Collections Rate & A/R Days

A practice can be busy and still short on cash if money isn't being collected. Collection rate and accounts receivable are the numbers that show how well your billing works. This calculator checks both and shows how much money a year you'd gain by reaching a healthy collection rate.

What this calculator does

Enter 12 months of gross production, contractual adjustments (PPO write-offs) and collections, plus your total accounts receivable and the part that's over 90 days old. The calculator shows:

• your net collection rate, with a 98% target,
• your gross collection rate,
• extra collections per year you'd get at 98%,
• days in A/R, and
• the share of A/R over 90 days, with a target under 15%.

The formula in plain English

Net production = gross production − contractual adjustments.

Net collection rate = collections ÷ net production.

Gross collection rate = collections ÷ gross production.

Extra collections at target = net production × 98% − collections (if positive).

Days in A/R = total A/R ÷ (net production ÷ 365). This is how many days of production are waiting to be collected.

A/R over 90 days = A/R older than 90 days ÷ total A/R.

A worked example

Dr. Bennett's practice produced $1.25 million in the past year, with $210,000 in PPO adjustments and $995,000 collected. A/R is $120,000, and $26,000 of it is more than 90 days old.

• Net production: $1.04 million.
• Net collection rate: about 95.7%, below the 98% target.
• Gross collection rate: about 79.6%.
• Extra collections at 98%: about $24,200 a year.
• Days in A/R: about 42.
• A/R over 90 days: about 21.7%, above the 15% target.

That $24,200 is almost all profit, because the dentistry has already been done. Working older claims every week and collecting patient portions at the visit would close most of the gap.

Why it matters at each career stage

If you're: Practice owner

Review these numbers monthly with your office manager. A slipping collection rate is often the first sign of staff turnover in billing, a payer problem or patients struggling to pay. Catching it early protects your cash flow.

If you're: Employed

If you're paid on collections, the office's collection rate directly affects your pay. Ask for it when you compare offers, and ask how unpaid claims on your patients are handled.

Ways to collect more

Collect patient portions at the visit. Estimate patient costs before treatment and collect them that day.

Verify insurance before appointments. Many denials come from eligibility problems that could have been caught.

Submit claims daily. And attach X-rays and notes the first time.

Work A/R every week. Follow up on any insurance claim over 30 days old.

Offer payment options. Payment plans and third-party financing help patients pay larger balances.

Watch adjustments. Make sure write-offs are only for contracted amounts, not collectible balances being written off for convenience.

Reading the A/R aging report

Your A/R aging report splits money owed into buckets: current, 31–60 days, 61–90 days and over 90 days. The older a balance gets, the less likely it is to be collected. Insurance balances over 60 days usually mean a claim was denied, lost or needs more information. Patient balances over 90 days often need a payment plan or a phone call rather than another statement. Reviewing the report each week keeps small problems from becoming write-offs.

When to get help

If your net collection rate stays below 95% or A/R days keep climbing, consider a billing audit or an outside billing service. Often the issue is staffing or training rather than patients who can't pay.

Next, see the full picture with the overhead benchmarks calculator, or weigh dropping a PPO.