5 Tips to Improve Your Dental Practice Cash Flow

One of the biggest mistakes dentists can make is to confuse revenues with cash flow. You may look at the patients waiting in your packed office and think things must be fine, only to wonder how come you’re so extended on credit lines and why there isn’t enough money to cover your overhead and payroll. Rather than a revenue problem, you might have a cash flow problem. Sure, lots of patients are having lots of procedures…but how are they paying for them?

Obviously, cash flow in a dental practice isn’t completely straightforward; there are many moving parts. 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 5 tips to improve your dental practice cash flow.

  1. Make it easy for patients to pay you. This sounds like a no-brainer, but if you don’t take debit or credit, or don’t accept some forms of insurance, you are seriously limiting your ability to collect. Some patients are not comfortable using tech of any kind, so be sure that you continue to accept cash and personal cheques. The only way you should say no to a patient’s payment is if they want to pay in magic beans.
  2. Make financial arrangements in advance. No one likes to talk payment for a $4,000 procedure, but before a patient accepts one, you should have talked about the money and where it will come from. Some patients (rightly) assume that once a treatment plan has begun, they can simply stall, make minimal payments and otherwise do whatever it takes to get that procedure completed without perhaps ever having to pay the entire amount. This kind of attitude puts your practice at risk. It doesn’t mean you can’t offer wonderful payment plans and have a kind and understanding attitude toward your patients, but you do want to prevent a scenario where you are taken advantage of.
  3. Cater to patients without insurance. Once upon a time, virtually everyone had some form of dental insurance. In today’s new economy of freelancers, part-timers and self-employed people, the reverse is often true. If your patients don’t have insurance but need braces or other expensive treatment protocols, set up your own special rates or payment plans. This may seem counterintuitive to increasing cash flow, but the fact is that this kind of service makes your patient more likely to pay – and to be loyal forever, and tell all of his/her freelancing, part-time friends about you.
  4. Get the team involved. Collection is a team effort, so don’t keep anyone in the dark! You don’t want the hygienist telling a patient they are free to go because the receptionist is on her break and no one but the receptionist knows that a payment is due. Everyone should be able to collect money and know what a patient’s payment status is.
  5. Use your dental office practice management software – and get everyone else to do the same. Relating to point #4, it’s no good if just one or two members of the team know how to process payments. Train everyone on how to collect and process payments from debit, credit, cash and cheques. In addition to recording payments, your dental practice management program will also track accounts receivable so you know where the weak spots are.

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.

 

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