Make sure you are keeping score

Dental and medical practice owners are, on the whole, forward thinking, innovative and driven individuals who make a good living through hard work and dedication to providing an excellent service. Few however, it’s fair to say, are natural entrepreneurs and many struggle with moving their business from average profits to super profits. The backbone of all businesses relates to the Financials and by getting a good grasp of past performance will enable you to keep score and move to a better financial position through making better business decisions.

You can only manage what you can measure

This well-known saying rings truths. The unknown is far more dangerous than the known, especially, in this context, when it comes to the financial future of your business. Access to past data from the previous months and years of trading gives you an insight into how income and cash flow through your business and into your own hands and also helps to ensure costs are not escalating out of control before you realise. If you don’t have a means of measuring these vital key metrics and important parameters within your business, you will struggle to manage it.

Tools to help you keep track

Keeping track of your financial position is difficult alone. The best method is to integrate a decent practice management system along with a decent bookkeeping system.

Your practice management system

will take care of reporting and keeping track of things related to:

• Patient income – for example, income by day, week, month and income per patient or group of patients
• New patients – for example the potential income value for this month, next month etc

From this you can work out valuable statistics to keep score of how your business is performing. These could include:

• Your most profitable patient type – so you can find ways to attract more of these into your business
• Your “worst” patients – those who don’t pay, turn up late or are low spenders for the resource requirement
• How much income you could earn if your new patients convert
• Your patient conversion rate as a % – to ensure your sales process is working effectively

Your bookkeeping system

will take care of reporting and keeping track of things related to:

• Income – corresponding to your practice management system but with a slightly different agenda
• Bankings / Receipts – to monitor cash flow and reconcile income with cash received
• Direct costs – the costs you incur to make a sale. This includes clinic purchases, supplies and associate wages
• Gross profit – income less direct costs
• Overheads – this includes staff wages, rent, rates, practice utilities, finance costs, to name a few of the larger costs
• Net profit – income less gross profit and less overheads

From this data, statistics you can extract or calculate could include:

• Income trends – to monitor how your practice performs month on month
• Period comparisons – to reflect on how your business compares with one period to another.
• Gross profit % – a broad % to aim for is 66% or two thirds of income
• Net profit % – a broad % to aim for is 33% or one third of income

Figurit are approved providers of Xero – efficient, reliable bookkeeping software that also provides you with useful reports each day and month so you can keep track of your business performance, effectively.

For Figurit clients – Xero is FREE of charge.

Figurit ensure our dental and medical clients get the very best support when it comes to keeping track of their business performance on a regular basis. Call today to find out more about Xero or financial reporting. T: 020 7376 9333 E: info@figurit.com

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