Strategies to manage costs and improve cash flow: Preventative care for your dental practice’s finances.
Running a dental practice comes with a lot of moving parts — and expenses. From payroll to supplies, every dollar counts. Managing your cash outflows isn’t about cutting corners; it’s about making informed decisions with your money. Here, we’ll explore strategies to control costs, reduce overhead, and ensure your practice runs efficiently so you can focus on your growth and your patient care.
Let’s start with budgeting. If you’ve created a detailed budget, stick to it. If you find yourself overspending, ask yourself: why? Budgets help you stay on track and identify areas where you might be able to cut back.
Next, implement cash flow forecasting. Whether it’s monthly, quarterly or annually, forecasting allows you to plan for seasonal fluctuations, upcoming expenses and unexpected changes. Pair that with a savings fund to build reserves for slower periods.
How you pay your bills can make a difference, too.
Automate your outgoing payments to streamline processes and pay bills on time but avoid paying early unless it benefits your practice financially. Using ACH payments whenever possible keeps cash in your account longer — maximizing retention without missing due dates.
Regularly review your financial obligations, like loan terms, with your banker. If you’ve had a loan for a while, refinancing might lower your rates or adjust repayment terms to improve cash flow. Also, consider establishing a line of credit before you need it. It’s like having an insurance policy for unexpected expenses.
Every few years, review your merchant services for competitive pricing and advancements in technology. In some states, you can also explore options like surcharging credit card payments, which is becoming more common among small businesses.
Inventory management is another key area for controlling costs. Dental supplies typically account for 5–7% of revenue. Avoid overstocking disposables unless there’s a clear cost benefit. Conduct annual inventory evaluations to ensure you’re adhering to your budget and not carrying unnecessary stock.
Work with your vendors to negotiate better payment terms. Take advantage of early payment discounts when they’re offered. If they’re not, request extended payment terms to free up cash flow for your practice.
Let’s not forget the importance of your team. A loyal, engaged team can help you save money in the long run. Retaining talented employees is always less expensive than hiring and training new ones. Conduct regular salary reviews to stay competitive and invest in team satisfaction through training, recognition and creating a positive workplace culture. A loyal team is more productive and better committed to your practice’s success.
Performance monitoring is another cost-saving tool. Optimize appointment schedules to minimize gaps, reduce no-shows and ensure your team is working efficiently. Simple steps like text and email appointment reminders can lead to measurable improvements.
Finally, review your practice’s goals regularly. Set clear goals for your practice and your team, then track your progress. Use patient feedback to identify areas for improvement and celebrate successes when you hit your targets. Also, validate where your new patients are coming from so you can focus your marketing spend on what works as well as eliminate strategies that don’t deliver results.
By reducing expenses and improving efficiency, you can build a stronger, more profitable practice. Small changes in how you manage cash outflows can have a big impact on your bottom line. If you’d be interested in Commerce Bank evaluating your operations, please get in touch with us. Improving efficiency in your practice may help free up cash to reinvest in growth and support long-term stability.
