Q: What does a buyer see in my AR in thirty seconds?

The data room just opened. Someone who has never met you is already reading your receivables with a term sheet in mind. Receivables first: balance against revenue, the ninety-plus share, and how much is provably collectible. That pass takes about thirty seconds and often happens before the first meeting. Age alone is not enough. Status is where value hides or dies. We would read your AR the way they will before you send the file.

Q: Why isn't an aging report enough for diligence?

Your aging report that looks fine went into the packet. The buyer's questions still land on status, not columns. An aging report sorts by how long a balance has sat. A buyer sorts by status: paid path, denied and worked, denied and ignored, never ruled, past filing deadline. The aging view blends those together. Status is what moves price. We would not lean on age buckets alone when someone is pricing your practice.

Q: What should I fix before a buyer pulls my data?

The data room invite is coming. The leaks you lived with are about to become their talking points. Phantom AR counted as collectible, revenue stuck between stages, attrition the P&L never flagged, and unsigned notes sitting on earned work. Name them on your clock, not theirs. We would clear the fiction before they open the folder.

Q: Will a quality-of-earnings review catch my cash timing problem?

QoE came back clean. Cash still lands late. It feels like the review missed the thing that hurts. Quality of earnings tests whether the number is recorded correctly. It often misses whether cash conversion (days from care to usable cash) is healthy. A cash bridge catches timing problems QoE can grade as fine. We would put visit-to-bank timing next to the earnings story before you treat a clean QoE as proof the bank will feel the same.

Q: What's the honest way to clean AR before a sale?

Someone reshuffled the aging buckets again. The same dollars are still waiting with fresher dates. Separate collectible, disputed, and dead. Work owned lists by cause. Nobody pays you by appearing on a report, and a buyer will not pay for balances that only look alive on aging. Cleanup that holds is status-true, not date-shuffled. We would rather see an honest smaller number than a pretty one that dies in diligence.

Q: Am I covering shortfalls out of my own pocket in a way a buyer will find?

Payroll cleared. Your personal account took the hit again. Nobody said it out loud. Owner subsidy hides the cash problem. Quiet top-ups, delayed draws, and personal transfers keep payroll looking fine while the practice stays short. A buyer or banker will name that gap on their terms if you do not name it first. We would put the subsidy on the table before diligence does.

Q: What does my banker see when cash swings before a sale?

Deposits bounced while the schedule looked steady. The lender is asking questions you have not answered yet. Lenders and buyers both read unexplained swings as risk. AR on the books may already be wrong. If deposits bounce while the schedule looks steady, underwriters see a story you have not told yet, and they price the silence. We would explain the swing on your terms before they invent one.

Q: Which fixes get priced into the multiple, and which fade?

You cleaned a backlog once. You want to know if a buyer will pay for that, or only for what stays fixed. A multiple is the dollars a buyer pays per dollar of earnings. A one-time backlog cleanup can lift earnings once. Buyers pay multiples for fixes that stay fixed: shorter visit-to-cash that holds, denial causes that stay shut, reporting that keeps working capital honest. Separate one-time cash from structural path changes before you claim either in a CIM (the buyer packet that sells the story of the practice).

Q: Where do I start if a sale is on the horizon and AR feels soft?

A sale is possible. Receivables feel soft. You do not want another binder of reports that disagree. Run a scorecard that forces bank vs billed vs stuck work onto one page. Then read your AR the way a buyer will. We would start with that honest page before you open a data room.

Question 1

What does a buyer look at first in my AR?

Accepted Answer

Three things, and the read happens before the first meeting. A buyer checks your AR balance against your revenue, the share older than 90 days, and how much can be proven collectible. That read takes about thirty seconds and shapes the price. Read your own AR the same way, cold and once, before you send the file to anyone.

The Accounts Receivable Buyers See When You Sell a Medical Practice

Question 2

Why isn't an aging report enough for due diligence?

Accepted Answer

Because it shows how long each balance has been sitting, and the price depends on what state it is in. Sorted by status, the same AR splits into claims pending on normal timelines, denials being worked, denials nobody touched, claims with no answer at all, and balances drifting past filing deadlines. The four aging columns blend all of that together, and a careful buyer prices the status.

What Buyers Miss in Seller Accounts Receivable Diligence

Question 3

What should I fix before a buyer pulls my data?

Accepted Answer

The leaks you have lived with. A buyer's review looks for AR carried as collectible that was already written off, revenue stuck between steps that never became cash, patients who quietly stopped coming, and unsigned notes on work you can't bill. Once a buyer finds one number that didn't hold, they doubt the rest. Find these first, then fix them or document them.

Question 4

Will a quality of earnings review catch a cash timing problem?

Accepted Answer

Not fully. A quality of earnings review tests whether your earnings are real and repeatable, and it can tie reported revenue to bank deposits for the period it covers. It doesn’t sort where each billed dollar sits today: with an insurance company, denied, taken back, unrecorded, or banked. The share that reaches the bank can slide for two years after closing, with no line item showing it.

Quality of Earnings Misses Cash Conversion in Medical Practices

Question 5

How much will a buyer discount my AR?

Accepted Answer

A buyer's model usually applies a flat discount to your AR, 15 or 20 percent, without looking at a single claim. Sorted claim by claim, that rule misses in both directions. In reviews we have run, one practice's AR was far more dead than the discount assumed, and another's was far cleaner. If yours is clean, the status sort is how you prove it and keep the value.

Question 6

What does my banker see when cash swings?

Accepted Answer

A lender prices a medical practice on how predictable its cash is. Two practices with the same collections borrow at different rates when one can explain every monthly swing. Your banker checks three things: how long money sits between the visit and the deposit, how much of your AR is truly collectible, and whether anyone can name the cause of a soft month.

What Your Banker Sees When Medical Practice Cash Swings

Question 7

Which fixes get priced into the multiple, and which fade?

Accepted Answer

The multiple is what a buyer pays for each dollar of yearly earnings, and it rewards fixes that keep working. Working down a billing backlog can lift earnings for one quarter, and a buyer reads that as a dollar earned once. A shorter time from visit to cash that holds month after month carries into the price. Label one-time cleanups as one-time, and show the lasting fix beside them.

Medical Practice Fixes Priced Into the Multiple (What Buyers Keep)

What buyers see in your AR when you sell a medical practice