What do I need to know about working with a collection agency ?
A collection agency is a specialized organization that acts on behalf of a creditor to collect overdue payments. A collection agency usually does not take ownership of the debt but simply represents its clients in organizing the collection activity. It does not guarantee the collection.
When to use a collection agency is less a legal question than a question of convenience and advisability.
You may turn to a collection agency after numerous attempts to obtain payment on a patient's outstanding bill have failed. A person owing money may find the use of a collection agency offensive and may resist attempts to collect the funds, even if the debt is genuine. Moreover, use of a collection agency can destroy the goodwill of the patient who owes the money. That person will probably not return to the practice, resulting in the loss of potential future income.
A few collection agencies specialize in early and diplomatic intervention with the person owing money. You should research the types of agencies available and perhaps opt for a gentler approach.
Use a collection agency when you are reasonably certain that the party has the capacity to pay the bill, understands the obligation to pay and simply refuses to pay. A collection agency should be used only when a debt is due or overdue. You should ensure that the collection agency has knowledge of and will comply with all laws applicable to collection of debts.
Also consider whether the debtor has a valid reason for not paying or thinks the reason is valid. Patients who believe they are justified in not paying may be prepared for a fight even if it means a prolonged legal battle. If the patient disputes the amount owed, look into the reasons for the dispute and consider how it might be resolved before contacting a collection agency. The use of a collection agency may cause a patient to further analyze the quality of the dental treatment provided and may result in a negligence action. Some collection agencies will discontinue their collection efforts if a patient claims he or she is not legally obligated to pay the debt due to negligent treatment by the dentist.
Even when the debtor has no valid reason not to pay, certain circumstances might make it difficult to recover the amount legally. The debtor might not have sufficient funds to pay the amount due. Bankruptcy would prevent collection activities.
You can improve your cash flow by being upfront with all clients about your willingness to use a debt collection agency should acceptable credit terms be stretched without permission.
Be clear with patients about the terms and conditions of the product or service you supply. Have a set of standard terms and conditions drawn up that specify the credit terms you offer and the process you will follow if they are not met. Typically, this will state your right to charge a specific rate of interest as a late fee after 30 days.
Dentist Problems In Billing Forms With Patients
Common questions & answers with patients insurance collections and dental benefits plans.