Key takeaways
- AR days shows how many days of charges are still unpaid.
- Watch the trend and the aging buckets, not one number alone.
- Short charge lag, prompt posting, and steady follow up bring AR days down.
Days in accounts receivable, usually called AR days, is one of the simplest ways to see whether billing is keeping up. It estimates how many days of charges are sitting unpaid. When AR days rise, cash slows down, even if the practice is busy.
How AR days is calculated
The common method is to take total outstanding AR and divide it by your average daily charges. Average daily charges is usually total charges over a recent period, such as the last three months, divided by the number of days in that period. The result is the number of days of charges that remain uncollected.
- Total AR: everything billed and not yet paid or adjusted.
- Average daily charges: charges for the period divided by days in the period.
- AR days: total AR divided by average daily charges.
There is no single right number for every practice. Payer mix, specialty, and patient balances all change what is realistic. The trend matters more than the number. If AR days creep up month after month, something in the process is slowing down.
Look at aging, not just the total
An AR aging report groups balances by age, usually 0 to 30, 31 to 60, 61 to 90, 91 to 120, and over 120 days. A healthy practice has most of its AR in the youngest buckets. When balances pile up past 90 days, they get harder to collect, and some will hit timely filing or appeal limits.
Common reasons AR grows
- Claims sent late because notes or charge entry are behind.
- Rejections at the clearinghouse that nobody is working.
- Denials that are not appealed or corrected.
- Payments posted late or posted wrong, so open balances look larger than they are.
- No regular follow up on claims with no response.
- Patient balances with no clear statement process.
Practical ways to bring AR days down
- Submit claims daily and keep charge lag short.
- Work clearinghouse rejections every day.
- Post ERA and EOB payments promptly, and reconcile deposits to postings.
- Follow up on unpaid claims by age and value, starting with claims near a deadline.
- Work denials by cause and fix the upstream problem.
- Send clear patient statements on a regular schedule.
- Review the aging report monthly with whoever owns follow up.
Clean up the data before you judge the number. Unposted payments, missing adjustments, and old credits can make AR look worse or better than it really is.
A quick example
A practice bills about the same amount each month, but AR days rises from one quarter to the next. The aging report shows the growth is in the 61 to 90 day bucket for one payer. A closer look finds a batch of claims denied for a missing modifier that nobody reworked. Fixing the modifier rule and resubmitting the batch brings AR days back down. The number pointed to the problem. The aging report found it.
Where Afiable helps
Afiable posts payments, reconciles deposits, works denials, and follows up on open claims by age and value. You get a clear AR report with what moved and what is next. Book a free audit and we will review your aging report and show you where the money is stuck.
Questions practices ask
What is a good AR days number?
It depends on specialty and payer mix. Compare your own trend over time, and look closely at how much AR sits past 90 days.
Should patient balances be included in AR days?
Many practices track insurance AR and patient AR separately, because they are collected differently. Seeing both clearly helps you act on each.
This article is general information for practice owners and managers. Payer policies and regulations change, so confirm current rules with each payer before acting.