Days in AR and net collection rate
The four figures a lender, a buyer and a billing company all ask for, from six numbers you already have — with the formula printed beside each answer so you can reproduce it next month without this page. No benchmark invented, nothing stored.
AR balance ÷ (charges ÷ days in period)73.0 days
over-90 balance ÷ total AR30.0%
payments ÷ (charges − contractual adjustments)91.2%
payments ÷ gross charges57.8%
Average daily charge for this period: $2,466. Every figure above is one of those six numbers divided by another — reproduce it next month without this page.
What each one is actually telling you
- Days in AR is how long, on average, your money is somebody else’s. It rises for two very different reasons — claims going out late, or claims going out fine and nobody following them up — and the over-90 share below is what tells you which.
- AR over 90 days is the number that matters most and gets looked at least. It is where timely filing limits and appeal windows run out, and a balance that crosses those stops being slow and starts being gone.
- Net collection rate is the honest one: of the money you could ever have collected after the contractual write-down, how much did you actually get. It is the number that exposes denials, underpayments and abandoned claims, and it is the one a percentage-of-collections vendor has the least interest in showing you.
- Gross collection rate is mostly a measure of your fee schedule against your contracts, not of your billing. A low gross rate with a high net rate means your charges are set high, which is not a problem.
We do not print a benchmark here. “Under 35 days is good” is repeated everywhere and we hold no sourced figure for it, so quoting one would be inventing a standard to be judged against. Your own number last quarter is the comparison that means something.
If the over-90 bucket is the problem: the AR aging analyzer · what the denials in it cost · how long you have left to file.
Why most practices cannot produce these on the day they are asked
It is not that the arithmetic is hard — it is four divisions. It is that the definitions are slippery enough that nobody is confident they have done it right. Contractual adjustments get confused with write-offs, payments get counted on the date posted rather than the date banked, and the period is whatever the report defaulted to. So the figure never gets produced, and the practice runs on a feeling about whether collections are alright.
Printing the formula beside the answer is the entire design. A number you cannot reproduce is a number you cannot act on, and the month-on-month movement is worth more than any single reading.
Questions
How do you calculate days in AR?
Total accounts receivable divided by average daily charges, where average daily charges is gross charges for a period divided by the number of days in that period. A year is the usual period because it smooths seasonality; a quarter is more responsive if you are trying to see whether something you changed is working.
What is net collection rate and how is it different from gross?
Net collection rate is payments divided by charges minus contractual adjustments — of the money you could ever have collected, how much you actually got. Gross collection rate is payments divided by gross charges, which mostly measures how your fee schedule compares with your contracted rates. Net is the one that exposes denials, underpayments and abandoned claims; gross is close to meaningless on its own.
What is a good days in AR figure?
We do not publish a benchmark, because we hold no sourced figure for one and repeating a number everybody repeats does not make it a standard. The comparison that means something is your own figure last quarter, and the AR over 90 days share, which is where filing limits and appeal windows actually run out.
Does this store my practice numbers?
No. Nothing is transmitted and nothing is saved — the arithmetic runs in your browser. These are practice totals in any case; do not type anything about an individual patient.
If the over-90 bucket is where the number went
That bucket is where filing limits and appeal windows run out, and it is the one nobody has time for. Send the aged AR report those numbers came from and you get back what is recoverable in it, in writing, free.
Nothing you typed into the tool above is attached to this. This form sends the three fields in it and which page it came from — that is all it can send. Or write to ops@softhomeglobal.com and skip the form entirely. What happens to it.
The rest of the free tools
Next step
If the over-90 bucket is the answer
That is the queue a seat works: full time, on your hours, inside your own system. Send an aged AR report and see what we find before you pay anything.
Or write to ops@softhomeglobal.com