Why cash flow matters for your dental practice: Don’t let your finances decay.

Running a dental practice is about much more than just patient care — it’s about managing the health of your business, too. And at the heart of that business is cash flow.

Cash flow is the net amount of cash moving in and out of your practice. It’s not just a number on a balance sheet; it’s a vital part of your practice’s overall health. Without solid cash flow management, even the most successful practices can find themselves struggling.

Did you know that insufficient cash flow is the reason most businesses fail? For dental practices, staying on top of cash flow is crucial, not just for growth but for survival. So, why does cash flow matter?

First, solvency. Positive cash flow means you can pay your bills, your team, and your suppliers on time. If you’ve ever felt the stress of meeting payroll or covering rent, you know how a cash shortage can keep you up at night.

Second, operational stability. Day-to-day essentials like utilities, supplies, and lab bills — all of these require cash on hand to keep your practice running smoothly.

Third, strategic opportunities. Healthy cash flow means you can take advantage of growth opportunities. Whether it’s upgrading equipment, adding an operatory, expanding your services, or replacing the front desk computer when it dies — do you have the reserves to ensure that happens?

And finally, creditworthiness. Consistent positive cash flow makes you a stronger borrower. Lenders offer the best rates to those with a solid financial track record. For example, paying an extra 3% in interest due to lower creditworthiness can quickly add up and impact your cash flow even further.

In short, cash flow is the lifeblood of your practice. It keeps your day-to-day operations running and fuels your growth. Without it, your practice may struggle to survive and achieve its long-term goals. Monitoring your cash flow also provides insight into your practice’s financial health. Spotting potential issues early allows you to correct course before small problems become big headaches.

If you’re wondering how to better manage your cash flow, or if you’re facing financial roadblocks, reach out to your trusted advisors who know the dental industry — your Dental CPA, your equipment provider, and Dental Practice consultants. And, as always, Commerce Bank is here to help. Reach out opens in a new window to a Commerce Bank representative — we can work with you to overcome challenges and keep your practice moving forward.