Reduce Days in A/R by Finding Where Claims Wait

How days in A/R is calculated

Days in accounts receivable estimates how long, on average, it takes to collect. Divide total outstanding A/R by average daily charges, where average daily charges are your gross charges for a recent period (often the last three or six months) divided by the number of days in it. If you have $300,000 outstanding and charge an average of $10,000 a day, days in A/R is 30.

Two cautions. The number moves when charges move — a slow month of charges makes days in A/R look worse even if collections are fine — so watch it alongside the aging of the balance. And because the calculation uses gross charges, compare it with your own history or with practices that use the same method, not with a figure from a different calculation.

What drives days in A/R up

• Charge lag: days between the visit and the claim. Every day of delay adds to A/R before a payer has even seen the claim.
• Rejections left unworked: claims that never reached adjudication sit in A/R as if they were pending.
• Denials: each one adds weeks while it is corrected or appealed. See how to reduce claim denials.
• No follow-up on silent claims: claims with no response from the payer need a status check, not patience.
• Patient balances: slow statements and unclear bills leave patient responsibility outstanding.
• Credit balances and unapplied payments: posting errors distort A/R and hide real problems.

Read the aging, not just the average

Split A/R into age buckets — 0–30, 31–60, 61–90, 91–120 and over 120 days — for insurance and patient balances separately, and by payer. A growing share over 90 days is the clearest warning sign, because those claims are approaching filing and appeal deadlines. Working them in order of deadline, then reason, then value is what our A/R management service does.

Changes that shorten the cycle

1. Bill fasterSet a target for charge lag and track it by provider; delayed notes are usually the cause.
2. Submit cleanerScrub claims before submission and work rejections the same day.
3. Follow up on timeCheck status on any claim without a response after the payer’s normal processing time.
4. Post accuratelyPost electronic remittances daily and resolve unapplied cash and credit balances.
5. Collect patient balancesEstimate patient responsibility up front, collect copays at the visit and send clear statements promptly.