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, , , 27 March, 2020

Master Cashflow in a Crisis

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DrillDown Solution

Cashflow in a crisis

Heather Porter:

Our mission and our goal are that you will walk away with at least one action item but, hopefully, a lot more, you can take care of in your practice.

Stephen Nance: I know you’re in a crisis. We all are. the dental industry has been hit, at least as hard, if not harder than anyone else right now where you’re having to close your doors except for emergencies. I’m going to share, a presentation with you

here. let’s talk about your cash flow. this is on your minds. I know. So you’ve been operating where money has been coming in. whenever you’ve had production, now that faucet has been turned off and you have maybe some pennies trickling in compared to the dollars that you’re used to and that you need to survive here. And meanwhile your, your expenses don’t go away. So this is a time, a critical time, as you know, where, if you’re not careful, you could lose everything that you’ve worked for.

Stephen Nance: I don’t want to be overly pessimistic here, but it’s also an opportunity where if you can manage this time and come out ahead, you’ll be better off for it. So let’s look at cash flow and what you can do. so first of all, you need to understand how much cash you have, not just the dollar amount that’s in your bank right now, but how long that will last you, under current operations, with doing nothing. And then we’re going to look at what we can do to increase funds available to you so you can increase that cash in your bank account. And then what can you do to retain what is in there And the most important part of this is this first step here. Understanding how much cash you have and how long that’s going to last you. You need to be in a position, I’m going to recommend where your cash can last you at least two to three months.

Stephen Nance: And we don’t know how long this crisis is going to last. If you can push that longer, six months, great. but you need to have at least two to three months. If you’re not there yet, we’re going to help you get there so that you can stay in business and come out of this ahead. So let’s look at increasing cash collections. First thing is, are all your claims submitted. You have time, make sure all the claims are submitted so you can start getting some cash in the door. second of all, any unpaid accounts receivable, you want to approach this delicately. But again, you have some time where you could be making some patient phone calls. Understand that they may be hurting too, just as much as you are, but they may not be. So you don’t want to prejudge either way, but it’s a good opportunity to make some calls starting with rapport, checking in, how are things going, getting a feel for if they’re going to be able to pay you.

Stephen Nance: You have earned this money so you have the right to be able to collect on it. But you do want to approach it sensitively for sure. You don’t want to push people away, but, anything you can do to collect what you’ve earned, all the better. if you have an insurance policy that can cover a disaster or a crisis like this, definitely want to make a call to your insurance company and see what you can do to get that. if you have some personal funds, now is a time to cut back on your personal spending, restaurants, travel, entertainment, things like that. And if you are falling into that group where you may be getting some of the stimulus money, any personal funds you have available that you can contribute to the business, it might be more, more worthwhile to cut back on personal spending and put it into your business right now, to keep things afloat, keep things going.

Stephen Nance: Let’s look at debt financing lines of credit. We’re going to be talking more about this subject later, but, check what’s available. There are new programs. We still don’t have all the details of this new SBA program, but they’re pretty, they’re pretty generous. and you want to look into what’s available to you. Get some funds in this. Yes, it’s a loan. You’re going to have to pay it back eventually, but not necessarily all of it as we’ll talk about later. So let’s look at what is available to you there. and I put this last, but you have the option if you have a 401k to, take a loan out of your 401k or even an early distribution. I put this last on purpose cause I wouldn’t want to do this. I want to do this as the last resort cause that’s your retirement.

Stephen Nance: But if you need to get some money into your business to keep it alive, it’s worth knowing that you can do that. because it’s a crisis right now as we know. So once we get as much money into the business as we can into your bank account, what is there, is, is important. Now going back to that first thing that I told you about how the most important part is understanding what you have available right now. I was looking at a client, that has 220,000 in their bank account, which looks at that and you think they’re going to be just fine. But then I look at what they’re spending on average per month, they’re spending about 175,000 per month, in their operations. It’s not wasteful spending. It’s just what their business has been costing them so that if they’re not careful and they don’t manage things right, that 220,000 is going to be gone fast.

