Lesson 6: A/R, Statements, and Collections

Accounts receivable is the gap between production and cash. Every dollar in it is work the practice has already done, paid for in supplies, lab bills, and payroll, and not yet collected. The older that dollar gets, the less likely it is ever to arrive.

This final lesson covers the systems that keep A/R small: how to read the aging report, how to work insurance and patient balances differently, what a statement cadence should look like, and what the rules are when an account goes to an outside agency. It builds on the checkout discipline from Front Office Fundamentals Lesson 4, which is where most A/R is prevented in the first place.

Two kinds of receivable

Reporting them together hides the problem. If the aging report shows $84,000 outstanding, the only useful next question is how much is insurance and how much is patient, because the two answers require completely different responses.

Reading the aging report

An aging report sorts outstanding balances by how long they have been outstanding, usually into 0 to 30 days, 31 to 60, 61 to 90, and over 90, measured from the date of service or the date the balance became the patient's responsibility. Some systems also show over 120 separately, which is worth having.

The over-90 bucket is the one that matters most. Older balances are harder to collect for ordinary reasons: people move, memories fade, disputes harden, and insurance filing and appeal deadlines expire. A practice with a small over-90 bucket is running its systems well no matter what the total looks like.

Commonly cited rules of thumb in dental practice management are that total A/R should be roughly in the neighborhood of one month of net production, and that the over-90 portion should be a small minority of the total. Treat these as directional rather than precise. What matters more than any benchmark is the trend in your own practice: whether the over-90 bucket is growing or shrinking quarter over quarter, and whether the same accounts keep appearing in it.

Working insurance aging

1. Sort by payer and by age, oldest first, and work the largest dollars in the oldest buckets.
2. Check status before calling. Portals answer most questions faster than a phone queue: received, in process, paid, denied, or never received.
3. Distinguish never received from denied. Never received means resubmit today and check the filing limit. Denied means work it through the process in Lesson 5.
4. Note the filing and appeal deadline on each account you touch, so you know what is about to become uncollectible.
5. Escalate patterns, not individual claims. One payer with fifty aged claims is a relationship problem for the owner to raise, not fifty phone calls.
6. Move the balance to the patient only when the insurance path is genuinely exhausted, and explain clearly when you do.

Statements: cadence and content

Statements should go out on a predictable cycle, usually monthly, and ideally in smaller daily or weekly batches rather than one large monthly run, so the resulting phone calls are spread out and someone can actually answer them.

A statement that gets paid is one the patient can understand in fifteen seconds. It should show the date of service, what was done in plain terms, what insurance was billed and what it paid, the patient's balance, the due date, and how to pay, including an online option. It should not be a raw ledger dump with procedure codes and no explanation.

Two practical additions. Put a short note on statements for accounts still waiting on insurance so patients do not panic or pay twice. And offer to email statements, because emailed statements are cheaper, arrive faster, and are paid sooner than mailed ones, provided the patient has consented to electronic communication.

The patient collection ladder

Two things make this ladder work. First, it has to be written down and applied consistently, because inconsistent collections is both a revenue problem and a fairness problem. Second, every rung should offer a path to resolution rather than only a demand. Most unpaid dental balances are affordability problems, and a patient who is offered a realistic arrangement usually takes it.

Payment plans and interest

If the practice carries balances, put every arrangement in writing with the total, the payment amount, the dates, and the consequence of a missed payment, and take the payments automatically rather than by statement. An arrangement that relies on the patient remembering is an arrangement that fails.

Two legal cautions, both worth real professional advice. Charging interest, late fees, or finance charges on patient balances, and offering in-house installment plans, can bring state consumer credit and disclosure requirements into play depending on how they are structured. And any financing arrangement should be reviewed against your payer contracts, several of which restrict what can be charged to covered patients. Have your own attorney review the agreement template and the policy before either is used.

Write-offs versus bad debt

A contractual write-off, as covered in Lesson 2, is required by a contract. Bad debt is different: it is a balance the practice has decided to stop pursuing. Keep them in separate adjustment categories, require a manager's authorization for bad debt, and record the reason, because a bad debt report is one of the more honest measures of how the front end is working.

Sending an account to collections and writing it off are also different decisions, and many practices confuse them. An account can be written off for reporting purposes while still being pursued, or pursued without being written off, depending on how the practice's accounting is set up. Ask your CPA how they want it handled so the books stay consistent.

When an account goes to collections

This should be a policy decision, not a mood. A workable policy states a minimum balance, a minimum age, a minimum number of documented contact attempts, an exclusion for accounts in a current payment arrangement or an active insurance dispute, and a requirement that a manager or owner authorizes each referral.

Hypothetical example of a policy: accounts over $150, more than 120 days old, with at least three documented contacts including one live phone call and one final notice letter, not in a current arrangement and not pending insurance, referred only with the office manager's written approval. That kind of rule is defensible, consistent, and easy to follow.

The rules that apply once you escalate

This is an area where getting it wrong creates legal exposure, so treat the following as general orientation and confirm all of it with your own attorney and your state's rules.

