals, and the total of all the outstanding balances. It is also called an aging schedule because all the outstanding dues from clients are duly segregated and divided into different time intervals based on their due dates.

  1. Review open invoices

The best way to start preparing the report is by reviewing all the outstanding invoices of the practice to get a complete financial picture of the practice at the end of the report.

  1. Categorization based on the aging schedule

The next step is to sort all the invoices by patient name and subsequently itemize each client’s invoice. The invoices are then sorted out by invoice date or number.

  1. Customer list with outstanding invoices

Once the invoices have been sorted and categorized, the next step to follow is the creation of a list of clients with outstanding invoice balances. These client details are included in the final accounts receivable aging report.

  1. List customers based on the number of days outstanding

Finally, the clients are listed on the accounts receivable aging report based on the number of days due on their invoices. 

Importance of Accounts Receivable Aging Reports

  1. Stay on top of your billings
    Accounts receivable aging reports allow a practice to identify those patients who repeatedly fail to pay their invoices. The practice is then able to contact these patients to follow up on their dues, allowing the practice to stay in a tight loop with its billing and collection processes. With regular follow-up, late payments can be prevented and bad debt occurrences can be significantly reduced.
  2. Suspend ties with arduous clients
    Accounts receivable aging reports give you a clear picture of your good and bad clients and ultimately help you identify the clients the practice needs to sever ties with to prevent losses. It is always a good idea to let go of clients who constantly fail or struggle to pay their dues.
  3. Maintain healthy cash flow
    Delayed payments can be problematic for practices for several reasons, including causing a disruption in its cash flow. A healthy cash flow is essential for running a successful practice. Practice can incur tremendous losses and eventually fail when clients stop paying or due to mismanaged cash flows.
    An accounts receivable aging report allows the practice to identify issues in the accounts receivable. Based on these, the practice can then take steps to remedy those problems, such as getting clients to pay their dues faster or preventing issues in cash flow.
  4. Identify risks of bad credit
    The AR aging report method can help the practice estimate its uncollectible debts, be it for one reason or another. This figure can then be used as the end balance of allowance for all the doubtful accounts for the practice. It is observed that the longer accounts receivables remain outstanding, the lesser likely it is that the practice will be able to collect them. The adjusted journal entries for these bad debt expenses can later serve as a reference source to identify bad credit risks early and avoid them.
  5. Improve your collection process
    AR aging reports allow a practice to analyze its collection process. For instance, numerous old accounts receivables, mostly clocking over 60 or 90 days, may indicate that the practice may be weak in its collection process. Therefore taking note of such trends from the AR aging reports, can help remedy the situation by making changes and adjustments in the practice’s collection practices, making sure invoices are sent correctly, or hiring a debt collection agency.
  6. Alter your credit policies
    AR aging reports are helpful in identifying those clients who are lagging behind on payments. If these clients are few in number, then the appropriate actions are taken on a case-to-case basis. However, if repeated instances of a similar trend are observed in multiple clients, it clearly indicates an issue with the existing credit policy. In such a scenario, appropriate research needs to be done and the credit risk and policy of the practice need to be compared with the industry standards to check for the need to make adjustments.

It is time to clean up your old Accounts Receivable

Collecting patients’ payments on time can be one of the most difficult parts of running a dental practice. Having old or aging accounts can indeed become a headache for your practice’s payment collections and management. Your practice needs to make sure that it is getting paid for the services provided and that the payment is collected from both the patients and the insurance provider. But often you see practices struggling to collect payments on time.

There are various explanations for why dental practices do not receive full payment. 

This includes:

  • The patient leaves a balance.
  • Insurance does not provide the expected coverage.
  • The patient discontinues payments under the established payment plan.

Now, why do you need to clean up your old accounts?

Accounts receivable is a major expense for dental practices which can easily go out of control. If accounts receivable get too high, it can even result in your practice being closed down. However, the good news is that regular cleaning up of accounts over the next 90 days will help your practice collect outstanding balances and limit bad debts, thereby preventing the accounts receivable from getting too high. Clearing old accounts on a regular basis also helps to make sure that not much time or money is spent chasing past-due patients’ balances and insurance balances. The goal of your practice should be to clear all accounts in accounts receivable that are older than 30 days.

Steps to cleaning up old accounts

Create a report

The first step to cleaning your old accounts is to create a report of accounts over the past 90 days. The likelihood of your practice collecting on overdue accounts decreases dramatically once they remain unpaid for such  long periods of time. This makes it important for practices to create a report of all the old accounts before they get written off.

Clean up patient data

Making sure that your patient data is clean and accurate is highly important for ensuring that your claims get paid on time. Any mistakes or inaccuracies in it can lead to payments getting delayed or worse, claims getting denied altogether.


  • Check for any duplicates
  • Check for missing information
  • Check for inaccuracies or errors
  • Check for inaccurate patient demographics
  • Check if the patient data are up-to-date

Review pending patient payments

Reviewing pending payments helps your practice get an idea of what went wrong, whether it is a mistake from your part or the insurance provider or the patient. Reviewing payments within the last 30 days will help you know if any payments have been forgotten or if there is some kind of problem with one of the insurance providers.

Send friendly reminders

The best way to stay organized and on top of the numerous patient payments is to send timely reminders via text messages, emails or phone calls. This helps your practice make sure that none of the payments go unpaid. It can be the best means to remind your patients of their payments, as there are high chances that they might forget about the payment.

Make follow-up calls

This is the last step in cleaning up the old accounts. It is the part where you call the patients to remind them of the payments and convince them to pay the due amount. There may be a lot of reasons that keep your patients from making the payments. This is your chance to talk to them and understand what is stopping them from making the payments so as to make the necessary changes to make payments easier for your patients, if possible.

Here are a few tips to clean up your unhealthy accounts receivable:

Collect payments on or before the day of treatment

Make sure to collect patient payments before providing the services so as to make sure that none of it goes unpaid. Collecting payments prior to providing services also helps reduce no-shows and cancellations. If you are not able to collect it at the time of scheduling, do so before the patient returns for treatment, especially if their appointment is long or challenging.

Avoid surprises

Before beginning treatment, explain the treatment plan and the anticipated cost to your patients. Have current eligibility information, a summary of benefits, and the insurance fee schedule on hand for the patient. Avoid surprises as it may ruin their experience, making them lose trust in your practice and not want to visit again.

Provide constant reminders

Provide constant reminders to your patient so as to make sure that they do not forget about their payments that are due. Make sure to call the patient if payment is not made by the due date. Even better, send them a text or email with a link to a payment page so they may pay the remainder online quickly and conveniently.

Offer various payment options

Make sure that it is easier for the patients to make the payment by offering them various payment options. In addition to accepting cash, checks, and charge cards, allow your patients the convenience of making payments online. Thus helping your practice collect payments faster and easier.

Cleaning up old accounts can be a great way for your practice to collect on outstanding balances and reducing bad debts. The key is to do it regularly and make sure you have a plan in place before starting.

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