Stephen Nance: We want to make cash last as long as possible. The big one, it’s on all your minds is payroll. What do you do with your employees do you lay them off Do you furlough them Do you keep paying them I have, I know a dentist that is, is full steam ahead. Then, the office is closed except for emergencies, but they’re paying all their employees as if nothing happened as if they’re still working a hundred percent. They did that right from the beginning with the idea that when this is all over, a lot is going to be expected of them. And having the benefit to your employees to keep them is going to be valuable if you can afford it. For a lot of you, that’s not really an option. You need to look at cutting your costs where you can. And for the most part, if you furlough or cut back on the hours of your employees, they can still get the unemployment benefit.

Stephen Nance: What’s most important here is what’s your cash situation How long is your cash gonna last you, and that will determine which option you have to go with. You ought to be aware also of the new, employer mandates for sick leave and expanded FML eight. So you’re now required to pay sick leave at 100% of the employee’s normal pay for anyone who’s impacted by the Coronavirus. whether they get it or they need to take care of a family member. and then after two weeks, you’re, you’re required to pay up to two weeks. And then after that, there’s an expanded FMLA where if an employee has to stay home to take care of a child because either they have the Coronavirus or they’re home from school because the is closed under this current crisis, you’re required to pay them at two-thirds of their normal pay for up to 10 more weeks.

Stephen Nance: So up to 12 weeks total, you’re required to pay this sick leave or expanded FMLA. Now the good news is if you have less than 50 employees, you are entitled to an exemption. There’s supposed to be an application form coming. We haven’t seen that yet, but you are allowed, you are allowed an exemption from that requirement. But if you choose to go ahead and pay it and offer that sick leave benefit, you’re entitled to a tax credit. That will be a credit that will be against your payroll taxes. So it will be on your next quarterly payroll tax filing. And essentially the government’s reimbursing you for this. I t’s costing a little bit upfront, but in the end, you’re going to be made even so that’s an option. Again, understand your cash situation, understand the options available to you. We’ll talk more specifically and more about team options here a little bit later, but that’s the first thing you want to look at in what you can do to hold on to as much cash as you can.

Stephen Nance: The next thing is loan payments and leased equipment. It’s worth making a phone call to your bank or to your leasing company to see what options they can give you. Can they delay a payment Can they give you a month off what other terms can they work out for you under this current crisis It doesn’t hurt to ask. The worst they can do is say nothing. They can’t do anything. but it’s worth making a call and seeing what they can do for you. Same thing with rent and utilities. Make a call to your landlord, to the utility company. See what they can do to work out an arrangement to defer paying as long as possible. Supplies and equipment. Obviously now it’s not the time to be investing a lot in equipment and supplies. You don’t want to pay for anything. You don’t need right now and right now you don’t need a whole lot because you are essentially not open.

Stephen Nance: On the other hand, go back to your specific cash flow analysis, what you have available to you, there are some discounts, going on right now with some of the supply companies. So it may be worth it to take advantage of some of those discounts if you have the cashflow available and you know, you’re going to need that in the future. But if not, you want to cut back as much as possible. And most of you have cut back on travel. That’s definitely not essential right now. taxes. We all know of the extended deadline of July 15th as an accountant. I was less than thrilled when I heard about this cause that means my tax season is now extended through July 15th. But this is a gift to you. This is going to help you out. If you owe taxes, you don’t need to pay in April anymore.

Stephen Nance: You’ve got three extra months to pay and that can be extremely helpful for you. so I’d encourage you, not to pay until July 15th. And that includes your first quarter, 2020 estimated tax payments too. So your 20 19 and your first quarter of 2020 estimated taxes can now be deferred until July 15th. That’s a big gift. If you are due a refund, get your taxes filed now so you can get that money. if you have some automatic payments, that are not essential right now, see if you can cancel those and hold onto your money as long as possible. Those are kind of the basics. Cash is King. Remember, whatever you can do to keep the cash flow in your business, that’s gonna control your business. We know the saying a fool and his money will soon be parted. You’re not a fool. You’re a victim of a very unfortunate circumstance right now. but again, you’ve got to manage this appropriately so that you can pull through. And I, I believe that if you take the time now to manage this widely and you learn the principles or take the principles that you learned from this experience and apply them in better times ahead, you’re going to be so much better for it.

