How to Improve Accounts Receivable and Cash Flow in Your Medical Practice

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Accounts Receivable isn’t just a number on a report. It’s the lifeblood of your practice’s financial health. Let’s break down what it really means - and how to keep it flowing.


If you’ve ever wondered where your revenue stands right now - not just what’s been paid, but what’s still outstanding - then you already understand the importance of tracking your accounts receivable.  


Your A/R represents all the reimbursement you’re still owed, whether by insurance carriers or patients. When it starts to mount, cash flow slows down. And in the world of private practice, cash flow isn’t just a metric - it’s what keeps your doors open.  


That’s why monitoring your A/R should be a non-negotiable part of your monthly routine. Especially if you’ve recently onboarded a new billing team, noticed a dip in revenue, or just want to make sure everything’s running smoothly.  


Let’s look at a few key metrics that can help you understand exactly how your A/R is performing—and what to do if it’s not where it should be.


Average Days in A/R: How Long Are You Waiting to Get Paid?

This metric tells you the average number of days it takes for a claim to go from submission to payment. The shorter this period, the healthier your cash flow.  


Most practice management or billing software platforms will calculate this automatically, but here’s the basic formula - just in case:  


  1. Add up all charges posted during a given period (e.g., 30, 60, 90, 120 days)

  2. Subtract any credits or adjustments  

  3. Divide that amount by the total gross charges  

  4. Then divide by the number of days in the period  


What the numbers mean:

  • < 35 days: Excellent  
  • 35–50 days: Average (room for improvement)  
  • > 50 days: Needs attention  

💡 Pro tip:

Break this number down by payer. You might find that one insurance company—or even patient payments—is dragging your average down. Also, consider calculating days in A/R both with and without accounts sent to collections. This can reveal whether slow-paying patients or pending insurance claims are the real bottleneck.


Percentage of A/R Over 90 Days: How Much Is Stuck?

This metric shows what portion of your outstanding revenue is older than 90 days - a red flag for cash flow and collection risk.  


The Medical Group Management Association (MGMA) recommends keeping this number below 15%,  with top-performing practices often aiming for lower percentages. Anything higher suggests claims aren’t being followed up on quickly or effectively enough.  


Your billing software should easily generate this report, often broken down by payer. If you see certain insurers consistently in the >90-day bucket, it’s time to dig deeper.


How to Keep Your A/R Healthy and Flowing

Knowing your numbers is one thing—improving them is another. Here are a few practical steps to keep your A/R under control:


✅ Verify insurance eligibility upfront, before the patient arrives.  

✅ Track denials and rejections daily and re-submit within 24–48 hours.  

✅ Set clear timelines – if a claim isn’t paid within 30–60 days, escalate it.  

✅ Segment your A/R by payer – don’t treat all payers (or patients) the same.  

✅ Automate patient payment collection – use HIPAA-compliant tools to store card on file and automate statements.  

✅ Implement a clear financial policy, communicate payment expectations before treatment and stick to them.


Tools that allow patients to pay securely via text or patient portal can significantly reduce days in A/R while improving the patient experience.


The Bottom Line

Your A/R is more than a number, it’s a story. It tells you how efficiently your revenue cycle is running, how responsive your billing team is, and how clearly you’re communicating with patients about their financial responsibility.  


If your numbers are trending in the wrong direction, it might be time to ask for help. Sometimes, a fresh set of eyes is all it takes to spot bottlenecks, renegotiate payer contracts, or streamline patient collection workflows.


Ready to improve your cash flow? Email us for a free audit.

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