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, especially during end-of-year preparations and plannings. Run through this easy checklist with your accountant to find out where your business is heading.
1. Annual Budget
Did you set an annual budget for the current year? If so, have you been referencing it on a regular basis or has it sat untouched since its creation?
What’s the use of an annual budget if you haven’t used it as a benchmark throughout the year? Make an effort to reference the data to determine the health of your practice. Yes, your budget may fluctuate from time to time, but if you don’t have an initial plan, you may be flying by the seat of your pants. And that’s no way to run a business.
To properly gauge profitability and potential growth, collect your financial reports from last year and the current year and sit down with your accountant to project an annual budget for the upcoming year. The data can help determine trends and indicate areas that need attention moving forward.
2. Fee Schedules
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 evaluate your fees. Even slight changes to routine procedures can result in significant changes to your bottom line. Strive for strong financial policies with clearly understood and accepted treatment plans to streamline the process.
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?
Even highly successful dental practices can become complacent with collections. Work with your accountant to create an efficient collections policy, and adhere to the policy regardless of cash flow fluctuations.
Don’t wait until after the holidays to collect and prepare documents for tax preparation. And use your accountant as a sounding board to maximize deductions before the end of the year. Performing all of these accounting checkups will help you close the books and prepare for a successful new year.