Q. What are the major pros and cons of a third-party payment plan?
Most veterinary practices don't want to get into the business of pursuing collections, so accepting third-party payment plans can be an easy way to avoid large outstanding balances, says Dr. Marsha L. Heinke, EA, CPA, CVPM, president of Marsha L. Heinke CPA Inc., a consulting, tax, and accounting firm in Grafton, Ohio, that works exclusively with the veterinary profession. And with the client owing the third-party provider rather than your practice, you save time and energy that might otherwise be spent on conducting credit checks, sending invoices and monthly statements, and completing other collection activities. But most importantly, using a third-party payment plan increases the likelihood that the client will opt for most or all of the recommended care, Dr. Heinke says, which also accelerates cash flow for the practice.
Dr. Marsha Heinke, CPA
So what's the catch? You may need to pay an initiation or enrollment fee, plus any equipment fees to swipe third-party-issued cards. "Fees charged to the veterinary practice can be fairly punitive in some contracts, as much as 5 percent or more," Dr. Heinke says. "Since many practices are experiencing tight profit margins these days, a third-party provider fee can eat up a large part of that profit." But if you enlist a company with low charges, you'll likely suffer fewer headaches than you would setting up and managing your own payment-installment plan.