Level Up Your Dental Practice Through Financial Management

Dentist explaining implants to patient

Dental treatments are not expensive, but neglecting one’s teeth is. When people do not invest in dental care, they end up spending more money and not to mention, have to endure more pain later on when the oral health deteriorates.

Doctors also need to learn this lesson when it comes to their business and finances. While everybody knows it is essential to pay attention to money and business affairs, accounting services for dentists is something that no dental professional can afford to neglect.

Some years ago, a financial survey on the dental industry was conducted about the expenses associated with the dental practice. It revealed the following costs:

  • Dental Materials: 20,173 GBP
  • Laboratory Fees: 35,579 GBP
  • Staff Payroll and Other Payouts: 81,355 GBP
  • Other Running Costs: 276,680 GBP
  • The EBITDA (or Earnings Before Interest, Tax, Depreciation, and Amortisation) was at 90,458 GBP.

Looking at the operating costs and earnings listed above, one can say that the dental profession is a costly one. It also requires significant liquidity on the part of the dentist who wishes to have their own practice.

The figures above were for the year 2015 to 2016. One can only imagine the rates now in 2020, especially with COVID-19 making practically all businesses struggle not just in the UK but in the rest of the world.

These days, dentists also need to carry additional expenses when reopening clinics after the coronavirus pandemic. They now need to account for the required purchase of personal protective equipment (PPE), air purifiers, face masks, and other vital supplies that protect both the dentist and patient from possible viral infections. With supplies running short and inflationary effects in full play, equipping and virus-proofing dental clinics at this time will surely add to operational costs.

Add to this are reports that the Treasury is considering a tax rise of at least 1 percent, bringing the total income tax rate to 21 percent. The hike in tax is being considered to address the budget deficit and to support ongoing costs in the pandemic impact.

Considering all these figures and developments, getting the services of an accountant becomes critical to the survival of a business and the growth of one’s dental practice.

Bookkeeping

First, the most distinct and irreplaceable role of an accountant who specialises in dental practice is in the area of bookkeeping. By gathering all relevant data, figures, and information, the accountant can organise all these as inputs to financial and budget decision-making on the part of the dentist-owner.

Reconciliation of accounts would help the dentist see the cash flow in their dental practice. Unnecessary expenses would be identified, while items that received too little cash and attention will also be noted down.

A specialist dental accountant will positively impact the practice by upgrading the quality of accounts management, freeing up the flow of funds to meet priority procurement needs. At the same time, a schedule of accounts payable can be done more appropriately, helping a dentist avoid inconvenience and possible penalties for delayed payments to suppliers and lenders, if any.

With proper bookkeeping, a dentist will know precisely how much money goes in and how much money goes out. It is a simple process, indeed, but alas, many fail to pay attention to it. To thrive in dental practice, one must master not only the art and science of dentistry but also the intricacies of business and financial management.

Advice on Budgeting

Another vital contribution or service that a specialist dental accountant can make is in the realm of budgeting. By providing advice on budget allocation, the accountant will help the dentist make timely decisions on the number of funds to be given to each component of their practice. These include office refurbishment, office supplies and equipment, dental tools and accessories, outsourced services such as laboratory tests, and of course, payroll and benefits for clinic staff.

Tax Strategy

Dental clinic interior

A dental accountant is also needed for the competent advice on how to maximise advantages related to tax reforms, available tax exemptions for the dental industry, and other facets of taxation that will impact the clinic operations and personal finances of a doctor.

Business Coaching

Unbeknownst to many, many specialist dental accountants are also adept at business coaching. They can help dental practitioners adopt a business mindset or an entrepreneurial approach to the practice. In the old days, given the limited number of those in practice, dentists can afford to be passive and still expect a crowd of patients to troop into their offices. Nowadays, with competition and economic factors effective in all areas of practice, dentists also need to be coached on business development, marketing, customer relations, and supply chain management, among other things.

Indeed, a dentist can bring back that wide and happy smile, not only to their patients but for themselves as well. With help from professional accountants, they can bring their practice to the next higher level.