• Federal debt collection law. The Fair Debt Collection Practices Act governs the conduct of debt collectors, which generally means third parties collecting debts owed to someone else rather than a creditor collecting its own accounts in its own name. It restricts things like calling at inconvenient hours, contacting a consumer at work after being told not to, discussing the debt with third parties, and using false or abusive communications. Several states have their own debt collection statutes that do reach first-party creditors, so a practice cannot assume the federal exemption is the whole answer.
• Regulation F. The CFPB's debt collection rule, effective in late 2021, adds detail for covered debt collectors: limits on how often they may attempt telephone contact, a required validation notice with specified information about the debt, and rules for email and text communication including how a consumer opts out. If you use an outside agency, ask how it complies, because its conduct reflects on your practice.
• Privacy. Disclosing patient information to a collection agency is generally permissible as a payment activity under HIPAA, but the disclosure should be limited to the minimum necessary (typically identity, contact information, dates of service, and amounts, not clinical detail), and the agency ordinarily needs a business associate agreement. Your privacy officer should confirm the arrangement.
• Calls and texts. Telephone consumer protection rules apply to automated calls and text messages. Use the office's approved system, honor opt-outs immediately, and keep records of consent.
• Credit reporting. A CFPB rule that would have barred medical debt from consumer credit reports was finalized in early 2025 and then vacated by a federal court later that year, which held that the Fair Credit Reporting Act permits reporting appropriately coded medical debt. Separately, the nationwide credit bureaus adopted voluntary practices in recent years affecting paid medical collections, small-dollar medical collections, and how long a medical collection must be unpaid before it appears. Several states have also legislated in this area and preemption has been contested. Because this area has moved repeatedly, confirm the current state of play with your attorney before agreeing to any arrangement in which an agency reports patient accounts.
• Time limits. State statutes of limitation cap how long a debt can be pursued in court, and the period varies by state and by the type of obligation. Suing or threatening to sue on a time-barred debt creates exposure.
• Small claims court. For larger balances some owners use small claims court instead of an agency. Limits, filing procedures, and costs are set by state and county, and it is generally the owner's decision, not the front desk's.

A monthly A/R routine

Finishing the course

Across these six lessons the same theme keeps returning: the money is won or lost upstream. Accurate plan knowledge produces accurate estimates. Accurate estimates produce collection at the visit. Clean coding and same-day claims with attachments produce first-pass payment. Fast denial work recovers what slips through. By the time a balance reaches the over-90 bucket, most of the outcome was decided weeks earlier.

If you have not yet worked through Front Office Fundamentals, that course covers the patient-facing half of this work. For owner-level analysis see the operations chapters on insurance and the revenue cycle and financial management, and for the software mechanics see Open Dental Module 6.

Try it

1. Split your aging. Run the aging report and separate insurance from patient balances, excluding credits. Write down both totals and the over-90 figure for each. That is your baseline.
2. Work the ten oldest insurance claims. Check each one's status in the payer portal and classify it: never received, in process, or denied. Resubmit or appeal today, and note the filing deadline on each.
3. Read your own statement. Print a real statement and read it as a patient would. Can you tell what you owe and why in fifteen seconds? If not, write down the three changes that would fix it.
4. Draft the collections policy. Write a one-paragraph policy with a minimum balance, minimum age, required contacts, exclusions, and who authorizes. Take it to the owner for approval rather than assuming.
5. Audit five over-90 patient accounts. For each, check whether the documented contacts actually happened and whether a payment arrangement was ever offered. The pattern you find is usually the real cause of the bucket.

Check yourself

1. Why should insurance A/R and patient A/R be reported separately?

Because they age for different reasons and require different work. Insurance balances are worked through claim status, resubmission, and appeals; patient balances are worked through statements, calls, and payment arrangements. A single combined number tells you nothing about which system is failing.

2. Why is the over-90 bucket the number that matters most?

Because collectability drops sharply with age and because insurance filing and appeal deadlines expire. A growing over-90 bucket means balances are becoming permanently uncollectible, regardless of what the total looks like.

3. What is the difference between a contractual write-off and bad debt?

A contractual write-off is required by a network contract and is not collectible from anyone. Bad debt is a collectible balance the practice has chosen to stop pursuing. Keeping them in separate categories is what lets an owner see whether the problem is contracts or collections.

4. Does the federal Fair Debt Collection Practices Act apply to a dental office collecting its own patient balances?

Generally it governs debt collectors, meaning third parties collecting debts owed to others, rather than a creditor collecting its own accounts in its own name. However, several states have their own debt collection laws that do reach first-party creditors, so the practice should confirm its obligations with its own attorney rather than assuming it is exempt.

5. What should a collections referral policy specify?

A minimum balance, a minimum age, a required number of documented contacts including a live call and a final notice, exclusions for accounts in a current payment arrangement or with a pending insurance issue, and a named person who authorizes each referral. Consistency is what makes it defensible.

This guide is educational content and does not constitute legal, financial, tax, or clinical advice. Laws and regulations vary by state and change over time. Consult your own dental-specific attorney, CPA, and state dental board before acting.