Introduction
Days in AR is a very important concept. It explains the impact of delayed payments on cash flow and measures the amount of time between payment being due and when it clears your bank account. The concept is primarily used to evaluate a practice’s financial health.
A high days-in-AR number means that your payers are slow to reimburse you and your practice is not focusing on maximizing cash flow
It is important for you to understand that a high days-in-AR number means that payers are slow to reimburse, and the organization is not maximizing cash flow. It also means that the practice has to hold on to money for longer than it should.
A low days-in-AR number means that payers are being prompt in their reimbursements and the organization is better able to reinvest in the practice.
A low days-in-AR number means that payers are being prompt in their reimbursements and the organization is better able to invest, earn interest or use the cash to reinvest in the practice.
Payers are not always timely in paying claims and this can cause problems for organizations looking to maintain a healthy cash flow. A low days-in-AR number can help your organization reduce the amount of time you have to wait to get paid and increase cash flow. It also means that your account receivables are less likely to become uncollectible because they’ll be collected sooner than later if you have a low days-in-AR number. If you want more information about improving your accounts receivables collection process, contact us today!
In addition to the financial impact, having a low days-in-AR metric lets providers know they’re doing a good job with their revenue cycle management.
Money is the lifeblood of practice, and keeping that money flowing is important. But it’s not just about ensuring the business has enough cash to pay its bills; there are many ways to use that money that can positively impact your bottom line.
If you have low days-in-AR, you can use it for new equipment or software, staff salaries and training expenses, marketing efforts, or even personal investments if you want to take some time off from work. Many providers choose to invest their savings back into their practices by paying off debt or investing in new equipment when they see how many AR dollars they have available after using up all their current collection efforts.
The benefit of having a low days-in-AR metric is ensuring that the provider organization has adequate cash flow, access to capital, and recognition for doing a good job
- ● Cash flow. Days in AR help providers gauge their ability to pay their creditors on time.
- ● Access to capital. By tracking and monitoring days-in-AR metrics, providers can determine whether they need additional working capital or if their existing levels of liquidity are sufficient for them to continue operations without interruption or disruption.
- ● Reputation & Recognition . A low days-in-AR metric can be used as an indication of risk management processes being effective in ensuring payment on receivables balances within a mutually agreed-upon timeframe. This will help improve the reputation of the provider organization among its customers as well as increase its ability to secure new business opportunities through referrals from its existing client base (i.e., word-of-mouth marketing).
Conclusion
Having a low days-in-AR metric is important to help ensure that the provider organization has adequate cash flow and can access capital, as well as recognition for doing a good job with their revenue cycle management.
Lower Your Days in AR With WWS
