While the focus of your practice will always be providing exceptional care for your patients, there is no way to get around the demands of running the business of a dental practice. In fact, it may often feel like a push-pull scenario between the day-to-day care of patients and the day-to-day reality of record keeping and business duties.
How do you stay on track and help your practice live up to its potential? What is important to focus on as your practice reopens after the stay-at-home orders caused by COVID-19? Here are some of the critical business areas you can focus on to help you reach your goals.
Just like it’s good when your practice receives income, other businesses need to be paid as well. Keeping up on payments can help your practice establish a trustworthy reputation that can ultimately lead to more success and growth. Unfortunately, AP is an area that many businesses struggle with. To stay out of hot water in this area, consider setting up procedures for cross-checking payments, always check pricing options from competitors and vendors, and be sure that billing amounts are being entered correctly.
In times of economic uncertainty, accounting is even more vital. Having up-to-date financial information can define your cash flow management strategy or allow you to make modifications.
Businesses that accept cash (especially a lot of cash) are at a high risk of loss due to theft or other discrepancies and errors. Keep your cash in control by having employees balance cash at the end of their shifts, have controls in place to ensure employees can’t pocket the cash without entering the transaction, check and reconcile bank balances regularly, keep all cash payment methods secure, and pay attention to your practice’s cash flows.
Proper accounting matters more than ever in your organization.
While accounting software may seem intuitive, it is very easy to make an error that snowballs and turns into a big mess in the end. It’s important to understand your needs and what you’re attempting to track to find the best solution for your practice. Some questions to ask include:
By taking the time to think through your full accounting process, you can select a software that not only best suits your needs but will also help you do business more efficiently.
Want to learn more about the basics of accounting and what you need to consider?Download our Basics of Accounting eBook
Accounting software isn’t the only thing you need to get right. Just like there are multiple types of dental practices, there are multiple types of accounting professionals. Often, practitioners will hire the same person to do bookkeeping and taxes, or believe their office manager can also serve in a CFO capacity. While this may seem efficient and cost effective, the work product is only as good as the person who specializes in that trade.
There are several different types of accounting professionals to consider, and each will have a unique and vital impact on your practice.
What’s the difference between a CFO, Controller and Bookkeeper?
When it comes to teeth, you're an expert. You’re passionate about helping your patients—and you’re good at it. But when you consider other aspects of your practice, maybe you don't feel quite as confident. Just like you encourage your patients to have regular check-ups, you should also have regular care for your dental practice.
The first step is to take a serious look at your practice and your overarching goals. Then, take an honest look at what you need help with and what positions would help you get to the next level.
Not ready to hire a whole team? That’s okay. Did the recent pandemic force you to furlough or layoff key personnel that you’ve relied on in this area? Many positions, including the ones we’ve listed above, can be outsourced until you’re ready to hire full-time staff.
Join us as we discuss the various benefits of outsourcing and current trends for your dental practice.
Another challenging result of COVID-19 is the various relief package requirements, complex loan forgiveness applications, and the stress of cash flow forecasting. Retaining an expert on this topic, especially one knowledgeable in the dental industry, is important. Working with someone who knows and understands your industry will save you time and money in the long run.
From a tax perspective, there are many opportunities for business owners, but also traps for the unsuspecting regarding unreasonable compensation, IRS audits, suspended losses from a lack of basis, and paying more federal and state income taxes than necessary, to name a few. While you do not have to be a finance, tax or retirement plan expert, it is important to have a team of advisors working on your behalf.
You want to work with an advisor who is familiar with the dental industry and is also aware of strategies to reduce your tax liability while minimizing the chances of an IRS or state audit. Audits can have a large financial impact on dental practices, so staying ahead of these risks can significantly benefit your finances in the long run. A few potential strategies to reduce your tax liability include:
Your advisor relationship is a long-term relationship that can help you maximize and achieve your goals. The relationship should focus on open communication throughout the year to help you take advantage of planning opportunities and benefit from available credits and deductions.
We recently talked about money saving tax planning tips and considerations for dental practices.
Furthermore, it’s about the well-being of your employees. Often, dental staff can work long hours or wear multiple hats. They also carry around a lot of knowledge about the way things are done. What would happen if you lost one key individual? How would that affect your bottom line?
Many COVID-19 relief provisions have direct implications on your payroll.
Other areas in which HR can help your practice include background checks, recruiting new employees, training and more.
Here are some questions to consider when it comes to your technology needs:
These are just a few of the questions to consider as you look through your technology needs. Not sure if your technology really is working for you? There are professionals who can help assess your systems and processes to ensure you’re performing at your very best.
Technology has made it easier for hackers, scammers and even bad-egg employees to commit fraud or other harm to your practice. To keep your people (and your practice) safe, consider the following:
The physical assets your practice owns, such as machinery or laptops, are of great value—you don’t want anything to happen to them. When it comes to laptops and other electronics, make sure they are safeguarded or locked up. This makes it difficult for someone to steal the physical piece itself, along with the information stored on it.
Record asset purchases and monitor use and depreciation to stay up to date on their value. If you have some of your staff working off-site due to the coronavirus pandemic, be sure to record who took what equipment where. Also consider setting a usage policy so assets aren’t falling into the wrong hands or being mishandled.
Cybersecurity problems are on the rise, but data security is even more important during this time of remote work arrangements. Keeping assets secure can help prevent data breaches and other cybercrimes.
KPIs reflect the factors critical to your company’s success. But they can’t be accomplished in a day. Ask yourself what adjustments you need to make that will directly contribute to the success of your practice, then monitor closely. Make sure the KPIs can be reported on a timely basis to allow for adjustments and action if you’re not reaching your goals.
In light of the extraordinary circumstances with COVID-19, and that fact that patients have not been able to access dental care for an extended period of time, a unique set of challenges has arisen. The following KPIs are critical to the dental profession now, as offices begin to reopen, and into the coming months:
Roughly 25-33% of the total production of the hygiene department should be in the 4000 codes.
This percentage is important because it measures if the team is diagnosing and treating periodontal disease, and constitutes non-surgical, periodontal maintenance. A deficiency in dental offices in not diagnosing periodontal disease and, given that patients have not been to the dentist in months due to stay-at-home orders, it is more important than ever for staff to focus on this.
Re-appointment rate should be 80-90%.
Every patient who leaves a hygiene operative or restorative appointment should have a future apt for either hygiene or future dentistry. Studies have found that as many as 50-60% of patients leave the office without a future apt. This is future revenue left on the table at a time when regaining consistent cash flow is so important.
Cancellations and no-shows should be under 10% of your total appointments.
A cancellation is someone who calls 24 hours or more and cancels their appointment. A no-show is defined someone who calls and cancels less than 24 hours before their appointment, or just doesn’t show up.
This KPI is important because open appointment times means lost revenue, which is tough to make up. It’s important that the office confirm appointments multiple times and for the dental team to emphasize why it is so important to train patients to keep appointments.
Key Performance Metrics can help you plan for the future.
Why Understanding Your Practice Is So Important Now more than ever, it is critical you understand your practice and increase efficiencies. As dental practices strive to do more with less, it’s important to keep an eye to accounting and be prepared to move forward into the next normal. Utilize your time and talents to help grow your practice and bring in the professionals to help make your dream a reality.
In a time of uncertainty, you need a trusted advisor by your side.
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