Cash flow can be a stressful task for any business and a dental practice is no exception. It can be even more challenging for dental practices. One of the biggest mistakes dentists can make is to confuse revenues with cash flow. Healthy cash flow should be a core part of any practice, and without it, a practice will not function properly. Rather than a revenue problem, you might have a cash flow problem. Sure, lots of patients are having lots of procedure, but how are they paying for them?
As you can imagine, these issues manifest themselves at a patient level as well. If you’re experiencing these issues in your dental practice, there are many things you can do to fix the problem. Improving cash flow will take effort from the entire team, but when you see your accounts receivable hit an all-time low, it will be worth it.
Here are five basic ways to improve your cash flow:
- Require immediate payment: Dentistry is expensive to many patients, so have a policy where every person either pays or has a commitment to pay through financial arrangements. The ideal situation from a cash flow standpoint is to require payment at the time of service. It doesn’t matter as much about how much you bill it does matter how much you collect.
- Encourage the patient to use of Debit or Credit cards: You can get your money more quickly, the patient is not subject to interest on their credit card since they will be reimbursed within 30 days. The merchant fees to credit card companies is minimal but worth it to improve your cash flow and it is a business expense. You don’t have to worry about the co-payment because you have already collected it.
- Manage the accounts payable: Always pay your bills on time, but don’t pay bills sooner than you have to. If your vendor has agreed to finance your purchase for 30 days for free, then take full advantage of that. Every invoice that you receive has a due date. You hang on to your cash longer, which has a positive effect on cash flow.
- Ensure your outgoing invoices are correct : Most of the companies make mistakes. Ensure that your outgoing invoices are also correct. If your outgoing invoices are incorrect then you are providing an opportunity for the patient to delay payment to you.
- Invoice upon service: If the patient does not pay the full fee at the time of service send an invoice immediately on that day. If you did the dentistry at the beginning of a month and you don’t send out account statements until the end of the month that negatively it affects cash flow.
“Managing a dental practice can be stressful at times. Changing the way you do things may involve a little time and work upfront, but will more than pay off in stress reduction down the line. Coupled with adequate reserves to help get your practice through any slow periods, these tips should help you retain staff and simplify operations.”
Contact us for more information +1(302) 613-1356 and Grow your cash flow for dental practice.