Is your cash flow is holding you prisoner?
If you’re feeling that your practice is doing well but you never have the cash flow that you think you should have then there are several reasons that this could be happening.
It’s an awful feeling to know that you have worked all out for the month and then realize that there is very little left for you to take home. If this is how you are feeling you may want to take a look at some of these systems:
- You need to have performance parameters in place for the Account’s Receivables (A/R’s) in your office. There are two parameters here that I suggest you check out. Firstly, your collections each month should average out to 98% of your production, for every $100 you bill there should be $98 collected. What would be the point of doing the work if you aren’t getting paid for it? Secondly, you want to ensure that the total amount owing over 90 days is less than 15% of your overall A/R. This means that if you have $5000 owing in your over 90 days column then there should be no more than $750 there. Delinquent accounts should be looked into on a regular basis and they should be one person’s responsibility, if they are only looked at once in a while you will have a difficult time collecting them. There should be a set of protocols in place for the different steps in collection of delinquent accounts.
- You should be aware of your production versus your overhead. Your accountant will be the best person to give you these figures to ensure that you have the correct balance. If your balance is off it may not mean cutting expenses, but it may mean that office production needs to increase. An increase in production doesn’t necessarily come from your chair, it may be coming from the hygiene department performance or associate performance. You will want some help with the systems in these areas if this is the case.
- You will want to ensure that communication is consistent throughout the team regarding all financial discussions around treatment. As the owner and dentist, you should not be the one discussing finances with the patient. Your job is to discuss with the patient their treatment options and if pressed you may be able to give a “ballpark” estimate for treatment. You should be the person though to discuss with your team what options will fit with your financial set up to offer to patients. Whether it is the treatment coordinator or the administrator who sets up the original financial arrangement with the patient, notes should be made of the discussion so that anyone who looks at the patient record and can convey the same consistent message.
- Everybody in the office should be able to explain all treatment in a consistent manner to patients. The person who is asking for payment needs to be able to explain the treatment as well as the person delivering it. It would sound unprofessional if a patient question’s a fee and the administrator can’t explain the procedure to them.
- When the patient is at the desk to pay, telling the patient the fee to be paid for today should be the last thing they do with the patient. First is ask how the appointment went, secondly, they would book the next visit and thirdly then discuss the payment with the patient. Asking for money first will make the patient feel that the payment is more important than anything else to the office.
- Ensuring that you have a variety of payment options is important to many patients, now more than ever. Having insurance assignment is currently great customer service for your patients, this will not interrupt your cash flow if you set it up to receive your copayment at the time of the appointment. Offering your patient three months of payment on major restorative will help with your acceptance rate (once again ensure that you have credit card information on hand for payments) as well, you can align your practice with a company that provides third party financing for dental practices.
You work very hard for your practice and patients, having efficient systems around finances in your practice will help you ensure that you will be taking home your fair share of cash flow.