Heather Porter: One question is, how do I apply for an exemption

Stephen Nance: Right now, if you have less than 50 employees, first of all, on the FMLA side, there actually are no application requirements. As soon as it becomes available we will let you know.

You get that automatically for the sick leave part. Document and keep a record. Keep a mental note, until that form comes up. we, when that does come to fruition, know that you’ll probably need to file something, but for now, you’re entitled to that exemption.

Speaker 3:

Ed Gabriel: Thanks for joining us today. Now, this health crisis is forcing you into some very tough decisions in an uncertain environment. We know that your teams are important and critical to your success and hopefully our discussion says we’ll give you some clarity. There will still be questions to work out office by office based on your particular situations and needs and we’ll do our best to help you through this. One of the challenges here is that there are lots of different sources of income information. I’m going to take a little bit deeper dive into some of the FMLA, the medical leave act. Then Steve did a, which hopefully will clarify some things but may also raise some additional questions. but the main decision for employees out of work is going to be, should I do sick leave or am I forced to do sick leave or should I do on employment

Ed Gabriel: Now this will vary state by state because of the various state unemployment rules. But basically, the sick leave question is a mandate. If people are affected by the coven virus directly, then they have some sick leave benefits that are being mandated by the government. I will mention that the first 10 days of leave actually do not have to be paid and an employee may elect or an employer may require an employee to substitute any accrued paid vacation leave personally or medical or sick leave for that unpaid leave. And generally, the act provides for, as Steve mentioned, the two weeks of paid sick leave. It’s at the regular rate of pay. If the person’s directly affected by COVID, if they have it if they’re quarantined or they have a need, a medical diagnosis for it. And then people are at 80 hours, at two-thirds of their pay if they’re unable to work because of a need to care for an individual subject to quarantine or to care for a child whose schools is close. For example. And this is probably where most of our dental clients will be affected by assistants or hygienists that need to be at home to care for children. and then there’s an additional up to 10 weeks of paid or expanded family and medical leave at two-thirds of the employees’ rate if they have to leave to care for a child.

Ed Gabriel: Now the limited exemption, I did a little bit more research into this, and here’s a quote from the DOL website. Small businesses with fewer than 50 employees may qualify for the exemption from the requirement to provide leave due to school closings or childcare on availability if the leave requirements would jeopardize the viability of the business. As a going concern, we don’t know at this point what the threshold provided will be. Now if you do pay sick leave there is that 100% credit, I understand that it’s against the employer portion of FICA and then any excess will be refundable and we’ll need to get more details on that. They’re not available yet. also if you decide that you may, if you have to pay some of that sick leave and you’re thinking, well, I don’t want to pay these payroll taxes right now, they’re going to waive penalties for payroll deposits that are late in anticipation of the sick pay credit.

Ed Gabriel: They’ve also noted that there’s no FICA tax on the sick pay, so it’ll just be regular pay, no payroll taxes on that. So let’s take a common scenario and this question of should I do sick pay or unemployment So let’s say that an assistant has some small kids at home and the husband is still working. She makes let’s say $18 an hour or $720 a week. Or sick pay would be two-thirds of the wages or $480 a week. If I pay her that 480 for 12 weeks, it’s fully refundable by the federal government, although it might take many months to get that cash flow back to me. On the other hand, if I furlough her front employment, the state pays one 26th of her quarterly wages, which would be about $355 for up to 26 weeks plus. The federal government is probably going to be matching that three 55 so she’s going to get a total of $710 a week for up to four months under the federal guideline.

Ed Gabriel: So in this particular situation, the business probably would have better cash flow and the employee would have more cash. There are still a lot of details to come and the law that was passed by the Senate yesterday has not been passed by the house yet. That’ll probably happen tomorrow. So jumping over now, she wants employment with respect to unemployment benefits. the States are responding with the relaxation of benefits, which is in accordance with federal guidelines. Some of you may have already let people go and around reduced schedules and some are concerned about contracted associates. our message here is at the end, the employment landscape is really pretty friendly to your situation. the COVID response may not be readily apparent on your state’s unemployment homepage. in some cases looking at different States. I had to search for COVID 19 or for coronavirus to get the updated information for that state.

