AR (Accounts Receivable) Ratio
Found on the Collections Board, this metric will include a Year Over Year Trend and a 90 Day Trend in the Graph icon. To view definitions and additional information, select the Information ( i ) icon.
💥Note💥: Data will not appear in this metric until Dental Intel has been actively syncing for 30 days. This metric is not based on historical data pulled from your Practice Management Software, this is based on cumulative data.
What is this?
The AR Ratio is an activity ratio measuring how efficiently the practice manages the credit it issues to patients and collects on that credit. This ratio is calculated by dividing the Average Accounts Receivable during a given period by the Net Production (Collectable Production) during the same period. It is important to note that the accounts receivable ratio is an average, and averages can hide important details. For example, some past due receivables could be "hidden" or offset by receivables that have been paid faster than the average.
Why is this Important?
The AR Ratio has several important functions other than simply assessing whether or not a company has issues collecting on credit. Though this offers important insight, it does not tell the whole story. For example, if one were to track a company's receivables turnover ratio over time, it would say much more about the company's history in relationship to issuing and collecting on credit than a single value can. By looking at the progression, one can determine if the company's receivable turnover ratio is trending in a certain direction or if there are certain recurring patterns. By tracking this ratio over time alongside earnings, one may be able to determine whether a company's credit practices are helping or hurting the company's bottom line. By clicking on this metric you can see the past 36 months AR Ratios