Dreaming of Practice Ownership: Cash flow tips to help you start out strong
Healthy cash flow can be key to starting and ultimately “growing” any dental practice. This blog will offer some practical tips you can use to help you strengthen your cash flow before you even open the doors of your business.
A good understanding and management of a healthy cash flow may help you build and then sustain the practice of your dreams. Here are a few simple suggestions to get you started:
- Carefully consider all your expected costs to identify potential savings – Assessing your expected costs before you launch your practice can help you identify savings and efficiencies early on.
- For example, will you be working with the best-priced product suppliers and service vendors from the start? Shopping around can help you identify quality options and different price points. (And after you’ve opened your practice, consider evaluating these costs annually to see that you are still getting the best deals.)
- Can inexpensive systems and process efficiencies save you some employment-related expenses? For example, can you budget for technology that helps automate a process, such as texting/emailing for appointment reminders instead of having the team make personal calls? How much might that save you in staff time and money?
- Build cash flow projections to gain greater visibility – In the earliest stages of your journey, thoughtful cash flow projections can help show how money may move in and out of your practice. Updated frequently after you launch your practice, cash flow projections can also be a helpful tool for you, your office staff, and your tax advisor as you build momentum in your market.
- Consider patients’ payment terms carefully – Your payment terms are your own, and there are a variety of options as you consider their impact to your cash flow.
- As you start out, what payment terms seem best to you based on your anticipated patient volume, seasonality, and insurance accepted: 30, 60, 90, etc. days?
- Will you only accept certain forms of payment?
- Will you accept credit and debit cards?
- Will you accept digital payment methods?
- Will you offer a payment plan?
For guidance, consider talking to your dental peers. Peer-to-peer feedback can be invaluable. Do you know dentists who seem to have mastered payment collection and a healthy cash flow? Ask them for their insights and suggestions.
A tool that can help prepare you:
- Get support on your dental practice journey with the workbook: Growing Your Dental Practice.
Other helpful resources:
- Wells Fargo Practice Finance – Extensive dental practice financing and support, including an array of Tools, such as various financial calculators and business planning and competitive intelligence support, as well as a Library of topics, including Business and Financial Planning
- ADA Member Advantage – Products and services selected especially for ADA members to help them manage their dental practices more smoothly and efficiently
Wells Fargo Practice Finance is the only practice and commercial real estate lender recommended for members of the American Dental Association.
All financing is subject to credit approval.