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How to ensure money you are owed comes in

Accountant Faye Armstrong provides advice on how to set up a credit control system to help you collect NHS funding and private fees.

GP practice income comes from a wider range of organisations than ever before. So it is essential to keep good track of what you are entitled to and what you actually get to make sure nothing falls down the cracks. Here are the seven steps to successful cash collection.

1. Know your customer

Whenever you do work without advance payment you are putting trust in the customer or commissioner that they will pay you what you are due.

This shouldn’t be problem for the majority of work which is undertaken for organisations in the NHS family. But, if you sign up to do work for a new organisation, individual or local business you can take reasonable steps to vouch their credit worthiness. 

It isn’t cost effective to do a credit reference check for every £50 fee, but it can be worth it if you plan to do a reasonable piece of work for a new customer. If the customer is a limited company their accounts can also be downloaded free of charge from Companies House, though if they are abbreviated accounts, the information in them can be quite limited.

2. Ask for what you are due

You will need to put a range of processes in place to cover the wide variety of organisations you receive monies from.  

Much NHS income is received as a result of standing monthly payment, or direct data extraction, but there are few true automatic payments. Practice input is still essential – for instance in coding procedure-based enhanced services correctly or writing a script for reimbursable personally administered drugs.

Make sure no claims are missed by briefing locums and new members of the team about your coding procedures and other income capture systems as part of their induction. It is also worth doing periodic reminders for all staff.

The key to successful invoicing for other types of income is being organised. The quicker and more accurately you invoice, the quicker you get paid. 

Set up prompts to remind you to issue regular invoices for things such as rent or service charges. Many software packages also allow you to also set up recurring invoices. Remember to plan for staff holidays or sickness to ensure that invoicing still happens when team members are absent.

Any errors or mistakes on invoices will delay payment, so make sure the addressee, amount, narrative and any reference the customer or service commissioner requires are clear and correct on the invoice.  

3. Ask for payment at the right time

Choose the appropriate time to ask for your money, remembering it can be different for different types of income.

Most people would think it reasonable to as for regular rent to be paid in advance, but why not do the same for a fixed fee solicitor’s report?

It is best to take payment when the service is provided for travel vaccinations and other procedure based services provided to individuals. Dispensing practices should always take the script fees when the item is dispensed – people promising to drop the money in later often forget.

Sometimes payment can only be requested after the service has been provided, but if you invoice periodically, think about asking for payment by direct debit in return.

4. Make your payment terms clear

Always make the terms of payment clear on invoices and bills.

It is common to request invoices are paid within 30 days, but choose a policy appropriate for you and the type of work you are doing, and stick to it. Think about asking for up-front payment, especially from customers the practice has not dealt with before, or who have paid slowly in the past.

You can charge interest on invoices which are paid late. If your terms and conditions of work are silent on interest, you can charge the default rate which is essentially the bank base rate plus 8% from 30 days after the invoice is raised. 

You can also claim compensation from your customer, which ranges from £40-£100 depending upon the size of the debt.

5. Simplify payment

Customers will pay more quickly if you make payment easy. Think about installing a card terminal in the surgery, but check the cost of the card machine fees first.  

You could provide bank details on invoices for direct payment, as long as you are sure releasing details won’t put you at risk of fraud.  

Many software packages, especially Cloud-based solutions such as QuickBooks, allow you to email invoices with a link for the customer to follow to make payment. This can streamline the system significantly.

6. Track what comes in and what doesn’t

You need to have a good grip on what income you expect to come in before you can spot what is missing. You can do this for regular NHS income, including enhanced service claims, by putting together a basic budget for the year. 

This can be a simple spreadsheet with a column for each month and a row for each income source, or a more sophisticated budget input into your accounts software. Your accountant might be able to let you have a template showing last year’s income as a starting point.  

Once you have the budget you can tick forecasted income off as received, or compare it with the actual figures in your accounts software. Any missing payments will jump out at you.

Not all income can be budgeted in advance. There could be ad-hoc pieces of work where the date of payment can’t be predicted when your budget is set. These income streams need to be recorded in a different way – for example, a list on Excel or a customer ledger on your accounts software. 

If you raise invoices from your accounts software, it should be easy to run off a list of how much you are owed, who owes it and how long it has been outstanding.  

The list should be reviewed weekly, or monthly at the least, to spot anything which hasn’t been received by the due date, and followed up.

7. Follow up any missing or late paid income

Once you spot any missing receipts, you will want to investigate. Has a claim been missed, an invoice not sent, or is has the organisation commissioning the service made an error and omitted to pay you?   

Set up and stick to your policy for chasing slow payers. For instance you could send a statement after an invoice has been outstanding for 30 days, telephone to chase payment after 45 days and issue sterner letters after 60 days, giving the amount owed and the date it must be paid to avoid further action. 

If you threaten further action you must follow up on it. A letter from your solicitor can achieve results, or you may decide that the only option is to take the debtor to court.

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