It’s a frustration shared by many veterinary practices: the doctors and staff put their skills, knowledge, experience, and heart into taking care of a beloved animal, but now the pet owner is unwilling (or unable) to pay for your services. The front desk staff is doing their absolute best to collect unpaid bills, but they simply do not have the time or the expertise. Doctors want (and should) focus on the animal's health, not the client’s wallet.
A veterinary practice is a business. That business must have employees, equipment, medication, and a facility (to list just a few expenses associated with operating a practice), to care for their patients. Even a small amount of overdue accounts receivable can create a cash flow strain on a practice.
You and your staff are busy enough trying to perform a hundred other daily responsibilities. You don't have the time to track down customers who haven't paid their bills! Especially if those unpaid bills add up to a significant dollar amount, you may need a team specializing in veterinary debt collection to help. But where do you begin?
What to look for
Selecting the right agency will make all the difference in the world when it comes to recovering your delinquent debt! The federal and state governments heavily regulate debt collection companies, and these companies are required to follow industry-related laws and to be licensed in all states where they collect.
There are literally thousands of debt collection agencies in the United States, and it's not a one-size-fits-all kind of industry. To narrow your choices, start by looking for a veterinary-specific collection agency with experience working with practices like yours. You want to find an agency whose ethics and integrity match yours, and that doesn't use aggressive or unprofessional techniques. It’s important to protect the relationships you have formed with your clients.
From a management perspective, the agency you choose should have a robust online client portal. It should be a quick, seamless process to place new accounts for collection, view a summary of your current placements, and run monthly reports and remittance advisements. Outstanding customer service would be nice, too!
The cost of debt collection
Because there are so many factors to determine the cost of debt collection, it pays to get quotes from several companies. Most collection agencies operate on contingency fees, meaning they are paid a percentage of the debt they collect. That percentage can range from 10% to 95%. Many factors determine what can be charged, including the number of debts in collection, the size and age of the debt portfolio, and the effort required to collect. For example, the fees for debts aged up to 90 days might be 20% to 50% of the collected revenue. Older debts aged 90 to 120 days require more work, thus fees will be higher. An account a year or more overdue might return only 5%, with the debt collection agency keeping 95% for their efforts. But the contingency rate is only one factor in the cost equation.
A contingency-based collection agency should have a very high recovery rate or success rate. Since they only make money if they collect the debt you place with them, the recovery rate is a critical factor. For example, in the table below, you can see that Agency A has a higher contingency rate, but their overall higher success rate more than compensates for the higher fee on each dollar collected.