Days in A/R Explained: Benchmarks and 9 Proven Ways to Reduce Days in Accounts Receivable

Days in accounts receivable tells you, in one number, how long your practice waits to get paid after care is delivered. When it creeps up, cash flow slows, staff spend more time chasing old claims, and balances quietly age past the point where they can still be collected.

High days in A/R is rarely a mystery. It usually comes down to a handful of fixable problems in submission, follow-up, and posting. This guide covers the formula, what a good AR days benchmark looks like, why AR days increase, and nine practical ways to bring them down.

What Is Days in A/R?

Days in A/R is the average number of days it takes to collect payment on your charges. Lower means money moves faster from claim to bank account. Higher means charges sit unpaid longer — in payer queues, denial worklists, or patient balances nobody is actively working.

It differs from your total A/R balance. A growing practice can carry a larger balance and still be healthy. Days in A/R adjusts for volume, making it useful for spotting trends month to month.

The Formula

Example (hypothetical numbers, for illustration only):

• Total A/R balance: $180,000
• Charges over the last 90 days: $450,000
• Average daily charges: $450,000 ÷ 90 = $5,000
• Days in A/R: $180,000 ÷ $5,000 = 36 days

This example practice collects, on average, about a month after charging. Whether that is good depends on specialty, payer mix, and patient responsibility — which is why benchmarks are ranges, not a single magic number. Calculate the metric the same way every month; changing the method makes trends impossible to read.

What Is a Good Days in A/R Benchmark?

MGMA benchmarking, as commonly reported, generally treats under about 40 days as healthy for many practices. High performers often sit around 30 to 35 days, while over 50 days is a warning sign that follow-up, denials, or patient collections need attention. HFMA revenue cycle KPIs use days in A/R alongside other indicators for the same reason — no single metric tells the whole story.

A second metric matters just as much: the percentage of A/R over 90 days old. MGMA benchmarking commonly points to roughly 10–15% or less as a healthy target. If a third of your A/R is over 90 days, your headline number may look acceptable while a large backlog becomes uncollectible.

Specialty matters — practices with heavy workers' compensation or authorisation-heavy procedures may run higher. Compare against your own trend first. Neximed Billing states "<20 days average days in A/R" as its claim on its revenue cycle management page — an ambitious target showing that systematic A/R work can run below the general range.

Why Are My AR Days Increasing?

Look for these causes before assuming payers are simply paying more slowly:

Slow claim submission. Every day a charge waits to be billed adds directly to A/R. Backlogs after staff absence or system changes are a frequent culprit.

Denials not worked promptly. A denied claim that sits two weeks before anyone touches it restarts much of the collection clock and inflates the 60- and 90-day buckets.

No bucket discipline. Without a routine for the 30, 60, 90, and 120+ day buckets, staff naturally chase the newest, easiest claims while old balances age untouched.

Growing patient balances. Higher deductibles mean more revenue depends on slower patient payment — especially when statements go out late and no payment plan is offered.

Eligibility gaps. Coverage and authorisation denials take far longer to resolve, and some are never recoverable.

Posting delays. Payments received but not posted make A/R look older than it is, and hide claims that genuinely need follow-up.

9 Proven Ways to Reduce Days in A/R

1. Submit Claims Within 24–48 Hours

Make fast submission a standard, not an aspiration. Review, code, and bill charges within one to two business days of the encounter, and track unbilled charges daily. Neximed Billing submits claims within 24 hours as part of its medical billing service. That head start compounds across every claim.

2. Verify Eligibility Up Front

Check eligibility and benefits at scheduling or before the visit. Confirm the plan is active, note deductible status, and secure authorisations early. An eligibility problem found before submission costs a phone call. Found after submission, it costs weeks.

3. Scrub Claims Before They Leave

Use claim scrubbing to catch missing modifiers, mismatched codes, incomplete demographics, and payer-specific edits before submission. A higher clean-claim rate means fewer denials and faster first-pass payment. Review rejections weekly — recurring edits point to a fixable registration or coding problem.

4. Work A/R by Bucket and Value, Every Week

This is the core of effective AR follow up in medical billing. Build workqueues by AR aging buckets — 30, 60, 90, and 120+ days — prioritise high-value claims within each bucket, and assign clear ownership. Neximed's A/R follow-up service works this way: systematic follow-up on each bucket, direct payer contact, and documented next steps.

5. Set a Denial Turnaround SLA

Give denials a deadline — for example, review within two business days and appeal or correct within five. Analyse CARC/RARC codes for root causes instead of fixing claims one at a time, and work appeals methodically through Levels 1–3 as the payer allows. A root cause fixed saves revenue every month after.

6. Collect Patient Balances Earlier

Patient balances pay slowest, so start earlier. Collect known copays and estimates at time of service, send statements promptly after payer adjudication, and offer payment plans for larger balances. A clear, itemised statement with an easy payment option outperforms a single large bill sent weeks late.

7. Post Payments and Reconcile ERAs Daily

Post payments daily and reconcile electronic remittance advice (ERA) against deposits. Accurate posting keeps your A/R report truthful, so follow-up targets the right claims, and surfaces underpayments and denials immediately. Neximed includes ERA reconciliation in its workflow for this reason. An unposted week can hide the claims that are actually stuck.

8. Hold a Weekly A/R Aging Review

Review the aging report weekly with the people who work it: total days in A/R, percentage over 90 days, denial volume, and the oldest high-value claims. Keep a simple KPI dashboard so trends are visible. Fifteen focused minutes prevents the month-end surprise of A/R jumping eight days. This discipline is central to accounts receivable management in healthcare and to a full revenue cycle management approach.

9. Know When Old A/R Needs a Dedicated Recovery Project

If the 120+ day bucket has grown large, routine follow-up may not be enough. Run a dedicated clean-up: research each claim, check timely-filing limits, appeal where grounds exist, and write off what is genuinely uncollectible — such as balances past a payer's filing deadline with no appeal path. Knowing how to work old AR in medical billing means being honest about what is recoverable. One client testimonial on Neximed's site reports AR days reduced from 45 to 19 after focused work; individual results vary, but old A/R shrinks fastest when someone owns it as a project, not a side task.

A Sample Weekly A/R Routine

Consistency beats intensity. A simple weekly rhythm keeps every bucket moving:

Adjust the days to your staffing, but keep the principle: denials, buckets, patient balances, and review happen every week.

Red Flags Your A/R Needs Attention

Two or more of these usually means the problem is process, not payers — and process can be fixed.

Bringing Your AR Days Down

Reducing days in A/R is about speed at the front end — eligibility, clean claims, 24–48 hour submission — and discipline at the back end: bucket-based follow-up, fast denial turnaround, daily posting, and a weekly review. Done consistently, the number usually moves within one to two billing cycles. If your 90- and 120+-day buckets are already heavy, a focused recovery effort can clear the backlog while your team keeps current claims on track.

Frequently Asked Questions

External references: MGMA benchmarking for days in A/R and percentage of A/R over 90 days; HFMA revenue cycle KPI guidance on A/R performance measurement.