When managing dental practice finances, there are many moving
parts. There are income, overhead costs, fees, taxes, insurance
reimbursements, and more. Even if you’re the best dentist in town, if
you don’t manage your money right, you won’t be able to build and
maintain a profitable, financially sustainable practice while still
providing top-quality patient care.
I work with many dental practice owners, helping them boost their profitability
by increasing their online presence. For this post, we contacted
several dentists for their feedback on best practices for financial
planning for dental practice. Based on what we've learned from working
with many dentists, we’ll explore the nine essential things dentists
must do to optimize their practice’s financial health and meet their
financial goals.
If you'd prefer a summary of the post and to look at some cool
pictures, scroll to the bottom, where you can view the infographic.
1. Hire an Expert to Help You
One of the main actions dentists recommend for managing a practice’s
finances is hiring a financial expert, preferably one with specific
dental practice expertise. Most dentists are not financial experts and
can’t be expected to know how to manage their money efficiently. Hiring
an expert such as a certified public accountant is especially important for dentists come tax time.
Here’s what a few seasoned dentists told us about hiring an expert.
Hire
an expert. Use them a lot or a little, but get professional advice. Too
many dentists think that because they’re smart in one area, they’re
also an expert in finances. Set short-term, medium-term, and long-term
goals and stick to them.
Loren Anderson, DDS, Anderson & Lintz Dental
You
should find a consultant who can sit down with you and make certain
that you aren't losing money due to poor management. Most dentists are
not great managers of money, but that's why you hire people who are.
What affects your profitability the most is that the dentist operates
without a full knowledge of where their dollars are going. Working
harder won't solve the problem until you diagnose what the problem(s)
really is (are).
Daniel Whittaker, DDS
One
word of warning here is that the financial expert you hire should not
be your buddy, as this can compromise the quality of their advice (and
your financial success.) One dentist told us, “It took me way too long
to realize that I didn't really have a financial adviser, all I had were
‘friends’ selling me insurance.”
2. Use Dental Accounting Software
Even if you have an accountant to
advise you on financial matters, you still need to give them the hard
data they need to assess your practice’s finances. Using the right
software, you can easily track expenses, revenues, and other financial
information to give your accountant an accurate view of your income and
expenses.
Some dentists use accounting software like QuickBooks or Xero; there are also dedicated dental practice management software solutions
such as Curve Dental or Total Dental. Depending on the dental PM
software you use, the software may have its own accounting features, or
it may integrate with other accounting software such as QuickBooks.
Continue reading about financial tips for dentists.