Did your practice make a profit last week?
How confident are you that your dental practice was profitable last month, this year to date and what about next year?
Many practice owners wait until the annual accounts are presented to see if they have made enough profit to cover all their running costs and left enough cash for loan repayments, pensions, tax and, most importantly, their own drawings.
This financial fog is made worse as it can often be six months after the financial year-end before you have got all records into your accountant and draft figures are available to either surprise or shock you.
With the next financial year rapidly approaching for many dental practices, now is a great time to consider taking better control of your business and start to create, rather than just hope for, financial success.
your bank accounts for ease of download, can show you at a glance how much profit you are making at any time in the year or for any day, week, month or year.
I always recommend that clients create a 12 month forecast, which is easily done using most accounting packages with previous year’s figures quickly brought in as a good starting point.
I say starting point because that is exactly what it is – no two years are the same and no business can afford to stand still. This is an opportunity to sit down, work out what you want to achieve and what changes are needed to achieve this – generally higher income from new business and price increases, reduced costs through efficiency and re-negotiation of contracts.
Once your forecast and accounting package are in place, sit back and watch as your daily, weekly, monthly actuals are quickly imported direct from the bank and compared against your carefully thought out plan.
Any differences, either good or bad, are quickly and easily spotted allowing you to investigate, take action and make a difference today rather than months later when the damage is done.
Practice turnover can be split out to show where your income comes from including private fees, associates, therapists, specialists, NHS contract and private plan payments. An unexpected change in who is delivering the income for the practice (principal, associate, specialist, hygienist, therapist) can make a big difference to how much profit is retained within the business.
For NHS practices, monthly adjustments can be easily made to reflect actual UDA delivery with any over or under-delivery being moved to a separate account which shows at any time potential over-delivery or clawback that may be building up. By adjusting the fixed monthly income received for your contract, the monthly profit & loss account will show how much money you are really making.
Other general overheads of the business should be relatively stable (which is why they are often called fixed overheads) and can be viewed as a whole unless they start to rise at which time you can quickly see which of the individual cost lines has risen unexpectedly and do something about it or understand and plan for the longer-term implications.
If you are already using an accounting package and want help with getting better value from it including forecasting, budgeting, report creation, analysis, income splits and action planning please get in touch with Your Dental Manager.
If you are interested in starting to use an accounting package to better understand your business, I have on-line packages available for just £20 per month which could make all the difference to your business and peace of mind.
For more information and contact details visit Your Dental Manager.