If you could track only one number to judge the health of your billing, days in accounts receivable would be a strong choice. It tells you, in a single figure, how long your money sits waiting after you've earned it.
A low number means cash comes in fast and the cycle is working.
A rising number is an early warning that something upstream is leaking, often weeks before it shows up anywhere else.
Here's what days in A/R actually measures, how to read your aging report, what a healthy range looks like for a DME, and the habits that bring the number down.
What days in A/R actually measures
Accounts receivable is the money owed to you that you haven't collected yet. Days in A/R, sometimes called days sales outstanding or DSO, measures how long, on average, that money stays uncollected.
The math is simple. Take your total accounts receivable, divide it by your average daily charges, and you get the average number of days it takes to turn a billed charge into cash.
Average daily charges are just your total charges over a period divided by the number of days in that period. So if you billed 900,000 dollars over 90 days, your average daily charges are 10,000 dollars. If your A/R balance sits at 450,000 dollars, your days in A/R are 45.
That single figure rolls up the performance of your entire revenue cycle. Clean claims, fast follow-up, and low denials pull it down. Rework, slow collections, and aging balances push it up.
How to read an aging report
Days in A/R gives you the average. Your aging report shows you where the trouble actually lives.
An aging report sorts every open balance by how long it has gone unpaid, usually in buckets: 0 to 30 days, 31 to 60, 61 to 90, 91 to 120, and over 120. Reading it well means studying the shape of those buckets, because the headline total hides where the trouble actually sits.
A few things to look for:
- The size of the older buckets. Balances in 0 to 30 are normal and expected. Money piling up in 91-plus is money at real risk of never being collected. The further right the weight sits, the worse the health.
- The trend over time. One snapshot tells you where you stand. A series of them tells you which direction you're heading. Watching your aging buckets month over month is how you spot a problem while it's still small.
- The concentration. A big aged balance tied to one payer or one product category points you straight at the source, so you know where to work.
The total is the headline. The buckets are the story.
What a healthy range looks like
There's no single right number, because a healthy days-in-A/R depends heavily on your payer mix and product mix. A DME leaning on Medicare and stable resupply looks different from one carrying a lot of complex rehab or slow commercial payers.
As a general reference, many DME operators aim to keep days in A/R somewhere in the 40-to-50 range, with the goal of holding it steady or trending down. Treat that as a rough starting point for your own conversation. What matters more than any target is knowing your own baseline and watching which direction it moves.
Two DMEs can post the same 48 days and be in completely different shape. One is holding steady with a clean aging report. The other is climbing fast with a swelling 90-plus bucket. The number matters. The trend behind it matters more.
The habits that bring the number down
Lowering days in A/R comes from consistent operating habits over time. The DMEs that keep the number low tend to run the same handful of routines:
- Work the oldest buckets first. The value of a balance drops the longer it sits. Prioritizing aged accounts protects the dollars most at risk, even though newer claims are easier to chase.
- Keep follow-up on a cadence. Unworked claims don't collect themselves. A steady, scheduled follow-up rhythm on outstanding balances beats sporadic bursts of effort every time.
- Track denial root causes. A/R often swells because the same denials keep landing in it. Fixing the upstream cause keeps those balances from ever aging in the first place. (For how to catch them early, see DME claim denials.)
- Post payments promptly and accurately. Cash that's collected but not posted still shows as A/R and muddies your read on what's actually outstanding.
- Review the aging buckets on a schedule. Check them regularly so a rising trend gets caught early, while it's still cheap to correct.
Where automation helps the queue
A/R follow-up is high-volume, repetitive work, which makes it a good candidate for automation on the parts that don't need judgment.
Automation helps most with the routine mechanics: flagging balances as they age into the next bucket, keeping the follow-up cadence on schedule so nothing sits untouched, and triaging the queue so your team's attention lands on the accounts that matter most. That frees your billers from combing the report by hand and lets them spend their time on the calls, disputes, and payer conversations that actually move aged money.
What automation won't do is negotiate with a difficult payer or resolve a complicated account. That work stays with your people. The honest value here is narrow and real: clear the routine tracking so your team can focus on the collections that need a human.
The Bottom Line
Days in A/R is the plainest read you have on whether your billing is healthy. It rolls up every stage of the cycle into one figure, and it warns you early when cash is getting stuck.
Bringing it down comes from steady habits: work the oldest balances first, keep follow-up on a cadence, and fix the denials that keep refilling the queue. Watch the trend as closely as the total, because the direction you're heading tells you more than where you are today.
A/R sits at the back of the revenue cycle, so the number reflects everything that came before it. A clean first pass on claims (Pillar Article 2 link) and a solid prior authorization process are what keep balances from aging in the first place.
For how all the stages connect, start with the DME revenue cycle guide.
