Message Boards
Today's Active Topics Today's Active Cases Browse Forum Categories My Recent Activity My Messages Private Groups My Marked Threads My Subscriptions
Today's Active Images Today's Active Polls Most Active Topics Global Townie Map Advanced Message Board Search Message Board Terms of Use

Baird Dental Business Concepts
Baird Dental Business Concepts
Baird Dental Business Concepts is a full-service consulting firm offering dental practices expertise in business, financial and operational management. Owner, Sandy Baird, MBA works with dental practices as a consultant, coach or business advisor.
Blog By:
Sandy Baird MBA
Sandy Baird MBA

Make Your Dental Practice Income Statement Work for You!

Make Your Dental Practice Income Statement Work for You!

3/2/2017 4:19:07 PM   |   Comments: 0   |   Views: 950
Your Dental Practice Income Statement, sometimes called your Profit and Loss Statement, or your P&L Statement, can be a foundational management tool for your practice if it is purposely designed. Unfortunately, many dentists have no idea their Practice Income Statement can be arranged to meet their specific needs. Usually, dentists accept the generic income statement given them by their bookkeeper or accountant, glance at the bottom line, then file it away for eternity never to be seen again or simply shred it.

Just about every industry has best-practice statistics available to guide businesses toward greater profitability, better overhead control, and effective budgeting. Dentistry is fortunate to be one of the industries that have these benchmarks available. They typically fall in these categories and ranges.

Best Practice Dental Expense Benchmarks
Facility and Equipment Expenses: 9%
Employment Expenses: 24-28%
Laboratory Expenses: 9%
Dental Supplies: 6%
Operating Expenses: 11-12%
Owner’s Compensation: 41-46%

To use these benchmarks for managerial purposes, the practice must organize their data into these same categories in order to have an accurate comparison between the benchmark and their actual performance.

Unfortunately, the typical dental Profit and Loss Statement does not segregate your expenses into these categories. To make it even more challenging, you, your bookkeeper, and your accountant do not know what expenses qualify for each of these categories. Email me to receive a full list of expense categories.

Designing Your Dental Practice Income Statement
In order for your bookkeeper or accountant to create a useful income statement for your practice, you must orchestrate its design. You must request the categories you want to show on your report. Now is a great time to do this, because only one or two months of the year will be affected.

Next, you need to label every card and check expense. Now, don’t panic here, this label can be one word or an acronym: Lab, DS, OE, EE, etc. When you write a check, you write the word or acronym on the stub for your accountant/bookkeeper. On your credit card account summary and your bank account statement (for debit card charges), you do the same next to each charge. Before long, your bookkeeper will learn what goes where.

Regardless, it is important that you are looking at these charges every month for lots of reasons besides this one, such as embezzlement, fraud and card breaches. Nobody but you will pick-up on these types of discrepancies. This isn’t something that someone outside your office can do for you and certainly not an employee. This is very important!

Your employees can help you, though, by making sure your large dental supply companies categorize your expenses on their monthly statements. Since these companies don’t simply sell supplies, but provide services, repairs, equipment, and instruments, all belonging to different overhead categories, they can greatly simplify your allocation duties. If you simply assign the total charge at the bottom of your dental supply company’s monthly statement, then you will probably see a 20% Dental Supplies figure. Your hair will stand on end, your ears will smoke, and you will probably start blaming the wrong people.

Sit down with your accountant or bookkeeper and discuss these issues.  Ask for their help in designing your P & L Statement, so it can be a useful management resource as well as a powerful motivator for improvement and higher profitability.
You must be logged in to view comments.
Total Blog Activity
997
Total Bloggers
13,451
Total Blog Posts
4,671
Total Podcasts
1,788
Total Videos
Dentaltown Magazine
April 2024
Dentaltown Magazine April 2024 Read Current Issue Read Archived Issues
Sponsors
Townie Perks
Townie® Poll
Have you ever switched practice management platforms for your practice?
  
Site Menu
Message Boards Magazine Continuing Education Podcasts Blogs Classifieds News Events Townie® Poll Ebooks Townie Choice Awards
Company Info
Contact Us Advertise With Us Howard Farran DDS, MBA Policies and Agreements
Site Help
Sally Gross, Member Services Specialist
Phone: +1-480-445-9710
Email: sally@farranmedia.com
©2024 Dentaltown, a division of Farran Media • All Rights Reserved
9633 S. 48th Street Suite 200 • Phoenix, AZ 85044 • Phone:+1-480-598-0001 • Fax:+1-480-598-3450