How healthy is your practice? 5 billing metrics to check your organization’s financial wellness

The U.S. Chamber of Commerce cites cash flow problems, often caused by insufficient oversight and organization, as the number one reason businesses fail. Running a mental health practice is no exception—it comes with so many moving parts and staying on top of everything can feel overwhelming. That’s where billing metrics come in. Just like you measure client progress, billing metrics can be used to monitor your billing health and identify when interventions are needed.   

These numbers are more than just figures on a report; they give you a clear picture of what’s working and where adjustments might be needed to keep your practice financially healthy. Regularly reviewing these metrics isn’t just important, it’s essential. They serve as powerful tools to help you make informed decisions and stay in control of your practice’s financial well-being. 

Charge lag  

Charge lag measures the time between the date you provide a service and the date you submit the charges to payers. Ideally, charge lag should stay within a healthy range of 3 to 5 days.  

When charge lag extends beyond this range, it’s often due to procedural mishaps and inefficiencies. For instance, delays in staff completing documentation or relying heavily on manual billing processes are common culprits. A slow charge lag directly affects your cash flow—the longer it takes to submit charges, the longer you wait to be paid. It also increases the risk of missing filing deadlines, which can result in denied claims.  

To improve charge lag, consider these steps:  

• Set clear expectations for staff, like completing and signing notes within 3 days of seeing a client.  

• Submit claims more frequently, such as daily or every other day.  

• Use automation tools to simplify and organize tasks.  

By addressing charge lag quickly, you can keep your practice running smoothly and maintain a healthy cash flow. 

Speed to pay  

Speed to pay, also called days in accounts receivable (A/R), refers to the time it takes for a claim to be processed and paid after it’s submitted. The goal is to keep this under 30 days.  

Delays in payments often happen because claims aren’t submitted correctly or on time. Missing follow-ups on unpaid claims can make things even slower. This can quickly impact your practice’s cash flow, making it harder to stay financially balanced. 

Here are some tips to improve this metric: 

• Understand how and when each payer processes claims to plan ahead. Review payer requirements, timelines, and common issues to align your billing processes.  

• Double-check insurance eligibility to avoid errors.  

• Submit clean, accurate claims to reduce rejections.  

• Investigate payment delays (over 40 days). 

• Send reminders or confirm details upfront to prevent mistakes.  

Take small, proactive steps to ensure smooth operations and timely payments. 

Percentage of A/R over 90  

This metric looks at the percentage of your accounts receivable that is more than 90 days old. A healthy range is less than 15%. Anything higher suggests that claims are slipping through the cracks.  

Aging claims often happen because denied claims aren’t addressed quickly, payments aren’t posted consistently, or certain receivables just get overlooked. The older a claim gets, the harder it becomes to collect.  

Here are some ways to tackle this problem: 

• Address earlier metrics like charge lag and speed to pay, as both impact how soon claims are paid.  

• Be proactive with denial management.  

• Identify claims stuck in the system, get to the bottom of denials, and fix the root cause wherever possible.  

• Reporting tools can help spotlight older claims, so you know what to prioritize.  

Picture this scenario: If 20% of your receivables are older than 90 days, you’re losing access to a major source of revenue. Streamlining your workflows and staying on top of follow-ups can help you recover that money and keep your finances on track—it’s all about taking small, manageable steps! 

Net collection rate  

Net collection rate measures how much you’re collecting from total revenue, after accounting for adjustments like contracts with payers. This gives you a clear picture of how much you’re actually bringing in. Ideally, this number should sit above 95%. 

If your rate is lower, there are often a few culprits. Clients may not fully understand their financial responsibility, or there may be no process in place to collect payments at the time of service. Practices that lack a system for following up on unpaid balances are especially vulnerable to losing revenue.  

Improving your net collection rate starts with clear communication. Help clients understand what they’ll owe upfront and why, and collect payments at the time of service whenever possible. For remaining balances, establish a consistent follow-up process to ensure no payments are forgotten.  

For example, if you bill $10,000 in a month but only collect $7,500, your net collection rate is 75%. That means a full quarter of your revenue isn’t coming in! Small adjustments, like clearer client education or improved invoicing, can help close this gap.  

Cost to collect  

Finally, cost to collect measures how much it costs you to collect payments, relative to how much you actually bring in. This includes expenses like payment processing fees, staff salaries for collections, or software costs for managing invoices. Ideally, your cost to collect should stay under 10%.  

High costs are often the result of manual processes, repeated claim rework, or simply underestimating how much time and money you spend on billing. Unfortunately, even if collections are strong, inflated costs can eat away at your revenue.  

Breaking down your billing workflows can help uncover inefficiencies. Look for areas where automation can reduce manual effort, such as denial management or payment reminders. Additionally, invest in training for your staff to ensure processes are as efficient as possible.  

Conclusion  

Billing can be complex at times, but it’s essential for keeping things running smoothly—just like checking in with a client’s mental health is key to their well-being. By monitoring these five key metrics, you can identify problem areas and refine your billing processes; not only does this improve your practice’s financial stability, it also helps you feel confident in the future of your organization.  

Improving these metrics doesn’t have to feel overwhelming. Start small. Focus on one or two areas that need the most attention, set realistic goals, and build from there. Just as you guide your clients step by step toward progress, tending to your practice’s financial health ensures stability—not just for you, but for the clients who count on your care. 

Ready to give your practice a wellness assessment? Get your free billing health check from our expert RCM team!