The Mindset That Isn’t Questioned
For decades, veterinary practice owners and managers have been taught to view accounts receivable (A/R) as something to avoid at all costs.
And if avoiding it entirely isn’t possible, the guidance has been equally clear: keep it tightly controlled, never exceed the commonly cited benchmark of 1.5% of gross revenue, and ideally collect it within 30–60 days.
This philosophy has been repeated so often that it’s now an orthodox doctrine—a rule to follow, a line not to cross.
But it’s worth pausing to ask where it came from.
This wasn’t a rigorously developed financial model. It was a benchmark introduced over 20 years ago, repeated, and gradually accepted as truth. A single, widely respected voice introduced it. Others echoed it. And over time, it stuck—so firmly that it continues to shape financial decision-making in veterinary practices today.
And yet, the environment it emerged from has changed dramatically.
Recent research analyzing veterinary pricing and expenditure trends from 2000 to 2025 suggests that the industry entered a recessionary phase in late 2024, with continued softness projected into 2026. Prices have continued to rise, but real expenditures have begun to slow—a signal that clients are reaching their limits in ways that aren’t always immediately visible.
In other words, the broader economy may send mixed signals, but veterinary medicine is operating within its own distinct financial cycle.
And in that context, it’s worth asking whether the financial rules we’ve relied on are keeping pace with the reality clinics and clients are experiencing.
Where Did Veterinary A/R Benchmarks Come From, Anyway?
I’ve been involved in the veterinary finance world long enough to see one benchmark appear again and again: the rule that veterinary A/R should never exceed 1.5% of total revenue.
I saw it cited again recently—for what feels like the 5,000th time.
Alongside it is the expectation that A/R should be collected within 30–60 days. These ideas have been repeated so often in practice management circles that they’ve taken on a kind of “golden rule” status.
So I went looking for where they came from—and whether they had ever been meaningfully revisited.
The earliest reference I could find dates back to around 2006, and veterinary financial expert Gary Glassman, CPA, cited the 1.5% figure again a few years later, in 2009. Nearly two decades on, the profession is still repeating and using the same benchmark.
That alone is worth pausing on, because this recommendation was established before the sharp rise in veterinary costs, the post-2020 inflation environment, and consumers becoming accustomed to managing large expenses through monthly payments, subscriptions, and extended financing.
It was built for a financial landscape that no longer exists.
When an Old Benchmark Becomes Doctrine
To see how deeply this mindset has taken hold, you don’t have to look far.
In The Art of Veterinary Practice Management (2014, Opperman & Grosdidier), practices with A/R of 0.5% or less are described as deserving an “A+,” while those reaching 3% are framed as having a problem.
That framing has shaped how generations of practice owners think about receivables. A/R has never been perceived as a means to reduce the affordability gap and treat more patients. Instead, it’s been viewed as a warning sign of financial danger ahead.
To be fair, the profession hasn’t ignored the need for payment flexibility.
Over the past two decades, veterinary practices have increasingly turned to third-party, credit-based financing options to help bridge affordability gaps. But those solutions aren’t available to everyone. Approval thresholds, credit invisibility, and underwriting criteria leave a meaningful portion of pet owners without options.
So practices find themselves navigating a difficult middle ground: trying to avoid A/R, relying solely on third-party credit, and still encountering situations where neither approach fully works.
Which raises a different question—if neither avoidance of A/R nor traditional credit solutions are sufficient on their own, what might we be missing?
The 1.5% Rule No Longer Reflects Reality
In a softer-demand environment, where clients are more price-sensitive and less able to absorb large upfront expenses, rigid payment expectations can create friction rather than reduce risk.
The 1.5% rule and the 30–60 day collection window were designed to maintain strong cash flow and minimize financial exposure. But in today’s environment, those same constraints can have unintended consequences.
When repayment timelines are compressed into a short window, the resulting monthly payments are often higher than what clients can realistically manage. And when payments feel unmanageable, follow-through becomes less likely.
In that sense, the risk hasn’t been eliminated—it has simply been shifted.
By contrast, when payments are structured over a longer period, the monthly obligation becomes more manageable, and consistency improves. Across VetBilling’s platform, repayment periods typically range from 6 to 7 months, with an overall success rate of about 90%—an outcome that reflects what clients can realistically sustain given today’s invoice sizes.
The old benchmark/mindset assumes that time increases risk. But when payments are structured appropriately, time can actually reduce it.
