Need Cash Flow? Pay Attention to These Monthly Reports
If you’re like most dentists, you probably don’t care much for the business side of running a practice. You’d rather spend your time diagnosing and treating patients, not worrying about overhead costs or looking at various reports to monitor practice financials.
While you’re certainly not alone, this attitude is a sure way to keep you from achieving success. Like it or not, your practice is a business – and if you neglect it, you and your team members will suffer. That means knowing how to run a practice, from being able to read reports to find more opportunities for cash flow to guiding your team members to success.
How can you be a better business owner? Here are a few tips:
• Know where money is being spent and what percentage of that money is going to specific areas of overhead. Learn how to read the Profit and Loss Report and do so monthly to properly manage practice overhead.
• Hire enough employees and train them to work efficiently. Offer them guidance through detailed job descriptions and evaluate their performance based on specific measurements.
• Establish yearly, monthly and daily production goals for every producer.
• Conduct yearly strategic planning sessions. Use these sessions to establish goals to keep the business profitable as well as to ensure those goals are being met. If they’re not, get your team involved. Determine which areas are falling behind and develop a plan to address the problems you and your team members identify. Empower them to take control of their systems and do their part to contribute to practice success.
• Never pass up the opportunity to increase cash flow. It’s your job to make sure you’re tapping into all income streams. Run specific reports from your practice management software every month to look for these opportunities. Be a leader and guide your business in a specific direction.
Here’s a look at some of the reports you should run every month:
Accounts Receivable Report
Outstanding Insurance Claims Aging Report
When looking at the report, make sure there are only a small number of claims over 60 or 90 days late. The goal is for insurance companies not to be overdue at all, but if they’re late your Financial Coordinator should know why.
It’s also important to train your Financial Coordinator to call insurance companies that are 15 to 20 days past due if claims are submitted electronically and still outstanding.
Accounts Receivable Aging Report
So how do you handle delinquent accounts over 90 days past due? Your Financial Coordinator should have already made two phone calls to talk with the patient about the unpaid balance. From there, it’s time to send a letter offering a small bookkeeping adjustment if the full balance is paid by a specific date. Why the adjustment? If it goes to a collections agency, you’ll be charged a fee; it’s better to get paid before it comes to that. Keep in mind the longer the account is outstanding, the more difficult it will be to collect.
If you don’t receive a response by the due date, write the account off as bad debt and hand it over to the collection agency.
Speaking of bad debt, about 2% of net production should be written off as bad debt; any more than that signals a breakdown. Review your Adjustments Report along with the Aging Report to see how many dollars are being written off to bad debt.
Now is the time for you to take control of your practice and own your role as practice CEO. Finding opportunities to increase practice revenue is an important part of that role. Read practice reports each month to find opportunities. Once you take the proper action, you’ll have a much more profitable practice.Forward this article to a friend
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