How to calculate days in A/R

To calculate days in A/R, divide your total accounts receivable, minus credit balances, by your average daily charges. To get average daily charges, take your gross charges for a period (the last 90 days is a common window), subtract credits, and divide by the number of days in that period. The AAFP says days in A/R should stay below 50 at minimum, with 30 to 40 days preferable.

It tells you how many days of billing are waiting to be paid, not where the money is stuck, so read it next to your aging report.

In short: Days in A/R = (total A/R minus credit balances) ÷ ((charges minus credits) ÷ days in the period). Aim for under 50, ideally 30 to 40, and track A/R over 120 days by payer, because a good average can hide old claims.

How to calculate days in A/R

The AAFP’s method for days in A/R has two parts: work out what you bill on an average day, then divide what is still owed by it. You need four figures from your practice management system.

1. Add up gross charges for the period. The AAFP’s examples use 3, 6 or 12 months.
2. Subtract credits that reduce those charges, such as voided or corrected charges.
3. Divide by the number of days in the period. The result is your average daily charges.
4. Take total A/R today and subtract credit balances, the money on accounts that may be owed back.
5. Divide that by average daily charges. The answer is your days in A/R.

Here is the arithmetic for a practice with $276,000 in charges over the last 90 days:

That is 40 days of billing waiting to be paid, at the top of the AAFP’s preferred range. Put in your own numbers to see where you sit:

Why the period length changes the answer

Average daily charges move with your volume. A short window reflects what you bill now; a long one smooths out holidays but lags behind growth. HFMA’s standard version of the measure, net days in A/R in its MAP Keys, uses the most recent three-month daily average, one reason 90 days is a sensible default. Here is the same $120,000 of A/R measured three ways:

Collections did not change between the rows. When charges drop, days in A/R rises before your A/R has time to shrink, and a growing practice looks slower on a 12-month window. Pick one window, use it every month, and note anything unusual next to the number.

Credit balances and credits

Credit balances sit inside your A/R: duplicate payments, patient overpayments, or a payer that paid as primary when it was secondary. They are money you may owe back, so the AAFP subtracts them from total receivables. If your aging report already nets credits against open balances, leave the credit balance at zero so you do not take them out twice.

Every dollar of credit balance lowers days in A/R, so unresolved overpayments make A/R look healthier than it is. HFMA tracks net days in credit balance separately, a measure it says indicates process failure in timely cash posting, incorrect posting or incorrect payment. Medicare overpayments generally have to be reported and returned within 60 days of being identified, under 42 CFR 401.305.

Credits for the period are different: entries that reduce the period’s charges, such as voided and corrected charges. The AAFP’s steps subtract them, though its own worked example uses gross charges alone, so treat them the same way every month. Leave payments out: they already come off your A/R, and subtracting them from charges would inflate the result. Keep both sides on one basis too: if your A/R carries claims at full charges, divide by full charges.

What is a good days in A/R for a medical practice

The AAFP’s benchmark is below 50 days at minimum, with 30 to 40 days preferable. That gives four bands:

• Under 30 days: faster than the preferred range. Check that credit balances or collection write-offs are not flattering it: accounts sent to a collection agency come off current receivables, so the AAFP suggests calculating days in A/R with and without collection revenue.
• 30 to 40 days: the AAFP’s preferred range.
• 41 to 50 days: inside the minimum, with room to improve.
• Over 50 days: above the minimum. Look at aging by payer to see where the time goes.

No single figure fits every practice. MGMA, which benchmarks medical groups, says revenue cycle performance differs greatly by type of practice and ownership, and points to payer mix and billing structure as part of the reason. Specialty matters too, since prior authorizations, records requests and patient balances all slow payment. The AAFP’s own example is a practice averaging just under 50 days whose Medicaid claims average 75.

Payers set a floor as well. Medicare cannot pay a clean electronic claim before the 14th day after it receives it, and must pay or deny clean claims within 30 days, under the Medicare Claims Processing Manual. Paper claims wait longer.

Your own trend is the most useful comparison. In a July 2026 MGMA Stat poll, 43% of medical group leaders said their days in A/R were about the same as a year earlier, 32% said higher and 22% said lower.

Why a good average can hide old A/R

An average hides the tail. A practice can sit at 38 days while a block of claims ages past 120 days, close to the payer’s filing and appeal deadlines. The AAFP warns that good overall days in A/R can hide large amounts of older receivables, and points to A/R greater than 120 days as the benchmark to watch.

Read the aging buckets

HFMA’s MAP Keys split billed A/R into five buckets, 0 to 30, 31 to 60, 61 to 90, 91 to 120 and over 120 days, each shown as a share of the total. Read the percentages, not only the dollars, and compare them month to month. For a reference point, the 2021 MGMA DataDive put the median share of total A/R over 120 days at 13.54% for multispecialty practices. That is one type of practice in one year: a sanity check, not a target.