A/R Benchmarks in Other Industries
Looking outside veterinary medicine helps put this into perspective.
In human healthcare, it is common for larger balances to be managed over 6 to 24 months or longer, without relying on consumer financing. Financial performance is evaluated based on the consistency of payments rather than the speed of collections alone.
Dental practices often operate with A/R levels in the range of 10–15%, recognizing that financing over 12-24 months is a normal part of delivering higher-cost care.
In elective and cosmetic medicine, repayment timelines may extend even further—24 to 36 months is not unusual. LASIK providers routinely offer interest-free financing for 12 to 24 months.
Rather than relying on a single approach, many of these providers use a combination of consumer financing and in-house payment plans to meet a broader range of patient financial needs.
Across these industries, there is a clear pattern: receivables are not treated as something to avoid at all costs, but as something to intentionally structure in a way that supports both access and revenue.
In-House vs. Third-Party Financing
Veterinary practices have understandably leaned on third-party financing options to help manage larger invoices. But these tools are not a complete solution.
Many clients are declined—not because they are unwilling or unable to pay, but because they don’t meet underwriting criteria, lack a sufficient credit profile (credit invisibility), or can’t manage required down payments. In addition, these financing options often come with significant merchant fees for the clinic.
The result is a familiar tension: clients need flexibility, clinics need predictability, and the most commonly offered financing solutions don’t always bridge that gap.
This is where structured, managed in-house payment plans begin to look more appealing. When designed thoughtfully, they allow practices to extend flexibility more broadly while supporting predictable, sustainable cash flow.
Redefining Financial Health in Veterinary Practices
All of this points to a broader shift in how we define financial health in a veterinary practice.
For years, the emphasis has been on minimizing A/R and accelerating collections. But in today’s environment, a more relevant measure may be the predictability and sustainability of cash flow.
When payments are structured in a way that clients can realistically maintain, the result is not just improved follow-through, but greater consistency over time.
Instead of relying solely on point-of-service transactions, practices are beginning to build something different: a layer of revenue that continues beyond the day the service is delivered.
Over time, that creates a stream of recurring revenue—payments arriving steadily across weeks and months, rather than in isolated events. This can help smooth out the natural variability of veterinary medicine, including slower seasons or periods of declining visit volume.
A New Way to Think About A/R
In the current economic environment, the goal shouldn’t be to eliminate A/R entirely. Instead, it’s time to start thinking about it differently.
For decades, the dominant approach in veterinary medicine has been to compress payment into the shortest possible window. But as prices have skyrocketed, that approach has become impossible to sustain.
An alternative is to structure payments over time to align with what clients can realistically manage. When payments are set at a level that feels achievable, clients are more likely to stay engaged and follow through.
In that context, extending time isn’t about being lenient—it’s about being realistic.
Instead of treating A/R as something to avoid at all costs, it can be intentionally designed to benefit both the practice and the client.
Well-structured A/R invites a shift in perspective—from the belief that it is always a liability to the recognition that it can function as a stabilizing asset and revenue generator.
References
- Glassman, G. I., CPA. (2009). Understanding profitability in veterinary medicine (Proceedings). DVM360.
- Burzenski & Company. Explaining veterinary financial health. Retrieved from https://www.veterinaryfinancialadvisors.com
- CareCredit. CareCredit for veterinary clients. Retrieved from https://www.carecredit.com
- Consumer Financial Protection Bureau. (2022). Understanding credit invisibility and unscorability in healthcare financing.
- Veterinary Economics Editorial Advisory Board. How to manage A/R in veterinary practices: Practical advice for balancing client needs and clinic cash flow. DVM360. Retrieved from https://www.dvm360.com
- iVET360. (2023). Buy Now, Pay Later in the veterinary industry: Exploring flexible financing options.
- McCobb, E., King, E., Mueller, M. K., & Dowling-Guyer, S. (2022). Financial fragility and demographic factors predict pet owners’ perceptions of access to veterinary care in the United States. Journal of the American Veterinary Medical Association, 260(1). https://doi.org/10.2460/javma.21.11.0486
- Gupta, R., Hasler, A., Lusardi, A., & Oggero, N. (2022). Financial Fragility in the U.S.: Evidence and Implications. Global Financial Literacy Excellence Center.
- Neill, C. L., Salois, M., & McKay, C. (2025). Anticipating the downturn: Business cycle forecasting for veterinary practice strategy in the United States. Frontiers in Veterinary Science, 12. https://doi.org/10.3389/fvets.2025.1689704