What Are Healthcare Accounts Receivable?
The term “accounts receivable” refers to a balance of money owed to a company for services or goods delivered. The customer has not paid for these services or goods yet. In other words, healthcare accounts receivable are sums of money that patients owe to their healthcare providers. They are for treatment patients have received but have not yet paid for. Usually, healthcare accounts receivable have terms that require a customer to make a payment in a fairly short period of time.
Healthcare providers record accounts receivable as assets. This is because the patient is legally obliged to pay his or her debt. Healthcare providers can designate them as current assets. This means the patient must pay the balance of the account in under 12 months. Essentially, accounts receivable are a sale made on credit and the provider hasn’t yet collected the money from the patient. Healthcare accounts receivable are, in effect, a form of short-term IOU issued to the healthcare service provider.
When a patient receives an invoice for his or her treatment, the provider will record the sale. However, the healthcare service provider will extend a period of credit to the patient. This will give the patient some time in which to make the payment. Until the patient makes the payment, the amount owed is the accounts receivable. If the patient doesn’t make the payment on time, then the provider can hand over the account to collections.
After the patient makes the payment, the balance of the cash sheet increases by the amount of the payment. Meanwhile, the accounts receivable balance decreases by that amount as well.