CPA's help in Collecting Delinquent Accounts

As a CPA you have an opportunity to help your customers with issues that affect their business, lives and stress levels. Most business owners use a CPA either because they don’t fully understand the accounting process or for a lack of time. Some business owners simply want a CPA to handle the accounting needs because they trust that the CPA is staying up to date with changes from year to year. A great CPA offers suggestions to their customers on how they can improve their cash flow and create a more efficient office.

Being a CPA is so much more than just running the numbers or preparing the books. A CPA is more of a trusted consultant, a friend, who can truly add value to businesses by giving financial advice. I am a business consultant in Tulsa and I work with businesses nationally that have huge receivables and slow paying or delinquent accounts. Some businesses prefer to write off the accounts instead of messing with them. Others are willing to give up a percentage of their income by handing the account to a percentage collection agency. Neither of those choices are good ones.

I help businesses and medical practices by setting up processes from the point of sale or the point of patient care all the way through to identifying early on those hard core accounts that need to go to a collection agency. In most cases I have been able to eliminate 56% of the delinquent accounts and increase the businesses cash flow. This reduces the amount of money that goes to a percentage collection agency and decreases the internal cost of collection. For medical practices I can elevate the importance of a medical insurance claim and get the insurance company to pay much sooner.

The first thing I suggest to a company is to offer as many payment options as possible. Sometimes a customer will pay with a credit card and actually increase the amount of purchase if that is an option. If the customer cannot afford to put 100% of the payment on a single credit card purchase, may be the company can automatically set up a recurring payment on that credit card without having to manually enter that card every month. Allowing your customers/patients multiple payment options reduces the chance that they will become delinquent. I also encourage online bill pay. It is easy to set up and you can actually pass the transaction fee back to the customer.

The next process I look at is the internal process of collecting delinquent accounts. Too often I see poor policies and procedures that allow an account to go too long before taking action. The longer an account is allowed to go without being collected the greater the chances are that the account will never pay. A national study by the Department of Commerce shows that an average of 5% of the accounts serviced in the first month will not be collected, every month after that the numbers get substantially worse. Medical practices are closer to 10% in the first month. The key is take action sooner rather than later.

These processes can also help with the efficiency of an office. This saves your clients time and money and increases their cash flow. An efficient office is a happy office. For more information contact Kevin McDugle, Expect 3 Consulting, 918.409.5572 (Cell), kmcdugle@expect3.com.