Ed Gabriel: The Senate bill, which passed last night, increased the state unemployment benefits by up to $600 a week for four weeks. And the coverage has expanded to cover self-employed persons and independent contractors like dental associates. Now the house still needs to approve it. As I mentioned, the bill revises the SBA program allowing for loan forgiveness for proceeds use for payroll. but you need to maintain employment levels in order to do it. They’ve mandated a coverage period from March one to June 30th. and a suspenders rule that loan forgiveness is taxable income. So this leads to the question, should I furlough employees and have them make an appointment or keep them and apply for a loan my argument for front employment would be that unemployment comp carries zero FICA payroll taxes, to begin with for both you and your employees. you would not be paying any loan interest. There’s no loan application process, no loan forgiveness calculations later on. if you’ve already furloughed employee since March one, then you’ll be getting a less than a hundred percent loan forgiveness for payroll expenses because they’re comparing this March to June to last year’s March to June. And if you’ve got fewer employees and payroll, now you’re going to get less than a hundred percent loan forgiveness.

Ed Gabriel: Note, some initially opposed this bill as being too generous since your employees could make more than they normally would. Additionally, the Senate bill includes a tax credit advance of $1,200 per adult and 500 per child on top of these unemployment benefits. bottom line is that your employees should be okay with the unemployment levels that are being offered. And, and the subsidies from the federal government, assuming the office closures don’t last too long.

Ed Gabriel: Let me just compare unemployment rules before and after COVID. Normally unemployment requires an eligibility requirement. You have to have a work history. Usually in Utah at least it’s five quarters. That really hasn’t changed. benefits are based on your wage history with the $580 per week. Utah maximum benefit. of course now with Kobe ed, we’ve got some supplemental federal benefits on top of that. the benefits are generally paid weekly and Utah, the week begins on Sunday and ends on Saturday night at midnight. there’s a one-week wait in Utah and that’s probably going to be the same even under the COVID, crisis.

Ed Gabriel: Before this crisis, climates were not eligible. If there was any work or even any paid, paid instruction for that week. Those roles have not been relaxed and there’s even eligibility for an employee if the employer temporarily shuts down, or even if the hours are just reduced. So where it used to be, you couldn’t have any compensation for that week and still get benefits. Now you can. the other critical thing, in my mind, was at claimants in the past had to conduct a job search and Utah you had to put in four applications per week in order to claim your benefits, but they’re not waiving that requirement, which means that as a dental office you should be able to retain your team even if they’re out on unemployment.

Ed Gabriel: Generally it’s going to take about two to three weeks, to get, your first check from the unemployment office. And that’s true both before and after.

Ed Gabriel: One of the concerns employers have is that in the past, there are two rates that come with unemployment. There’s a base rate that the state mandates and then there’s an employer rate usually based on how much unemployment an employer has. and Utah, they stated that the benefits costs attributable to COVID- 19 will be charged to social costs, meaning the base tax rate, and will not affect the employer’s experience rating, which is a good thing for employers. another question you might have is whether officers can apply, whether the dentist themselves can apply. And basically, if you’re a w two employee of your own corporation or LLC, you may, you may be eligible. So it’s something worth looking into if you need to. each of your offices is going to have different situations as I mentioned. So contact us to help walk you through the maze and realize that it may take some time for the best to settle because there are lots of rules and regs that are still being generated. Thank you.

Ed Gabriel: If you are paying the sick leave pay, that refund will be taken through the payroll tax return. So there’ll be an offset on the payroll tax return for your employer portion of FICA. You’ll take the credit for what you paid. If the credit is, exceeds that, then there should be a refund available on the return.

Heather Porter: Our next question is, if I applied for the SBA loan, would the forgiveness for payroll kick in for the existing pay period, which has affected me for a week and a half so far, Or would it only kick in for the future payroll after disbursement of the monies.

Ed Gabriel: There’s a period of March to June 30th. If you’ve been paying payroll since March 1st, yes, it would include payroll since March 1st.

