Financial management is a critical aspect of running your dental practice.
The first thing to focus on is cash flow. Too many dentists simply go to the office, treat patients, pay the bills and see what’s left. Instead, you should give serious thought to cash flow factors, such as when patients pay, how they pay and whether they pay at all.
Design a system to have patients make their payments as early as possible relative to the time of treatment. Then use a Levin Group consulting innovation known as a one day rule to collect 99% of all money due to the practice. The one day rule states that patients will be called the day they are overdue. This is followed by a nine-week follow-up process. Together, these two methodologies enable Levin Group clients to collect 99% of all the money they’ve earned.
Another critical component of managing practice finances is budgeting. Very few dental practices have a budget, and many of those that do pay little attention to it. This is how practices get into financial trouble and doctors end up with lower income.
Most doctors have no idea where their revenues stand for the year and whether they’re on budget. With today’s profit margins being squeezed, we see many new management consulting clients whose income is flat or declining. The solution is to establish a budget, track each line item continually, and make adjustments as needed throughout the year to hit your financial targets.
Interested in improving your financial management skills? Read a free excerpt from Dr. Levin’s essential book, Practice Finance, by clicking here.
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