Cash flow challenges can make even the most successful practices feel like they’re struggling. Money is coming in—but somehow, it’s not staying in the practice. If you’re noticing financial strain, uncollected revenue, or increasing overhead, it’s time to identify and stop the cash flow leaks.
Many practices are unknowingly losing thousands every year due to inefficiencies in collections, overhead management, and scheduling. The good news? Small adjustments can make a massive difference. Let’s dive into three essential steps to strengthen your practice’s financial health.
How to stop cash flow leaks in your Dental Practice:
1. Optimize Your Insurance and Collections Process
A common reason for cash flow issues? Collections are lagging. Whether it's insurance claims that aren’t followed up on, patient balances that go unpaid, or simply not collecting at the time of service, these gaps add up quickly.
Here’s how to tighten up your collections:
- Track Your Collection Percentages: Analyze collections for the last six months to identify trends. Your practice should aim for at least a 98% collection rate year over year.
- Submit Claims Within 24 Hours: Delayed submissions mean delayed payments. Aim to submit all insurance claims at the end of the day or by the following morning.
- Verify Insurance Benefits Before the Appointment: Ensuring accurate coverage details upfront helps prevent denials and unexpected patient balances.
- Collect at Time of Service: The longer a patient’s balance remains unpaid, the harder it is to collect. Train your front desk to request payment when treatment is completed.
- Follow Up on Outstanding Balances Weekly: Work through your 30, 60, and 90-day accounts receivable to recover unpaid balances before they become uncollectible.
2. Cut Unnecessary Overhead Costs
You might be collecting well—but if your expenses are too high, profitability still suffers.
Here’s how to take control of your overhead:
- Audit Your Expenses Regularly: Review your practice’s P&L statement quarterly to identify any unnecessary subscriptions, duplicate services, or outdated expenses.
- Negotiate Supply and Lab Costs: Compare vendors to ensure you’re getting the best pricing. Look into bulk purchasing options to save without sacrificing quality.
- Set a Monthly Budget for Supplies: Your supply costs should ideally be 4-5% of collections—set a firm budget and track spending to stay within limits.
- Evaluate Payroll Costs: Ensure staffing levels match your production needs. While payroll is an investment in your team, inefficient scheduling or underutilized roles can drive up costs unnecessarily.
- Review Credit Card Processing Fees: Even a 1-2% savings on processing fees can significantly impact your bottom line. Consider renegotiating rates or switching providers.
3. Maximize Production Without Overworking
Your production goals should align with your overhead needs. If cash flow is tight, it might not be a collections issue—it could be that your schedule isn’t optimized for profitability.
Here’s how to make sure your schedule is working for you:
- Implement Block Scheduling: Design your schedule around high-value procedures first, ensuring you maximize revenue without overbooking low-production cases.
- Reduce Open Chair Time: Unfilled time slots can drastically impact your monthly revenue. Use a 15-minute quick fill system to minimize last-minute gaps.
- Increase Case Acceptance: Patients who delay or decline treatment impact your bottom line. Make sure your team is trained on presenting treatment in a way that builds trust and encourages follow-through.
- Ensure You Have Enough New Patient Slots: If growth has stalled, evaluate whether your schedule allows room for new patient flow and comprehensive treatment opportunities.
Strengthen Your Practice’s Financial Health
The most profitable practices aren’t just working harder—they’re working smarter. By tightening up collections, controlling overhead, and optimizing production, you can ensure long-term financial stability and reduce daily stress.
Looking for more tailored strategies to stop cash flow leaks in your practice? We’re here to help! Let’s chat and create a plan that supports your goals.
Schedule a free strategy call today!
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