Why Dental Payment Plans Are So Popular in 2025

Payment plans have been around in dentistry for decades now, but are now seeing a surge in popularity. Taking advantage of the “buy now, pay later” psychology that has fueled growth in the e-commerce industry for years, practices are now implementing more payment options to improve case acceptance rates, bolster collection efforts, and improve the financial experience for their patients.

But how good are they at achieving these benefits?

In a previous study we conducted, we observed the performance of a sample of 1,600 payment plans and compared the collection outcomes with that of traditional billing without payment plans. The plans included in this study were all offered in-house via Pearly’s Pay-Over-Time platform. 

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Dental Payment Plans - Industry Report Results

Here’s what we discovered when we looked at the results after 90 days:

Collection rates for balances 90+ days past due and $200+ were lifted by 19%. These are by and large persistent, aging, and substantial balances that would have gone to collections or ultimately written off as bad debt.

Payment velocity for all balances offered payment plans was improved by 10.2 days across all aging buckets and balance sizes.

With these two performance metrics in mind, it is safe to say that offering payment plans is beneficial to both patient-portion collection rate and cash flow. Making it standard practice to offer a plan (in-house or via a 3rd party) can ultimately make your practice healthier and more profitable.

But not all payment plans are created equally. 

So what is the best way for practices to offer payment plans? And what are the best practices for structuring them and targeting the most appropriate patient balances?

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Optimal dental payment plan characteristics

In our Payment Plan report, we then dissected the best performing payment plan offerings to determine what made them so effective in their respective contexts. Here we found that there are 4 factors that impact the effectiveness of a dental payment plan:

1. The payment interval structure
2. The associated fees
3. The targeting parameters
4. The delivery system

Payment plan structure

When it comes to driving a higher adoption rate for payment plans, offering the right plan structure can be a key factor. While there are hundreds of permutations of plan structures that practices can offer their patients, a handful stand out as the most effective at promoting enrollment.

So which plan structures are the most prevalent and are associated with higher collection rates? Pearly’s Pay-Over-Time separates plans into periods and weekly intervals for payment cadences. A plan for settling a $100 balance with 6 periods and 4 for the interval indicates that $100 will be paid in full with 6 payments, each made every 4 weeks. The initial installment counts towards the first payment period.

From our dataset, we observed that payment plans with a period of 3 and an interval of 4 were the most used by patients. This correlates with 1 monthly installment 3 installments total. 

The next two most popular structures were P6, I4 and P4, I1.

Payment Plan Fees

In addition to the structure of the plan itself, the fee structure can impact the overall success of a payment plan offering campaign.

Practices can improve margins of their collection efforts by including an administrative fee with payment plans. These fees (called admin or enrollment fees) can be a double-edged sword. Though they can encourage patients to complete their payment plans on time, they also can discourage enrollment in the first place due to the added cost barrier.

From the dataset we have that includes practices that set admin fees with their plans, we learned that adding an admin fee is correlated with a 21.3% decrease in the completion rate across all aging buckets and initial balance sizes.

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Patient Balance Targeting

Not all balances should be offered payment plans–especially if your practice has to manually enroll patients into them.

You need to establish the parameters for creating cohorts of your patient base that best qualify for plans.

In our dataset, we found that:

1. The average installment amount for successful payment plans was $121.
   
   
2. The average face value of the completed plans was $468 (median $303). The “face value” was defined as the down payment amount plus the installment amount multiplied by the number of periods outlined by the plan.

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These thresholds might not apply to your particular practice, but they can serve as a starting point for testing your patient balance cohort adoptability.

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The Payment Plan Delivery System

Once you have a system in place to target the best balances with the best-structured payment plans, you’ll need a way to offer it to your patients.

We find that to reduce staff time and the associated costs of staff collection intervention, it is essential to have an automated system for identifying qualifying balances, offering plans via self-enrollment, and processing installment payments.

Dental payment plan software like Pearly provides a cost-effective one-stop shop for all of these tasks. With Pearly’s Pay-Over-Time feature, practices can go “hands free” with

their payment plans. Just determine the plan structures, set the qualifying parameters, and let Pearly do the rest to improve your practice’s cash flow and fuel its success. 

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