Simply put, there aren’t very many dentists out there that don’t take plastic anymore. The biggest argument against them is the fee schedule, but that is becoming less and less of an issue, for one main reason: collections.
According to one survey, more than 40 percent of a typical practice’s receivables are owed by patients as direct payments. The average collection time is drawn out over 48 days, and the average annual patient out-of-pocket cost–roughly $650 per year as of 2014–is expected to increase as more employers switch to managed-care plans and health insurance companies tighten reimbursements for dental care.
It typically takes 30 to 45 days for an insurance claim to be settled. Add a few days for patient bills to be mailed and another 30 to 60 days for patients to send in their payment, and you’re looking at having the bulk of your receivables on the books for 60 to 90 days.
Oh, and you’re losing interest income on the outstanding amount, as well as the in-house costs involved in sending out bills, making follow-up calls, repeat billings. It’s a colossal pain in the keister.
Ah, say the credit card holdouts, but so is taking credit cards! Nice try. Modern technology has made accepting major cards easier than ever. There are just a few things that you will have to take care of first:
The Merchant Account
There are two commonly used ways of accepting credit card payments: through your own merchant account or via a payment gateway account provided by a third-party merchant. An internet merchant account–usually obtainable through your current bank–allows you to process credit cards by effectively extending you a line of credit that is used to cover the costs of transactions until funds are officially placed in your account.
You’ll also possibly need a payment gateway account. Gateways are online credit card processors that already has the clearance to connect your customers’ credit card accounts to your internet merchant account for the transferring of funds. The payment gateway interacts with the card issuer’s bank to authorize the credit card in real time when a purchase is made on a website. That means you get paid and the customer gets your product or service, even if the bank is closed at the time of the transaction.
Then There’s PayPal
PayPal is what is considered an electronic wallet, and it may be an even better option than credit cards. The service allows individuals or businesses to easily and securely transfer funds online. According to their site, PayPal has more than 87 million active accounts in 190 markets and 24 currencies around the world.
There are a number of good reasons to use PayPal:
- * Easy to setup and use.
- * Global name recognition.
- * You won’t need a merchant account.
- * Customers don’t have to have a PayPal account to pay you.
- * Built-in invoicing tools.
- * Lower fees than many merchant accounts.
- * Easily integrated with popular shopping cart systems.
Still, PayPal isn’t the perfect solution for every small business. There are stiff fines for chargebacks, and you’re more susceptible to account suspension.
That can seem a bit daunting, but the point is, you have several options. Spend a little time investigating all the pros and cons of you using any of these methods … and compare them with the pros and cons of not taking electronic payments at all. In the end, it will most likely be mandatory, so why not go ahead and bite the bullet?