Financials are something we should always be paying attention to. We shouldn’t be constantly stressed about financials and stare at our bank accounts all day, but we should always have and idea of where our cash is, and where it needs to go. Don’t wait until your broke to start paying attention.
For those not trained as business owners, accountants, or bookkeepers, it’s easy to ignore your financials and just keep using your credit card without really worrying about it. As a dentist, you probably have a good income. You probably aren’t too worried about whether or not you have enough money. You’re always able to pay for things that you need in your practice. If you don’t feel like you need to ask if you can pay for something in your practice, you could be in deep trouble. If 2020 taught us anything it’s you just never know what could change virtually overnight.
Just because you can afford something according to your bank balance doesn’t mean that you can afford it in the near future. If you’re having a slow month, you might have a lot of money in the business account, but you’re going to need that to cover the fact that patients aren’t coming in this month. If you have a loan payment due on top of that, you won’t be able to cover all your costs if you buy a new piece of equipment.
Don’t wait to be broke to discuss these things with your bookkeeper. Planning ahead based on estimated cash flow for the next month is something you have to be doing. If you don’t, you’ll be broke and not realize what happened, and often at this point you may not recover.
Here are a couple of quick tips to help you start:
Set aside at least enough money to cover one payroll cycle, a full month is even better. That way if everything stops like it did in April 2020, you will have the payroll expense covered and your people taken care of. If you have your eye on a new piece of equipment, start to set aside a percentage of income to cover the cost AND TRAINING in that new item. Even if you don’t have a specific item in mind you should be setting aside a percentage of income for the maintenance and replacement of your current equipment. Just like saving for retirement, it’s easier if you never see it so make sure the money is automatically transferred right out of your account.