Does the 80/20 Rule Apply to Your Receivables?

In most practices, a handful of accounts carry most of the outstanding balance. The natural conclusion is to work the big balances first. But the aging report tells a different story: the accounts most likely to become uncollectible are the small ones nobody has spoken to.

Written and reviewed by the client services team at First Financial Resources.

Where the pattern shows up

Sort your aging report by dollar value and the large balances fill the page. They also get the attention: someone calls the payer, someone calls the patient, someone escalates.

Sort the same report by count, and the picture flips. Most of your accounts are small, and most of them have had a statement cycle and nothing more.

What separates a balance that gets paid from one that doesn’t is rarely its size. It’s whether anyone has talked to the person who owes it. By ninety days without a human conversation, the patient has usually decided nobody will call, and the statement has drifted to the bottom of the pile. From there, the odds of resolution drop sharply.

First Financial Resources does not publish a recovery rate for small balances. The rate depends on the practice, the payer mix, and when the accounts were placed, and a figure without those conditions would mislead more than it informed. Clients receive their own monthly figures for their own accounts.

Frequently asked questions

Q1: When should a practice place small balances?
A: There is no minimum age for placement, so accounts can be sent to us whenever you are ready. At First Financial Resources, we work small balances exactly as we work large ones: written notice first, individual handling, and a named representative the patient can reach. We do it earlier than what most practices do, and in batches rather than one at a time.

Because our fees are contingent on recovery, placing a small balance costs your practice nothing up front and nothing if it isn’t resolved. Our accounts receivable services for practices explain the process in full.

Q2: Is it worth placing a small balance?
A: Usually, yes. On a contingency arrangement, you pay a percentage of what’s recovered, so the choice is between a share of something and all of nothing. Carrying a small balance isn’t free, either: it eats statement cycles and staff time, and eventually becomes a write-off. The one thing you do put at risk by placing it is the patient relationship, and that depends heavily on how the account is worked.

Q3: Will placing small balances upset patients?
A: No, not when the account is handled properly. Every patient gets written notice before any call. Calls come from our certified representatives, within the hours the law allows. We record and honor each patient’s circumstances and contact preferences, and any arrangement is put in writing. Your practice keeps the patient relationship throughout, and patients can read what to expect from us before we ever pick up the phone.