As a practice owner, you are directly responsible for your dental practice’s financial performance. As such, you need to understand the business’ cash flow.
Cash flow refers to the numbers needed to meet your financial obligations, earn a profit, and the ways to generate those numbers. Understanding the cash flow of your practice is a fundamental aspect of financial success.
The following steps can help you stay on track and manage your cash flow and financial performance.
Production is crucial for cash flow. In order for your practice to grow, you need production goals. For example, your goal may be to collect enough to cover operating expenses, pay off some of your debt, and deliver a profit. To maximize your cash flow, create daily and monthly production goals.
Strategies to maximize daily production may include:
A practice monitoring tool can help you understand the strengths and weaknesses of your practice and systems. Use a tool to establish baseline measurements for all systems from production to expenses.
This can help you start routinely tracking and examining your practice statistics. Reviewing profit and loss numbers may help you diagnose and treat problems before they affect the overall health of your practice and cash flow.
Internal systems can include patient recall, staff training, payroll, and everything in between. These systems are critical in establishing operational and financial efficiencies in the practice. Using outdated systems or equipment can limit your cash flow opportunities. A high-functioning practice should offer and use quality products and services.
Implement follow-up procedures that capture all changes and ensure long-term sustainability. Develop efficient, effective, quality internal operations that support your cash flow while also upholding your brand and practice value.
Marketing is critical in generating cash flow. This is true when you start your practice and need to attract new patients and throughout your career as a dental professional.
Investing in a marketing program may include your website, social media, and community engagement. This ensures a regular stream of patients and a potentially robust production schedule. Additionally, your marketing program lets patients know when you have new services or treatments which can be a significant source of production and revenue.
Some practice owners cannot start their own businesses without taking on debt for real estate, remodeling projects, equipment, and supplies. You must effectively manage your debt to improve your cash flow.
Consider using the following guidelines to help pay down your debt each month:
Create a yearly financial forecast with a budget for each month. This helps ensure your spending and debts do not spiral out of control. A monthly budget gives you a basis for your production goals and helps you stay on track. Consider the following suggestions:
These financial management and cash flow tips can be powerful tools in helping you maximize the financial performance of your business. These tools also help ensure your practice’s future growth and success.
At LenDRgroup Consulting, we care about the long-term success of your dental practice. Our team offers customized practice financing or business consulting services to meet the needs of your dental practice and your career.
We developed a lending platform of 300+ dental and healthcare-specific lenders with the sole purpose of helping dentists, veterinarians, and physicians. We want you to achieve your practice ownership goals and will work to eliminate the financing obstacles in your way.
Thus far, we have helped hundreds of dental professionals just like you launch, expand, and grow their practices. LenDRgroup Consulting understands the needs of your small business and can provide guidance to help avoid costly mistakes. So, let’s get started.
Contact us today to schedule your consultation.