Behind the scenes of every thriving dental practice, are a series of administrative tasks being frantically carried out, of which cashflow management and expenses control, form a part of.
Critical to the long-term health of a dental practice from a financial perspective, managing cashflow and carefully controlling expenses isn’t always easy, and many practice owners work with a dental accounting firm to help them put smart financial systems in place to target growth and stability.
Here are 9 ways, recommended by accounting professionals, to better manage your practice’s cashflow and expenses:
- Monitor cashflow regularly
Without being consistently monitored, even the most profitable of practices can find themselves struggling financially.
Begin with cashflow forecasting implementation; projections made on a monthly and quarterly basis can help you identify potential upcoming shortages or surpluses. Track receivables diligently, review cashflow reports regularly, and closely monitor KPIs to spot early warning signs.
- Streamline billing and collections
With automated billing processes and software to take care of invoices, reminders and online payments, you can make quicker collections with less of an administrative burden. Offer a number of different payment options, train front desk staff to handle overdue accounts professionally, and be diligent in following up on insurance claims.
- Create a detailed budget
Every dental practice benefits from having a financial roadmap in place, and with a detailed and accurate budget that outlines all fixed and variable expenses, you can set monthly spending alerts and track variances automatically between your budgeted figures, and the actual figures.
- Evaluate and control overheads
With the ability to silently drain a practice’s profits, overheads that are left unchecked can lead to such things as uncompetitive rates from providers, and high utilities. Carry out an annual review of vendors, suppliers and service contracts to ensure you’re getting the best rates, negotiate terms where possible, and make some energy-efficient upgrades.
- Optimize staff scheduling and productivity
By optimizing staffing levels, you can make sure that during peak or slow periods, you’re neither over or under-staffed. You may find implementing a plan for ‘peak hours staffing’ based upon patient flow data, helps to keep the practice appropriately staffed at all times.
- Offer patient financing options
Many patients are concerned about the cost of treatment, but by offering them legitimate financing options, you can enable them to get the care they need while paying for it over time. This should help improve case acceptance rates, and keep funds flowing without big delays.
- Create an emergency fund
Cashflow can quickly become strained when an unexpected repair crops up at the practice, or the economy takes a nosedive. But with an emergency fund set up to cope with between 3 and 6 months of operating expenses, you can protect your cashflow and maintain profits.
- Strategically plan capital investments
To avoid putting too much of a strain on cashflow, big investments must be carefully planned with help from a capital budget, and a thorough ROI evaluation.
- Use financial reporting and dental accounting services
With accurate monthly financial statements such as cashflow statements, balance sheets and profit and loss reports, you can gain clarity over the financial health of your dental practice. Working with professional dental accounting services can help you identify challenges and opportunities early on, and be proactive with tax planning for dentists.
Use these 9 methods to better manage cashflow and control your expenses, and as a dental practice owner, you’ll soon find yourself able to shift your focus from financial administration, to delivering excellent patient care, and future-proofing your business.
