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16 September, 2021

CFO/Financial Management for Dental Practices

Every facet of your dental practice hinges on the financial health of your business. The quality of patient care is predicated on the equipment you have, the type of technological tools at your disposal, and the caliber of your team.  Your practice offers competitive wages to be able to hire top-quality dental assistants, dental hygienists, and office managers.

To pay for the equipment, the tools, and the salaries, you need a healthy bottom line.  A healthy bottom line requires vigilance and highly developed systems to monitor your expenditures and manage your overall budget.

As a dentist, your focus is understandably on your patients. This can result in your patient list growing. However, a successful practice is not exclusively dependent on your dentistry or even a growing patient database. A successful practice requires business acumen and sound financial management.

This is where a virtual Chief Financial Officer, or CFO comes in.

What is a Virtual CFO?

A CFO serves as a money strategist for your dental practice. A CFO works to ensure financial efficiencies that will assist your practice with reaching its goals. They provide insights, uncover places where fiscal hygiene could be a problem, and help your dental business establish best practices for a healthy fiscal outcome.

Every dental practice sets their own unique financial and organizational goals. These might include paying off equipment loans, striving for greater internal staff efficiencies, gaining better control over lab fees and supply charges, etc. Perhaps your accounts receivables are not up to snuff. You also can’t figure out ways to bolster your profit margin.

A CFO can employ their fiscal expertise to straighten out all aspects of your financial operation. They have the knowledge and tools to optimize the fiscal side of your business and ensure that you have a healthy profit margin.

Advantages of a Virtual CFO for a Dental Practice

A CFO will be able to plan, track and forecast everything related to your budget. They will provide you with key indicators and all the financial information you need for your practice to be profitable. Knowing how all the numbers add up will help you make better financial and operational decisions. This strategy will lead potentially to more profit, and peace of mind.

A virtual CFO dedicates a portion of their time to the financial health of your dental business. They have the required skills to review financials and understand the story behind the numbers.

Predictability & Stability

Your CFO gives your dental practice predictability and stability. For example, you will know your cash flow a few months ahead of time, and you will have the ability to effectively address potential budget stressors such as changes in payroll and emergency expenditures.

As the dentist and owner of your business, there should not be any surprises when it comes to income and expenses as your virtual CFO will closely monitor financial transactions and equip you with the knowledge to prepare for lean financial times.

This highly customized approached to financial management results in a strategy that is unique to your dental practice. This strategy reflects your staff and your workplace values. What’s more, as your systems have been analyzed, a virtual CFO is able to identify trends to help anticipate issues that are specific to your practice operations.

When it comes to tax preparation, your CFO will consistently inform you of what to anticipate when it comes to tax obligations and how best to protect your assets.

Your CFO will instill in your practice intelligent planning that enables you to make prudent decisions. You will have a team supporting your dental business to help you determine if a new procedure or lab equipment is right for your practice’s circumstances at any given time.

Better Controls

By hiring a virtual CFO to perform comprehensive financial services it can prevent incidents of fraud and theft. The CFO will ensure all aspects of your finances are in order, plus all expenditures reconcile.

Tax Services

The average small business owner – and that applies to dentists who own their own practice – often find managing their taxes is a difficult task. With the IRS issuing new updates and authorizing changes to tax codes, it makes sense to employ the services of a CFO to oversee this area of your business.

Your virtual CFO will be responsible for ensuring tax preparation and tax filing are properly completed and saving your practice from potential mistakes that could be costly to your business.

More Accurate Financial Statements

A CFO can prepare your financial statements for your dental practice. You have the peace of mind of knowing that your financials are accurately prepared by a trained, knowledgeable financial professional.

Clear Financial Picture for Your Practice

Your virtual CFO will develop a plan that demonstrates activities and outcomes with clearly stated key performance indicators, or KPIs. It is these indicators that will motivate your dental practice to achieve its financial goals. It is essential to monitor and report on these indicators on a regular basis.

Are You a Candidate for a Virtual CFO?

You are probably ready for a CFO to handle your financial operation if you are wanting to grow your dental practice. Are you looking to improve cash flow by determining how to better allocate and manage line items such as lab fees, supplies, and accounts receivable? Do you need to more effectively manage employees?  If you answered yes to either of these last two questions, then you would benefit from the services of a virtual CFO.

If your practice would like to increase its profit margin and reduce your overall debt, then a CFO would bring value to your business.

In the final analysis, a skilled CFO offers sound analysis and financial planning that dental practices need to thrive in today’s competitive business environment. Both new and small dental businesses will benefit from the type of expertise a virtual CFO brings to their operation, but they normally can’t afford to hire someone of this caliber full-time.

Drilldown Solution Can Help Your Small Business Accounting Needs

Our accounting services are designed to reduce your administrative and bookkeeping burdens and provide you with valuable financial benchmarks for your business. This results in keeping you updated and informed.

Our seasoned, highly skilled full-service accounting team at Drilldown Solution will remove your financial pain points with bookkeeping to make managing your money easier. DrillDown Solution has the important tools you require to track expenses, oversee cash flow, and discover financial trends so you can effectively plan for the future of your business.

We have the expert team to help any small business thrive, even under the current COVID-19 pandemic circumstances. We accomplish this with a three-part system comprised of patient-experience excellence, financial focused operations, and accountability.

Our goal at Drilldown Solution is to put your small business in the best financial position possible, utilizing proactive processes and personal care

Note: The material and contents provided in this article are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.

Ed Gabriel, CPA is President of DrillDown Solution and a graduate of Brigham Young University. His clients benefit from over 40 years of experience in maximizing profits, minimizing taxes and putting them in the best financial position possible.