Common AR Recovery Terminology and How to Understand It

Accounts receivable (A/R) is an essential aspect of any business, and recovering unpaid A/R is vital to maintaining cash flow. However, the world of A/R recovery can be confusing and full of jargon that can make it difficult to understand what’s going on. In this blog post, we will go over some common A/R recovery terminology and explain what it means.

1. A/R Aging Report : An A/R aging report is a list of all unpaid customer invoices, sorted by the number of days that they have been outstanding. This report helps businesses identify which customers owe them money and how long the debt has been outstanding.

2. Collection Agency: A collection agency is a company that specializes in recovering unpaid debts on behalf of other businesses. They use a variety of tactics to recover debts, including phone calls, letters, and legal action.

3. Charge-Off: A charge-off occurs when a business writes off an unpaid debt as a loss on their financial statements. This typically happens after several attempts to collect the debt have failed.

4. Delinquency: Delinquency refers to a debt that is past due. The length of time that a debt can be delinquent before it is considered “bad debt” varies depending on the industry and the specific business.

5. Collection Agency Commission: Collection agency commission is the fee that a collection agency charges for their services. This fee is usually a percentage of the total amount of the debt being recovered.

6. Collection Call: A collection call is a phone call made by a collection agency to a debtor in an attempt to recover unpaid debts. These calls can be automated or made by a live agent.

7. Debt Settlement: Debt settlement is an agreement between a creditor and a debtor to settle a debt for less than the full amount owed. This is often done to avoid legal action and to recover at least some of the unpaid debt.

8. Statute of Limitations: The statute of limitations is the amount of time that a business has to take legal action to recover an unpaid debt. This varies depending on the state and the type of debt.

9. Write-Off: A write-off is when a business removes an unpaid debt from their books as a loss. This is typically done when it is clear that the debt will never be recovered.

10. Payment Plan: A payment plan is an agreement between a creditor and a debtor to pay off an unpaid debt in installments. This is often done to avoid legal action and to make it easier for the debtor to pay off the debt.

Understanding these terms is crucial when it comes to recovering unpaid debts. If you’re a business owner, it’s essential to stay on top of your A/R and to have a plan in place for recovering unpaid debts. Whether you choose to work with a collection agency or handle A/R recovery in-house, knowing the terminology will help you communicate effectively with debtors and recovery professionals.

It’s essential to understand the common A/R recovery terminology to recover unpaid debts effectively. Knowing the terminology will help you communicate with debtors and recovery professionals effectively. If you’re a business owner, staying on top of your A/R and having a plan in place for recovering unpaid debts is crucial.

Atlantic RCM is one of the leading multi-specialty medical billing companies in USA that serves 25+ major medical billing specialties. Our experts work across your practice in billing, collections and account receivables management, to help you succeed.

Get in touch with the leading medical billing outsourcing company to learn more. Call us at (469) 501-1500 or write to us Info@atlanticrcm.com