Days in accounts receivable is the average number of days it takes to collect a dollar you have billed. It is the single best short answer to "how fast is money reaching this practice", and it is routinely misunderstood.
The calculation
The standard formula is straightforward:
Total accounts receivable ÷ average daily charges = days in A/R
Average daily charges is usually gross charges over the last 90 or 120 days divided by the number of days in that period. A longer window smooths seasonality; a shorter one reacts faster to a change.
Two practices can compute this differently and get very different numbers, which is why comparing your figure to someone else's without knowing their method is close to meaningless. Comparing your own figure to itself over time is not.
What the benchmarks say
MGMA and HFMA both publish reference ranges. Broadly:
- 30–40 days is a normal range for a well-run outpatient practice
- Under 25 days is where top performers sit
- Over 50 days indicates a systemic problem, not a bad month
Specialty matters. Practices with heavy prior-authorisation burden or a large workers' compensation book will sit structurally higher, and comparing them to a primary care benchmark is unfair to the billing team.
What the number hides
Days in A/R is an average, and averages conceal distribution. Two practices can both report 38 days:
- One has almost everything collected inside 45 days and very little aged.
- The other collects most claims in 20 days and carries a large block of receivables past 120 days that will never be collected.
The second practice has a serious problem the average does not show. That is why days in A/R should never be read without its companion metric.
The metric that goes with it
Percentage of A/R over 90 days. Benchmarks put this under 20% of total A/R, with top performers well below that.
This is the number that tells you whether your follow-up reaches the bottom of the pile. A concentration here means claims are being worked in the order they arrive rather than in the order they will expire — and claims that expire are gone.
Read them together:
- Low days in A/R, low over-90 concentration: healthy.
- Low days in A/R, high over-90 concentration: you collect easy money fast and abandon the rest.
- High days in A/R, low over-90 concentration: slow but complete. Usually a payer mix or authorisation issue.
- High days in A/R, high over-90 concentration: the follow-up process has failed.
What actually moves it
In order of impact for most independent practices:
- First-pass clean claim rate. Every rejection adds a fortnight or more. Fixing claims before submission moves days in A/R more than any follow-up effort.
- Denial turnaround. How many days pass between a denial arriving and someone acting on it.
- Eligibility verification. Coverage failures generate the denials that age worst, because the patient has already gone home.
- Follow-up cadence. Whether unpaid claims are touched on a schedule or when someone gets to them.
- Patient balance process. Patient responsibility collects slower than insurance, and it is a growing share of every practice's A/R.
Where to start
Calculate the number, then immediately calculate the over-90 percentage alongside it. If you cannot produce both from your system today, that is itself the finding — and it is the most common one we report back in a free A/R analysis.