A/R over 90 and over 120 days

Past 90 days, deadlines start to matter. Medicare claims must be filed within one calendar year of the date of service under 42 CFR 424.44, and a Medicare redetermination, the first level of appeal, must be requested within 120 days of receiving the initial determination. Commercial limits come from each contract and vary by payer, plan and state. A claim that runs out of time without action is usually lost.

Payer mix

Run your aging by payer, not only in total; MGMA recommends it to find slow payers before contract talks. One payer at 75 days inside a 45-day average is a problem the average will not show. Keep patients on payment plans apart too: the AAFP suggests treating them as their own “payer”, because long plans raise days in A/R.

What pushes days in A/R up

Days in A/R rises when claims go out late, go out wrong, or come back and sit. In the July 2026 MGMA poll, leaders whose days in A/R had risen pointed mostly at payers: slower payment, initial denials, downcoding, records requests, prepayment audits and long appeals. They also named billing staff turnover, credentialing delays and system changes.

Inside the practice, the usual causes are:

• Charge lag. MGMA describes days in A/R as the days between the date of service and payment, so every day an encounter waits to be signed, coded or billed adds to it.
• Front-end errors. The wrong payer, inactive coverage, a wrong member ID or a missing authorization. Under the same CMS manual, a rejected claim is not counted as received until it is resubmitted corrected and complete.
• Denials left unworked. The AAFP puts the industry average denial rate at 5% to 10%, and MGMA benchmarking puts first-submission denials at 7% to 8% over the past four years. Each denial stays in A/R until someone corrects or appeals it.
• Slow or wrong payment posting. Until a remittance is posted, a paid claim still looks open and its denials go unseen. A payment posted to the wrong account leaves a credit on one and an open balance on another.
• Patient balances. Deductibles and coinsurance that are billed late, or never explained at check-in, age slowly.

How to reduce days in A/R

Fix the step that creates the delay, then work what has already aged.

Close encounters and post charges quickly

MGMA’s advice is to set expectations for clinicians to close encounters within 72 hours and for staff to post charges within two days. Track the days from service to claim each week, by provider, and fix clearinghouse rejections the day they come back.

Verify eligibility before the visit

Check coverage, the member ID, primary and secondary insurance, and referral and authorization rules before the patient arrives. Eligibility and benefits verification prevents the denial instead of fixing it weeks later.

Work denials every day

Start with high-dollar claims and the nearest appeal deadlines, as MGMA recommends, and sort by reason code to find repeat causes; our denial code guides explain the common codes. Denial management corrects or appeals each claim, then fixes the step that caused it.

Post payments the day they arrive

Post ERAs and EOBs daily, match deposits to the bank, and send each remittance’s denials to follow-up the same day. Review credit balances monthly. Accurate payment posting and reconciliation keeps the A/R figure honest.

Collect patient balances at the visit

Collect copays and known deductibles at check-in, and give staff a standard way to explain estimates and ask for the patient’s share, as MGMA recommends. Bill the patient once insurance has paid or denied.

Work the oldest A/R first

Sort open claims by deadline and dollars: claims near a filing or appeal limit first, then the oldest and largest, each followed up until it closes.

Related measures to track with days in A/R

Days in A/R shows how fast you are paid. These three show how much, and where the risk is.

• Net collection rate. The AAFP calls it the adjusted collection rate: payments, net of credits, divided by charges net of contractual adjustments, over 12 months. It sets 95% as the minimum; the highest performers reach 99% or better. Our guide to medical billing costs shows how a few points of collection rate can outweigh a point or two of billing fee.
• Denial rate. The AAFP divides the dollars denied in a period by the dollars submitted: 5% to 10% is the industry average and under 5% is more desirable. HFMA’s remittance denial rate counts claims instead: claims denied divided by claims remitted.
• A/R over 120 days. The share of open A/R more than 120 days old: the number the AAFP says to watch next to the average.

How Reliable Care works your A/R

We work A/R by payer every day, oldest and largest first, and a claim near a filing or appeal deadline jumps the queue. Each unpaid claim gets a status check on the payer portal or by phone, then the action that moves it: a corrected claim, records, a rebill or an appeal. Repeat problems go back to the step that caused them, from eligibility to charge entry.

Each month you see, by payer: days in A/R and its change, aging by bucket, A/R over 90 days, claims near a deadline, and every write-off and credit balance with its reason. If we run your revenue cycle, A/R follow-up is part of our full-service rate of 3% to 6% of monthly collections, with no setup or onboarding fees and flexible monthly-minimum plans for new and smaller practices. A/R-only work and old A/R from a previous biller are quoted after a free review.

See how our A/R management works, or send us your last 90 days of A/R and we will show you what is collectable and what is close to timing out.