Brandon Pearson: We all need a little humor. we’re in a crap situation, so I figure if we could find something to help us treat it, that might be a little better. So, yeah, I hope you like this little,

picture that my mom shared with us. I have another one I’ll share a little while, but I’m going to talk real quick about some SBA loan options. I’ll briefly go through these and,

and talk about them real quick and then we’ll shift a little bit, on what we can do to help other things we can do to help your business stay strong during this difficult time. there are three different SBA loan options that you have available there. Hopefully, we’ll have it available to you very soon.

Brandon Pearson: The first one is the small business interruption low phones. These are the new ones that, we hope get passed here the next day or so. this one, well, I’ll get into more detail. The next one is the economic injury disaster loan program that’s been around for a long, long time. And then the SBA express bridge loans. So I’ll go into some details and all of those so I can get this to work. So for the small business interruption loans, this is eligible for small businesses with under 500 employees, which I’m assuming all of you would be eligible for this and you can apply for this anytime March 1st through March through December 31st this year. I’m sure, sure. None of you have needed to or have applied for March 1st yet. So, but that’s the dates they set forward.

Brandon Pearson: The amount of your eligibility is based on things that you paid pro or any mortgage payments, whether it’s, for your practice or on your building. If you own the building, any rent payments, including rent under a lease agreement, payments on any other debt obligations, and then you take what you paid for that year, and multiply it by four and whatever that number is, if you spent, you know, if all those things cost you $100,000, you’d be eligible for a loan of $400,000, or up to $10 million. But hopefully, we don’t have to go that high. you’re allowed to use it for all the same types of things. Payroll, even if it’s for paid sick medical or FMLA leave, anything that has to do with health care benefits for those people who are in that time, employee salaries, mortgage and rent, payments, utilities, and any other obligation that was incurred before the coverage periods.

Brandon Pearson: So before March 1st, there is some information on these for loan forgiveness. we’re not very many deep details in the, and the, and what I read in the Senate package that, explain how this loan forgiveness work. it did say though it would be equivalent to the amount that you could receive and a loan benefit that you could use as, as forgiveness. Kind of wipe it clear and, and, and go from there. So there’s more information that should come out on that. Also, prepayment penalties. Typically with SBA loans, there are prepayment penalties, but if you would like to start paying on these loans, if you do get one, most payments won’t start until January 2021. You are allowed to start making payments before then if you would like, the other type of SBA alone that, that could benefit you is one that’s been around for a while. This economic injury disaster loan program provides pretty low-interest rates. these are to be used as working capital type loans to help you, forward your business and you can be loaned up to $2 million.

Brandon Pearson: Another type of loan is called the SBA express bridge loan. And this loan is, is used to bridge the gap between applying for either the economic impact loan or the small business interruption loan. You can get up to $25,000, and they essentially just, deduct that amount from the overall proceeds of your loans. So this is just a short term to get you by until your loan gets funded.

Brandon Pearson: Those are the different types of SBA loan products that, that are available for this type of, circumstance. now future loan needs, what are we going to do with your existing practice or and or real estate loan You need to contact your lender right away. Find out what they are willing to do for you. Most of them, if not all of them, should have something in place already. so that you can find some relief. a lot of them, it will be, you know, not making any payments for three to six months and then making those payments in full at the end of that period or the more popular option is not making payments for several months and then restructuring your existing loan to include that amount on the end of the loan. So if you only had four years remaining on your practice loan, it added by four years in six months or however long you did needed to extend that business line of credit moving forward. Steven talked about this earlier, it’s good for you to have a line of credit for your business. I hope you don’t ever have to use it. I would never recommend you using it. but it is good to have in case of, stressful times to be able, to meet some of your obligations. So I would, I would look into some options when it makes sense for you

Brandon Pearson: to apply for any of these, the best ways, to go to disaster loan.sba.gov I believe they will continue to use that same web address for all of their loan applications of these types. So, that’s what I have so far, on the SBA stuff. One question is if

you have a business line of credit, should you pull the money out and put it in your account. That’s a very good question. I was in the banking industry from 1999 till 2015 and when the market crashed back in 2008, there were a lot of institutions that were reducing or canceling these open lines of credit. I would check with your institutions, see if they have any plans. I, it can’t hurt to pull the money out, leave it in your account.

Brandon Pearson: It’s just a game of either paying interest on it and keeping that money in your pocket and having to pay it back over time. I guess if you don’t use it, then you can pay it all back, that, that’s up to you. Either way, if you feel confident that, that you’ll be able to make those loan payments, go ahead and pull it out. but if you don’t need it right away, I would, I would just sit on it and wait until they really need it. Hope that helps. the other question that came through, the EIDL loan on the SBA website is the only thing that’s available right now because the other loan hasn’t quite been approved. So I’m sure that once they approve it, it’ll all go through the same website.

Brandon Pearson: So I would personally, I would wait for the business interruption loan, so I would hold off, wait for them to pass the bill, and go from there. So I think that’s the better option. Personally. I hope that answers that question as well. the other question is there a potential for loan forgiveness for existing SBA loans I may already have. I believe there is a, it was hard to figure out from the wording in the bill, if it was going to, to work for old loans, but I believe that’s what it was intended for was if you do have an existing SBA loan and you could also apply for this business interruption loan and say you were applying for $100,000 and you still owed $100,000 on your SBA loan, I believe it would just cancel each other out. But there, there is more information we need on that. So I, I don’t feel confident in telling you exactly what, what would happen there, but I believe they would just cancel each other out. the, we won’t know exactly what to do on that, loan Fergie until they pass it through the house. And then once it’s passed, we should be able to get more detail. So I hope that was helpful.

Brandon Pearson:

One more little bit of humor for me because I like a lot of humor. You know, when grandma, here’s your brand of toilet paper, that is probably what’s going to happen. So be prepared. Just don’t actually flush it. So

I wanted to spend a few minutes talking about ways to improve your business. While we’re not working, there are a lot of different things you could do. I’m, I’m trying to focus on a few basic things. I don’t want to overwhelm you, but everyone’s business. I don’t care how well you run your practice. We all can improve in some ways. So I’ll talk about a few different things. I’m going to talk about these three main topics. Training, whether it’s training for yourself or your team, improving some business operations and, and communication.

Brandon Pearson: Communication and training are two of the biggest downfalls and dental practices that I’ve seen over the last four and a half, five years. W e’ll talk about that. So starting on training your team, it’s extremely important to have team and department meetings. Some of you might not have a team large enough to justify doing department meetings if you only have one or two assistants. One hygienist, one or two people upfront at, at the front desk might not make sense. But make sure you have at least a monthly team or staff meeting. It’s important that you get together with everyone. Find out what, what challenges they might be having in the practice. Find out what things are going well,

Brandon Pearson: create an action plan and most definitely follow through. You’ve got to be good at following through with the, with different things that you, eat. but made sure you sit at me. Schedule, plan your meetings in advance, stick to the schedule. Don’t let your patients force you to make changes. you don’t need to have big productions as a, as a meeting, but get together. Talk about things from last month to talk about important things that need to happen in your, in your practice to improve. Talk about goals. the next, I don’t know what happened. Next thing we need to work on with training our team, morning huddles. I don’t know how many of you do a morning huddle, but this is an extremely important meeting and usually, the biggest obstacle and having effective morning huddles is the fact that the dentist doesn’t show up to work on time.

Brandon Pearson: if you can be there 10 to 15, 10 to 15 minutes before your first patient, that gives you more than enough time to have an effective morning huddle. Morning huddles should be no longer than 10 minutes. Talk about how things went yesterday. What did we do well What can we improve on now What new patients do we have coming into the practice today We need to make sure we pay special attention to them and make sure they have a great experience. Are there any patient needs for that day Is there anyone that’s coming in that we should target for online reviews or ask them for referrals How are we progressing as a team toward our goals for our practice These are things that are, that we can talk about each day to make sure everyone’s on the same page and to motivate everyone moving forward.

