Debtors can run but not hide

Imagine what happens in a cat and mouse game. Eventually the mouse gets caught. In private practice you will find some patients who get away without paying you partly, or in full. The effort of chasing down bad debt may appear daunting especially if you are a busy practitioner. Now, you try running away from your creditors - they will come at you hammer and tongs. The biggest creditors are the most serious about recovering their debts. A few dentists have faced pecuniary embarrassment and ended up having their office and personal items auctioned.

So, what can you do about bad debt? Unlike the USA we do not have a Fair Debt Collection Practice Act so it is standard practice to pussy-foot around debtors until you reach a pre-determined point of no return. Start pursuing outstanding debts which are older than 90 days actively. Give them 3 calls and send them a written letter threatening to report them to a Credit Reference Bureau. Follow up with a Lawyers letter. If that fails, hire a reputable debt collector and let them take the next steps upto and including an auctioneer. Some people will not pay, anyway. You may have to write off some debts and put them in your Income Tax returns as an allowable expense.

We are all facing difficult economic times. A prominent Kenyan Bank has increased its interest rates on loans o 24.5%. Going forward this is the time to review your credit and collectables policy. First of all figure out what credit limit you are going to allow for each person or third party payer that you treat. Offer payment plans to patients and explain what happens if they fail to pay on time. You just stop treating them. You may have to lose some Insurance companies and HMO's that do not pay on time or have convoluted payment processes.

Dentistry cannot be cheap with all the equipment and materials used, coming from abroad. It is dangerous to underprice your services. So the market, whichever niche market you serve must adjust and must be coaxed into paying on time for services rendered so that you can remain in business. Dentistry is a business which keeps you busy so that you and the Taxman can keep working to build infrastructure, pay for recurrent expenditure and pay corporate and national debt. Government and the people are in the same boat. We have to plug in all leaks in the hull and collect more efficiently and effectively. Little wonder that KRA officials are scoping all apartment blocks in my neighborhood to track down non tax compliant landlords! All dentists can learn from KRA and can repeat their clarion call "Tulipe ushuru" to all patients and Insurance companies.