Continued from Cash Flow: 6 Successes For Your Dental Practice (1/2)
A cornerstone of any business is having a mastery over your revenue and cash flow. Lucky for our dentist clients, they have a fantastic capacity for inflow, but disproportionately high outflows from expenses and taxes. Analyzing your accounts receivable and operating activities is an intrinsic part of our income analysis process. The best leading indicator for the success of your practice and of your financial plan.
Bring forward revenue
There are several lending and credit schemes that will allow dentists to bring forward revenue instead of waiting for insurance and clients to pay. These can be a fantastic value add for your clients by helping them flatten out the payments and keep on your treatment plan. These lending and payment systems keep you from being the bank and put the money into your practice faster with little interruption or time on your part.
We don’t recommend any single group for offering these services, but find that dentists that enable their clients to have access to a trusted partner are able to keep their patients on track and stabilize inflow to their practice.
Diversify your inflows
Even by having all of the above and doing everything you can to normalize the revenue of your practice, hiccups can still occur that are outside of your control. Changes to insurance coverages, business partners, and economics have always caused displacement of cash flow for dentists. Clients that have a good understanding of both their practice and non-practice cash flow are capable of weathering these changes.
Clients who have worked through the P.E.A.K Process® know exactly what their cash flow health looks like for both the practice and their personal assets and how much risk is associated with getting income from a single source. Most people don’t have the luxury of determining their own income like dentists we work with. So knowing exactly the source and vitality of profit from several diversified sources becomes helpful for practices that may be working through tight cash flow from expansion, contraction or transition.
Work with a dental financial advisor to analyze and provide action items to improve your cash flow
You have to be preemptive when it comes to monitoring your cash flow. Dentists often prefer to delegate cash management to one of the employees at their practice so they can have more time to care for their patients. This may however not be an effective way to manage or maintain a steady cash flow. Having a good understanding of your cash flow, its relationship to your practices financial health, and how dependent you are personally on the steadiness of that flow will make a measurable difference in the trajectory of your financial plan.
Clients that use the P.E.A.K Process® CFP®’s at InSight understand your cash flow habits and provide a better understanding of the in’s and out’s of your practice. Dental financial advisors analyze, estimate, and help you predict your income over time. We find ways to better maximize your efforts, and discuss ways to better utilize that knowledge in your financial plan. This intimacy will help you plan on how to preempt any shortfall. Or, to broaden your current capacity to generate revenue into long term and diversified vehicles for cash flow generation.
Our CFP’s analyze your cash management habits but suggest ways to improve your cash flow and also find tax reduction strategies. We find opportunities you may not know about. Invest in yourself and your practice, and we will help guide you through what you don’t know you should know to get you closer to financial freedom.