AR (Accounts Receivable) Days
Found on the Collections Board, this metric will include a Year Over Year Chart in the Menu icon. To view definitions and additional information, select the Information ( i ) icon.
What is this?
The approximate amount of time that it takes for your practice to receive payments owed, in terms of receivables, from your patients and insurance claims.
Why is this Important?
AR Days has a wide variety of applications. It can indicate the amount of production your practice has made during a specific time period, how quickly patients are paying, if the practice's collections department is working well, if the practice is maintaining patient satisfaction, if there are issues with patient's insurance providers or if credit is being given to patients that are not credit worthy.
While looking at the individual AR Days value for your practice can provide a good benchmark for quickly assessing your cash flow, trends in AR Days are much more useful than an individual AR Days value. If your AR Days is increasing, it may indicate a few things. It may be that patients are taking more time to pay their balances, suggesting either that patient satisfaction is declining, that providers or administration within the company are offering longer terms of payment to drive increased treatment acceptance or that the practice is allowing patients with poor credit to receive treatment. Additionally, too sharp of an increase in AR Days can cause serious cash flow problems for a practice. If a practice is accustomed to paying its expenses at a certain rate on the basis of consistent payments on its patient's receivable, a sharp rise in AR Days can disrupt this flow and force the practice to make drastic changes.
Generally, when looking at your cash flow, it is helpful to track AR Days over time to determine if AR is trending in any particular direction or if there are any patterns to your cash flow history. AR Days may often vary on a monthly basis, particularly if your practice is affected by seasonality. If your AR Days are volatile, this may be cause for concern, but if AR Days tends to dip during a particular season each year, this might be less worrisome.