Accounts Receivable Follow-Up — Healthcare & Allied Health Edition
A structured procedure for monitoring outstanding patient invoices and executing timely follow-up actions to minimise overdue receivables and improve cash flow.
Purpose
To ensure that all patient invoices are collected within agreed credit terms by implementing a consistent follow-up cadence, maintaining accurate ageing records, and escalating overdue accounts as required.
Scope
Covers all outstanding patient invoices from the point of invoice issuance through to collection or escalation to the debt collection process. Includes statement distribution, reminder calls, and formal demand notices.
Prerequisites
- Up-to-date patient contact details in the accounting system
- Aged debtors report generated from the accounting software
- Approved credit policy and terms of trade documentation
- Access to patient account records and invoice copies
Includes safeguards for Australian Privacy Principles (APPs), Medicare compliance, and health record management under the My Health Records Act. All patient data handling follows AHPRA guidelines.
Step-by-Step Procedure
Generate the Aged Debtors Report
Run the aged debtors report from the accounting system as at the current date, categorised by current, 30, 60, 90, and 90+ day buckets.
- 1.1Log into the accounting system and navigate to the receivables module
- 1.2Generate the aged debtors report as at today or the last business day
- 1.3Export the report to a spreadsheet for annotation and tracking
- 1.4Compare the total to the general ledger receivables control account
Distribute Monthly Statements
Send patient statements for all accounts with outstanding balances to prompt payment and provide patients with a clear summary of what is owed.
- 2.1Generate patient statements from the accounting system
- 2.2Review statements for accuracy before distribution
- 2.3Email statements to the accounts payable contacts at each patient
- 2.4Record the date statements were sent in the follow-up tracker
Follow Up on 30-Day Overdue Invoices
Contact patients with invoices 30 days past due with a polite reminder call or email to confirm receipt and expected payment date.
- 3.1Identify all invoices in the 30-day overdue bucket
- 3.2Send a friendly reminder email referencing the invoice number and amount
- 3.3Follow up with a phone call if no response is received within three business days
- 3.4Record the patient response and expected payment date in the tracker
- Ask the patient to confirm receipt of the invoice — often non-payment is due to the invoice going to the wrong person
Escalate 60-Day Overdue Invoices
For invoices 60 days overdue, send a formal reminder letter and escalate internally to the account manager or sales representative for assistance.
- 4.1Send a formal written reminder noting the overdue status and requesting immediate payment
- 4.2Notify the account manager or sales representative of the overdue balance
- 4.3Request that the account manager contact the patient to support collection
- 4.4Clinical record all communications in the patient account notes
Issue Formal Demand for 90-Day Overdue Invoices
For invoices 90 days overdue, issue a formal letter of demand and place the patient account on credit hold pending payment.
- 5.1Prepare a formal letter of demand specifying the total outstanding amount and payment deadline
- 5.2Place the patient account on credit hold to prevent further orders
- 5.3Send the demand letter via email and registered post
- 5.4Record the credit hold and demand notice in the patient account
- Consult the credit policy to confirm when credit holds should be applied
Escalate to Debt Collection or Legal Action
For invoices that remain unpaid beyond 90 days despite all follow-up efforts, escalate to a debt collection agency or commence legal proceedings as per the credit policy.
- 6.1Prepare the debtor file with all supporting invoices, statements, and correspondence
- 6.2Obtain Finance Manager approval to refer the debt to a collection agency
- 6.3Submit the debtor file to the approved debt collection agency
- 6.4Assess whether a provision for doubtful debt should be raised or increased
Update Records and Report
Update the aged debtors tracker with all follow-up actions taken, payment commitments received, and any write-offs or provisions, then report to management.
- 7.1Update the follow-up tracker with the outcomes of all actions
- 7.2Calculate the debtor days ratio and compare to target
- 7.3Prepare the weekly or fortnightly receivables summary for management
- 7.4Highlight any accounts requiring management attention or decision
Quality Checkpoints
Common Mistakes to Avoid
Expected Outcomes
Average debtor days are maintained at or below the target set in the credit policy.
Less than 10% of total receivables are aged beyond 60 days.
Bad debt write-offs do not exceed 1% of total revenue per annum.
Frequently Asked Questions
How do I handle a patient who disputes an invoice?
Investigate the dispute by reviewing the original order, contract, and delivery documentation. If the dispute is valid, issue a credit note. If not, provide supporting documentation to the patient and continue the follow-up process.
When should a patient be placed on credit hold?
A patient should be placed on credit hold when their account exceeds 90 days overdue or when the total overdue balance exceeds the credit limit, in accordance with the credit policy.
How often should the aged debtors report be reviewed?
The aged debtors report should be reviewed at least weekly. For high-volume businesses, a daily review of new overdue items is recommended.
What is the process for writing off a bad debt?
A bad debt write-off requires Finance Manager approval and documentation demonstrating that all reasonable collection efforts have been exhausted. The write-off is posted as a bad debt expense and the GST adjustment is claimed on the next BAS.
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