Improve dental practice cash flow with these 5 steps
5 Steps for Improving Your Dental Practice Cash Flow
Controlling cash flow is at the heart of building a successful dental practice, but many dentists and practice managers are alarmed to discover the complex and time-consuming nature of managing their finances. Specialized dental practices such as orthodontics, periodontal, pediatric, oral and maxillofacial surgeons, and endodontic can have added complexities that require advanced accounting expertise.
How can you make healthy cash flow a strong point at your business instead of a costly issue that gets in the way of being able to grow your practice? Whether you have trouble understanding a financial statement or feel like you can’t get the insight you need—here are a few ways to improve cash flow at your dental practice.
- Pay attention to your cash flow statement, and budget for future expenses
One of the key things to understand about cash flow is that it may always be somewhat irregular. These variations might seem random at first but, if you work with an experienced dental accounting partner like PBA, we can help you analyze and identify patterns. When faced with varying expenses, especially major purchases like new equipment, you’ll want to time things in accordance with revenue patterns or know when to budget for them.
- Keep minor expenses under control
Big purchases are easy to account for, but it’s also critical to pay close attention to all the small expenses that often get overlooked. All of those minor purchases add up, and if you can get rid of the ones you don’t need, you’ll save quite a lot of money over an entire year. And of course, every dollar saved can really make a difference over the lifespan of your dental practice. Imagine saving even 1% of an unnecessary expense year after year – after 20 or 30 years, that represents a lot of extra cash!
- Use effective billing procedures
Make sure you have a consistent credit policy with tight enough standards for extending credit. It’s also important to minimize billing errors – many customers simply won’t pay if they notice a mistake on the invoice, and they might not tell you about it until you call to make collections.
- Keep your cash-to-cash cycle short
Don’t wait until the end of the month to bill your customers. Timely billing means timely payments so if you don’t have the technology or resources to support efficient billing—an outsourced accounting partner is a smart investment. Make sure you are consistently tracking balances due so you can send proactive reminders.
- Identify and eliminate inefficient business processes
Make sure your employees are well-trained and knowledgeable about the administrative processes in your business. Try to keep staff turnover at a minimum – you’ll benefit from the expertise they gain over time. If you do face turnover, having your processes clearly outlined reduces the time and effort to onboard and train new employees. Using technology to automate recurring, redundant accounting tasks will save you time and money on administration, while increasing your visibility into the ups and downs of your business.
Feeling overwhelmed? Contact PBA for dental accounting expertise.
Cash flow and accounting can be one of the most challenging aspects of running a successful dental practice. It’s critical to gain an external perspective by working with a partner so in-tune with your business, they can eliminate your financial blind spots. An accountant with experience in dental practices can be particularly helpful because they already understand the challenges you face. Contact PBA today to learn how you can benefit from our dental industry knowledge and experience.
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We can help you transform your practice and simplify your life. Your partnership with us begins with an introductory meeting to work with you to determine if our services are a good fit and—if they are—set up an accounting assessment.