You didn’t choose dentistry because you love finances. However, you know that simply putting in time at your office isn’t enough to keep your practice afloat, much less growing.
At CSI Accounting & Payroll, we've worked with small businesses - including dental practices - for over 50 years. In all of that time, we've gotten a lot of questions about what dental practices can do to improve their businesses.
So, what should you keep in mind when evaluating the financial health of your dental practice? Here are 4 key tips that will help you stay profitable and efficient.
1. Keep an eye on your business finances.
Let's get more specific. In the dental industry, it's critical to watch out for labor costs and your revenue cycle. Both of these points are also touched on as part of three accounting checkups for your dental office.
Labor Expenses
The dental industry's higher pay and bonuses can mean substantial labor costs that might not align with your earnings. Generally, you should keep your total labor expenses to under 30 percent of your total revenue, so you should raise your fees if you increase your labor costs. If you're not sure about these numbers, a monthly accountant can help you set your budget and adjust it over time.
Revenue Cycle
This ties into revenue cycle (specifically, your cash flow) directly. If your cash flow is inconsistent or struggling, your workers can be at risk of not getting paid. You can supplement with a line of credit, but you may want to take a look at your collections policy, too. A monthly accountant can help you here if you're looking for guidance.
2. Discuss your case acceptance goals.
Small routine procedures, such as teeth cleanings, only make up a small portion of your profit. The rest of your profit is dependent on larger, more extensive procedures, such as root canals.
This means that although your office may seem full, you're losing out on a lot of revenue if you're lacking larger procedures. You may need to adjust how you are bringing in patients and what you are bringing them in for.
Many dentists don’t have specific case acceptance goals, but they're just as important as your other business goals. A monthly accountant can work with you to find the realistic types and numbers of cases that are the best for your business.
It's perfectly fine to decide you want to have a certain number of larger procedures, but that doesn't mean turning down smaller ones - it means marketing toward audiences that are more likely to need larger procedures.
With a little work, you can indirectly "choose" who your clientele will be. For example, younger audiences may offer long-term loyalty to you, but they aren't as likely to need large procedures. Meanwhile, older audiences are more likely to need large procedures like root canals or dentures, but they are less likely to visit you long-term.
3. Find ways to engage with new audiences.
In addition to establishing case acceptance goals for existing patients, you’ll also want to dedicate some time and energy to finding new patients. Technology is key!
Your service is intimate and requires a lot of trust. New patients are increasingly turning to the internet for recommendations and advice, so a common strategy that works well is setting up a text automation system to encourage existing patients to leave reviews. It can also be a helpful customer service tool to remind patients of upcoming appointments.
You’ll also want to establish a strong web and social media presence, and be sure that your website is optimized for mobile access. You may find it worth it to hire a service to manage or grow your online presence for you. Even a monthly accountant can make marketing suggestions based on what has worked for other dental practices they've served.
4. Partner with an experienced dental accounting service.
When you got your DDS, you were probably excited to finally start practicing dentistry - not to manage the finances for your office. Outsourcing your monthly accounting and taking advantage of their dental industry expertise can increase your efficiency dramatically and lead to greater profits down the road.
Monthly accountants go beyond what annual accountants can offer. If you only work with an accountant for your annual taxes, you’re just reacting to what’s already done for the fiscal year. As you grow, you may want to consider investing in a monthly accountant who will be better tuned in to your business fluctuations and can be more proactive and responsive to your needs.
Wondering if it’s the right time to outsource your accounting? Why not consider CSI Accounting & Payroll? We’ll support the financial side of your business, and you’ll be able to focus on your patients and services. Click the button below to set up a consultation and see if we can be a good fit to help grow your business:
Not ready to talk? That's okay! First, learn more about the different types of advice a monthly accountant can provide you by clicking the image below:
