What Is Accounts Receivable Turnover?
Description
This KPI shows your collections for a given period compared to your total accounts receivable balance.
Why is This Important?
This KPI is important because it is a barometer of how well you are bringing in the money owed to you. In the example below, you can see that every 1.52 months, you are essentially collecting or adjusting all the money owed for services rendered.
In a perfect world, the Accounts Receivables will turn rapidly. During times of increasing charges, such as flu season, this amount will be much different than during the spring. That is why comparing the month of January to the month of May is very misleading. Practices should compare same months when running this analysis.
PMI Recommended Frequency to Run this KPI:
Monthly
Formula:
Provider or Practice AR / Provider or Practice Average Monthly Collections= Accounts Receivable Turnover
Show the Math:
$87,500 / $57,500 = 1.52
How Should I Track this KPI?
It can be tracked using an Excel spreadsheet by Practice and/or Provider. You can even set this up to run monthly by service line (Laboratory, Inpatient Charges and Office Visits, etc.).
