Discover the 4 mistakes that are killing the success of dental practice and how the top dental practices manage to avoid them
Working as a dental practitioner has its rewards and its challenges. Many practitioners love treating patients and having flexible schedules, but when it comes the business side of the practice however, many practices find themselves drowning in the day to day of running an office. It makes sense to say that most dentist chose medical school to avoid other careers, possibly such as accounting. Yet opening your own practice requires a great deal of accounting, bookkeeping, billing, attempting to collect payments from patients, payroll, bill payment, on top of other skills more commonly learned in business school.
But neglecting to make the financial side of your practice a priority or hiring someone with little to no experience can have a drastic impact on the practice as a whole. Whether it’s simple as the man hours needed to successfully manage your cash flow or as complex as bookkeeping fraud, it’s important to keep an eye out for these four common mistakes that dentist make.
Relying on Management Software for Billing and Bookkeeping
It’s undeniable that there are many different solutions available online for dentist to handle their billing and collections, and/or bookkeeping and accounting. Programs such as Dentrix, Easy Dental and QuickBooks can help businesses manage and organize invoicing, billing, bookkeeping and more. They advertise that they can make the billing and accounting for your practice easy.
While deploying a practice management software program can help dentist make manage their billing and accounting in one place, they don’t change the fact that someone on the team at the office has to do all of the work, analyze the data and monitor the financials. For a solo or small practice, that often means the dentist is still involved all of the billing and bookkeeping themselves or guiding their office manager. Seen in this light, those software programs are little more than information holders. And if there is an accountant present that handles their financials, many Accountants/CPA focus on taxes rather than advising their clients on how to monitor and improve their practice money by focusing on automating collections, managing cash flow, or increasing revenue
Software can help you stay organized, but it can’t advise you or double check for errors, leaving your practice vulnerable to mistakes made through inexperience.
Management software may seem like a less expensive option to hiring a professional, but take into consideration the cost of your time as well. It’s not helpful to pay less for a service that forces you to spend countless office hours getting the job done. If you were able to turn those hours spent managing the software program into treating patients, you wouldn’t be able to afford not to outsource the work!
Management software is only as good as the numbers being entered into it. They won’t be able to find the mistakes you’ve made or practices that you didn’t follow.
Sending Out Late Invoices and not following up with patients
Accounting is cyclical. The pattern of sending invoices and making payments starts over every month, and in many ways it is the backbone to your practice. It might not seem like sending a late invoice or two would do very much at all to disrupt that cycle; however, this is a common misconception!
Cash flow in any business is important. Without a predictable cash flow, it’s nearly impossible to make decisions about how a company – any company – should spend their money.
If you get into the habit of allowing a few late invoices go out or not following up consistently to collect payment, you might end up with a snowball effect where your cash flow becomes more difficult to predict. This puts you in a risky gray area when it comes time to make decisions about how to spend the money in the practice.
Taking a long time to send out an invoice or follow up to collect payment gives a patient the impression that they can take a long time paying it.
Promptly sending invoices signals to a patient that you would appreciate the same attentiveness in return, setting up an expectation of behavior that keeps your relationship on good terms and your accounting a well-oiled machine.
Additionally, taking longer to send an invoice or delaying to contact a patient to collect payment seems to increase the likelihood that patient will complain that he or she was overcharged. Swift invoicing helps both parties, patient and dentist, remember exactly what work was done in what frame of time.
Not Reviewing the Financial Numbers
When handling the billing bookkeeping and accounting for a dental practice, the numbers you end up with really matter. Like every small business, it’s important to review the profit and loss of your business, along with each and every specific category listed under those headings.
Not knowing what numbers need to be reviewed and analyzed can hold your practice back from strategic growth and sound business practices.
It’s possible that if the accounting numbers were carefully reviewed, some of the other mistakes listed here might be caught and corrected. Beyond letting other mistakes fall through the cracks, not reviewing the accounting numbers cripples the growth of your practice.
Without an accurate budget, without an accurate receivable number, without accurate payroll numbers, it’s impossible that an accurate idea of where your practice is heading financially.
Avoiding this mistake is a balancing act of the experience of running a dental office and the knowledge of accounting principles. Understanding what numbers are important to review and how often they should be reviewed will vary depending on the size of your practice. But from a small practice to a mega practice, business decisions made without an understanding of where the practice is heading are ultimately bad business decisions.
Not Having a Professional Advise You on Your Financials
Doctors understand professionalism. Your reputation depend on your professionalism, and you honed those skills first in medical school. Business Advisors, likewise, have specialized knowledge on billing, collections, bookkeeping, cash flow and profit improvement strategies. You’ve invested a lot of time and effort into your dental practice, make sure that you leave the financials in the hands of someone who is a professional able to handle your needs.
Find the best of both worlds by having your team handle our bookkeeping, payroll, and billing and allow a professional look over their shoulder and advise you on how to grow your practice.
Being a great dentist is the first step to having a successful practice, but you need other people on your team with the skills to keep your office running smoothly and to maximize the profit you could be making.
Larger practice will often have departments dedicated to accounting, but that doesn’t make sense for a small practice. Precise MGMT offers solutions for small or solo dental practitioners who need to increase cash, to make payroll and pay bills, take care of bookkeeping or who need guidance on how to streamline and grow their dental practice. So Stop wasting any more time worrying about where your practice will be tomorrow and let Precise MGMT be the partner you need to give you a clear future