Reader Question:
Tracking Accounts in Collection
Published on Wed May 01, 2002
Question: When we turn a patient balance over to a collection agency, should we write off the amount, or should we leave it on your books so it shows in our accounts receivable? New Jersey Subscriber Answer: Recording and tracking balances that are turned over to a collection agency depend on your computer practice-management system. Some systems allow you to report balances in collection in a separate file, so you can print an accounts-receivables report including or excluding the amount that has been sent to the agency. You can see how much of your total A/R is with the collection agency and obtain an accurate assessment of your A/R. If you are unable to separate balances in collection from your total A/R, your real receivables number will be inflated because you will have dollars included that you have less chance of getting paid. If your system is unable to account separately for balances in collection, you can do the following to track the accounts:
Write off the amounts given to the agency, and add whatever the agency collects back in as a payment, adding a note to the payment that identifies it as money from the collection agency. Record the balance as $1, or some smaller amount, so you know that anything in the A/R at that amount is in collections, and write off the remainder. Create an internal adjustment code that indicates that the balance is in collections, and write off the balance as an adjustment under your new code.