1. “Acknowledge the impact of self-pay patients “

this really isn’t so much a tip on collection as it is a reminder to keep in mind that 16% of the US population is uninsured and can account for a significant portion of the problem debt.

2. “Start early”

The researchers suggest that early efforts to control receivables incurred by emergency room visits can have a significant impact on the bottom line. They note that successful healthcare providers utilize best in class “front-end procedures such as patient admittance, charity care classification, and insurance approval” to help reduce receivables risk. this would include partnering with A collection agency that does more than mere collections, but provides intelligent input into the “revenue cycle.”

3. “Use different services for different purposes”

The paper suggests dividing up the collection effort among three different groups. The first group is, in effect, an outsourced accounts receivable department that collects in the name of the healthcare provider. The second group is a contingent fee-based collection agency, that is, the most typical organization that is thought of one one refers to a collection agency. The third group is what the paper terms “debt buyers” which can be investment pools that buy up healthcare receivables and and turn them into investments for their stakeholders.

This is an interesting suggestion that could become a part of a well-planned collection program.

4. “Negotiate based on price, but only to a point”

This tip explains that there has been a bit of a “land rush” by collection agencies into the healthcare receivables segment of the market as the segment continues to experience strong growth in demand for debt collection services. This rush of collection agencies into the market has pushed collection fees down to an average of about 21%.

The researchers invite you to take into consideration the fee being proposed by the collection agency, but not to forget the organization standing behind the fee. What are you buying for that price? Look at experience, whether it has well-trained personnel, whether it uses creative methodologies, et cetera.

Part two of this series of tips will be published tomorrow.

If you write off a debt or receivable as a complete loss, IRS Reg. S1.61-12 requires that the debtor report the charged off debt as income on their tax return. This transformation of a debt into income, on which taxes have to be paid, turns out to be a very effective method of getting a debtor’s attention.

No one wants the IRS to take a closer look at their tax return and IRS Reg. S1.61-12 plays on this fear. You see, in order to ensure compliance with this rule, the IRS requires that you, the business that wrote off the debt, send in a W-9 to tell the IRS about the conversion of the debt into a loss. The IRS will then look to match up the W-9 with the debtor’s tax return and see if the income has been properly reported. You can imagine what happens when the IRS discovers the debtor did not disclose the income.

The only way for the debtor to avoid the IRS scrutiny is to pay the bill. Make that abundantly clear to the delinquent debtor and see how quick the debt gets paid.

How can you start using this powerful collection technique?

I developed a program called, The IRS Advantage, which has proven to be a very effective way to get customers to pay their overdue accounts using IRS Reg. S1.61-12. It comes complete with the following:

• Instructions and guidelines
• Collection letter templates for both corporate and consumer accounts (in MS Word)
• Suggested phone scripts
• IRS Form W-9 with web links
• A pre-formatted template of the IRS 10 day demand letter which can be sent out on your company’s letterhead
• IRS Fax Demand template – 4 pages (fax cover sheet template, IRS collection letter, Form W-9 first page and penalties page)
• Background information with technical addendum to ensure compliance and effectiveness

Using The IRS Advantage is the quickest and easiest way to start using this effective tool of debt collection. Order the program by calling 888-722-1611.

(1) Have a Written Credit Policy.

A written policy educates the customer as to what you expect from them. It Lays out the ground rules for paying on credit and shapes their expectations. Without a written policy there can be a substantial amount of arguing back and forth about when something is supposed to be paid, how much time between the invoice and payment is reasonable, etc. think of a credit policy as a contract (which, actually, it is) between you and the customer laying out each obligation than they have and each responsibility you have.

(2) Invoice Quickly.

As soon as you ship the product, or as soon as you finish the work, send an invoice. Do not delay as this invites a delayed payment. A quick invoice also communicates to your customer that you are serious about getting payment.

(3) Tell the Customer About the Oustanding Balance When they Buy Again.

It is not unusual for a customer who is overdue to make additional purchases on their account in the mean time. PC mag suggests that every time they make a new purchase that you remind them about the outstanding balance. The majority of the time the customer will pay the entire amount due when confronted with a reminder of the past due amount.

(4) Send a Monthly Bill, Regardless of Activity on the Account.

Regardless of the customer’s purchasing activity for the month, send a bill. This will do two things. It will remind the customer that you are, in fact, keeping track of what they are doing, and it also reminds the customer about the overdue amount. The emphasis should always be about open and frequent communication. Accounts become delinquent because they are neglected. When a seller ignores the account, that is when they will run into trouble, That is when the customer will “forget” about the debt or over extend themself and get in trouble.

(5) Send a Collection Letter Quickly.

You want one say customer becomes overdue and immediately send a collection of water. Again, this emphasizes communication and getting the customer’s attention. You can’t let them forget about the amount owed and you must make it seem like this is a very important debt that you need repaid as soon as possible.

The article gives a good sketch, but just a sketch, about how your business should “lend” to you customers. Your best bet is, as always, to work with an experienced debt recovery firm, such as Stevens & Ricci, to help you design a complete accounts receivable program, that includes a debt collection plan.