How healthy is your dental practice? Just as you advise patients to schedule regular checkups to maintain a healthy smile, you should also schedule financial checkups for your business.
CSI Accounting & Payroll has worked with dental practices like family dentists, orthodontists, and pediatric dentists for over 50 years, so we know your industry's unique financial needs. That's why we've made this checklist for you to run through with your accountant to help find out where your business is heading.
Dental Practice Accounting Checklist
As a monthly accounting service, we know we can sound biased when we recommend going over these points every month. However, most of our staff comes from an annual accounting background. Since we're familiar with both monthly and annual accounting, we've seen the benefits of reviewing the following on a more frequent basis.
1. Fee Schedules
Even slight changes to routine procedures can result in significant changes to your bottom line, but you still need to turn a profit to stay in business and grow.
When was the last time your fee schedules were updated? If you can’t remember, it’s probably a good sign that you need to re-evaluate your fees. Be sure to consider what uninsured patients can afford and the rates that dental insurance pays you, too!
While you don't have to increase your fees each month, it's important to take time each month to reflect on your financial statements and determine how your profitability has changed month-over-month. If you're not sure how to do this, a monthly accountant can help you analyze monthly financial statements or even determine how much you need to raise your fees.
2. Labor Expenses
The dental industry requires a variety of highly-trained, professional workers who tend to be compensated more than workers in other industries. Luckily, the dental industry's higher pay and bonuses help with limiting turnover, but this also means you face large labor expenses that may not be kept in check with your revenue and fees.
A monthly accountant can help you determine the best numbers for your business, but a general rule of thumb is that your total labor expenses (between your full staff: dentists, assistants and hygienists, claims adjusters, and front desk workers) be kept to no more than 30 percent of your total revenue. If you're increasing what you pay your staff, you should also be increasing your fees.
3. Collections Policy
Dental practices are not lending institutions. Are your collections reasonable, or are you finding a significant number of patients paying past-due bills? Payment cycle issues are one of the biggest financial challenges that dental offices face.
Work with your accountant to create an efficient collections policy, and stick to it regardless of cash flow fluctuations. Just because one month is going well with collections doesn't mean that the next month will! We recommend keeping payments to a 30-day time frame and monitoring how many net days outstanding you have month-over-month.
If you're running into issues with getting payments from insurance, that can be a whole different story. Do you know why this could be happening? Maybe your insurance submissions are incorrect and need to be redone, or maybe you're exceeding the agreed-upon rate, so your invoices are not being accepted. Keep these in mind if you're running into issues here.
Work With an Experienced Dental Practice Accountant
When you do a financial checkup on these three key areas of dental practice accounting, you put yourself in a position to make better business decisions. If you need assistance with examining your bottom line and profitability, balancing your labor fees with your revenue, or creating a collections policy that works best for your business, a monthly accountant can help.
A monthly accounting service that has experience in the dental industry can be a sounding board for your decisions. They can base the advice they offer you on the financial statements they make for you each month and other businesses they've helped in your industry.
If you're considering monthly accounting, why not check out CSI Accounting & Payroll? After all, we've worked with dental practices for over 50 years. To find out if we can be a good fit for your business, click the button below for your free consultation:
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