Clear Financial Policies Keep Customers Coming Back!

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By Rhonda R. Savage, DDS

It's true: people who owe you money do not like you! They feel guilty if they're late with a payment and burdened that they've procrastinated. They know it's not your fault, but they feel pressured and unhappy. Today, clients are more stressed than ever before about finances. Your customer can be extremely upset if he or she receives a financial surprise. It is wise to remember that a surprised customer will first be an embarrassed client, and then will become an angry customer!

If you want to avoid all this stress and anger, take the following steps to clearly outline your company's financial policies. Clear financial policies are a very real part of customer service, especially when presented by a warm, empathetic, knowledgeable staff. In addition, for a policy to be effective, it must be well understood by staff and backed up by the owner and manager.

Determine the health of your accounts receivables:
As a basic guideline, your accounts receivable (AR) balance should not exceed one half to one month of production. 

  • Run a "clean" AR report that does not include credit balances and analyze the 60 day and over column, as well as the 90 day and over column. In general, the 60 day and over column should not be more than 4-6 percent of what your clients owe you. The 90 and over column should not be more than 2-4 percent of your AR. 
  • Make certain also to run a past due report. Any accounts 30 days past due require a follow up call from the team member responsible for this department. 
  • The owner's role is to hire, train and provide oversight for your financial health. Even with the finest office manager, the owner should still be involved and should be the leader in the business. 
  • The owner should review the AR on a monthly basis, or more often if this area of your business needs additional attention. Many offices have a policy that "everyone does everything." With a more systematic approach, the owner can oversee those accountable for particular areas. In addition, your team members will know who to ask for what, such as which staff member should speak with a particular client. Designated office responsibilities with clearly defined goals and expectations will decrease stress and increase professionalism in your office.


If your AR balance is less than one half of your monthly production, your financial policies may be too firm and staff may be unintentionally running clients off. On the other hand, for your established customers of record, you might consider flexibility in payment if the client has demonstrated a good history. If you do offer financial options, however, do not extend them for more than three months and have a re-bill policy, or inform the client of interest due after or during the three-month period. Also, verify the credit history of the client prior to advancing credit.

  • Check with your state law regarding interest regulations and present a written policy to the customer. 
  • Do you have old accounts on your AR that have been turned over for collection? Adjust these off so you have a true AR that is collectable. Enter the adjusted amount into the client's record and keep a separate ledger file for this activity. Check with your accountant and clean up your Accounts Receivable report.


Develop your financial guidelines:
Sit down with your team and write out your office financial guidelines. The collection of money owed is the responsibility of the entire team. Once the entire team creates the guidelines, the owner needs to approve and stand behind them. Have you ever noticed that the client will try to go around the staff person and ask for a discount? Or ask if they can pay "over time" instead of paying as the service is completed?

As an owner or manager, you will undermine the client's trust and respect of your staff if you allow even one customer to do this. One very kind-hearted business owner said, "There's no 'end run' involved! I just plow right thru my front office team and give the discount up front to the customer and I know I'm the problem!"

Discuss the philosophy of your business with your team. Each office is different. If you feel compelled to give a courtesy, consider a limited discount amount rather than a discounted percentage.

  • It is advisable to craft a "change of policy letter" regarding your position on cash courtesies or changes in your office's financial policy. The worst thing you can do is surprise the customer! Remember that a surprised customer is an angry customer! Do allow the prior courtesy level and let the client know, in a friendly, warm manner, why you've had a change in policy. And then the new courtesy level would apply for all future procedures or services. 
  • Owners or managers: Reinforce the efforts of your office team. If an old friend asks for a courtesy, let him know that your staff will handle all the financials for the two of you. If the owner shoots down the financial coordinator, she may not want to enforce the policy again! Owners who make arrangements contrary to office policy create stress for their staff and ultimately can create spoiled clients who will continue to go around the staff. Spoiled clients are created by nice, caring owners who want to bend over backwards for their clients, especially early in the relationship. These clients become quite demanding and are often rude to the office team, dictating when they'll come in, when they'll pay, and how much they'll pay!


Criteria for financial options:
The client is prepared in advance regarding their responsibilities with payment.

  • The front office team's responsibility is to say: "Will that be cash, check or bank card?"
  • If the work or service is extensive, consider breaking the client's portion into three segments, with one third due at the beginning of the service, one third half way through the project and the balance at delivery. If the work is done in two procedures, then either the entire amount is due to begin, or split into two payments. For well-established clients with a great track record, consider half down and the balance in 90 days. During financial arrangements, present the client with a written estimate, have the customer sign one copy and keep one copy in the business record.


These are some of the guidelines you will need to define with your team. There is much more to consider: verbal skills, past due accounts receivables, and how to connect with the client, how to express warmth, empathy and concern. Firm, consistent financial policies are just one layer of the customer service that your clients deserve and expect. Your challenge is to have an open, honest, productive team meeting and look at your financial policies. How healthy is your business?

Rhonda Savage is an internationally acclaimed speaker and CEO for a well-known practice management and consulting business. As past President of the Washington State Dental Association, she is active in organized dentistry and has been in private practice for more than 16 years. Dr. Savage is a noted speaker on practice management, women's issues, communication and leadership, and zoo dentistry. For more information on her speaking, visit www.DentalManagementU.com, or e-mail Rhonda@MilesandAssociates.net.

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