Why should a company have a collection policy?
By Anne Orrick, COO, Allegiance Group
In today’s environment, HME margins are narrower than ever. Tightening margins mean you cannot afford to allow any payments to fall through the cracks. What can you do to close the gaps? A written collection policy.
A policy serves as your company’s rulebook for all the procedures starting from the time an order is placed until the balance is paid.
Here are four benefits of using a policy:
- Documenting procedures to drive results
By taking the time to outline your workflow, the policy will serve as the compass for your collection efforts. The goal is to help ensure a consistent approach throughout your operation.
- Clarifying roles
By assigning employees specific tasks and objectives in the workflow, you will streamline the process. Therefore, your staff’s efficiency and accountability should improve.
- Providing consistency
The policy should guide every employee to make the same decisions in the same scenario. By using your collection policy as a compass, it will eliminate confusion and help reach your collection goals. When you train to and abide by the policy rules, you will have peace of mind knowing that every balance is being treated the same way.
- Tracking progress
By tracking your key performance indicators (such as days sales outstanding, collection rate and employee efficiency), you can determine if your policy is generating the expected results. If not, adjust your workflow and policy. Consider changing tasks, assignments, timing, etc. After the changes are implemented, assess the impact on your results.
Long A/R cycles and continued stressors in the healthcare environment create a lot of pressure on everyone—your staff, your patients and your bottom line. Creating or reviewing your collection policy can help improve your cash recovery.