Brandon Pearson: And then another part is cross-training your team. It’s so important to make sure, especially in times like this where we’re realistically for the foreseeable future, going to be operating on a reduced team. You’re not going to have as many employees working with you from day to day until we’re given the all-clear to resume business as usual. It’s important to make sure that everyone can do everyone else’s job as much as possible. It might not be realistic to have all of your assistants or your hygienists learn how to submit insurance claims, but maybe it does. Maybe it makes sense. So figure out what would work best for you, for your practice moving forward, and cross-train your team as much as possible. If you still have your team employed cross-train, now it would be a great time to get them learning how to do other, other things within the practice. training your team is so important. There was a survey done of 2000 dental practices across the country and of those practices they were asked how often they train their team, one and a half percent training their team on a monthly basis, another one and a half percent on an annual basis. That’s 3% of that. Those 2000 practices we’re receiving any kind of training throughout the year. Take time to train.

Brandon Pearson: A couple of things to improve your business operations. Steven talked about this earlier when you need to make sure that you’ve always got a reserve account that has enough money to cover two to three months’ worth of expenses. this is my number one recommendation, to all dental business owners. This is what you need. and you can choose whether or not to include what you’re paying yourself as well. Might as well build that reserve account so that you can, the hard part is a lot of single dentist practices where you’re the owner dentist. A lot of dentists I’ve come across treat their business bank account as their personal bank account. so another thing that’s important to do is start paying yourself based on your individual, your personal collections. A general rule of thumb is that if you had an associate, you’re going to pay them 30% of their collections. You should do the same for yourself. 30% of collections is a great number. Anything above and beyond that will go to your bottom line and you’ll be able to take home profits moving forward, but be strict with that.

Brandon Pearson: Pay yourself based on only what you are actually earning by working. And then, later on, you’ll be able to pay yourself. You’ll be able to use the excess, to build your reserves and then pay yourself through your profits as well. I think it’s extremely important to study your profit and loss statement every month. get to know what’s on there. How much money are you spending in different categories Are you spending way too much on your office supplies or your dental supplies is a big, big issue here, especially in Utah. We pay too much for our supplies here. Let’s review it. Make sure that, we’re keeping our costs as low as possible. How much are we paying our team Is that going up over the years or 10 is that you pay your stay the same year over year and, and hopefully decrease the larger you become. But reviewing your profit loss monthly, making sure your expenses are online will be very beneficial to you moving forward. if you’re not sure how to reduce some of your overhead, let us know. We can help you do that. I’ve spent a lot of time helping reduce overhead and give ideas for how to do that. So just let us know.

Brandon Pearson: And then what are some of your big pain points in your practice I know each of you that owns a practice, there are things that just drive you crazy. Unfortunately being the clinician, being the main producer, and in your, in your practice, you don’t have time to deal with all of the different issues. So figure out what those are and work on them now, you know, take time to evaluate and fix these issues.

Brandon Pearson: Implement better systems. We can always improve what we’re doing. everyone has a great system, for collecting, but can it be better Everyone has a great system for, onboarding new patients. But can it be better Can it be more efficient Talk to your team, find out what systems need to improve, to help your office run more efficiently, that it can only help moving forward? And now that you have the time, now is the time to do it. Finally, let’s talk about communication. So important right now to communicate with your team whether you’ve laid them off or furloughed them and hopes to rehire them when you can open your doors again and, and, work business, as usual, communicate with them. stay positive. All of your communication should be positive. Let them know how much you care about them, how you appreciate them, keep them informed on, on what plans you’re making moving forward or, or what the outlook looks like, and be understanding of their personal situations.

Brandon Pearson: We are in a very interesting time, very, unique needs that your, your team might have very understanding. And then with your patients, stay connected to them. If, if you connect through social media or email, or newsletter already, keep doing it. Keep your conversations with them positive, help them know how much you appreciate having them as a patient. And, also we don’t know when you’re going to be able to start a business as usual. So keep sending out your reminders to your patients for upcoming appointments. And then as we find if we find out closures need to last longer, then let them know that we’ll need to reschedule their, their patient, or their appointment. But I would hate to have you have a completely bare schedule when you’re able to open your doors. Again, have to start calling everyone. So keep, keep them on the books and keep them informed as to what’s going on. So, that’s all I have for now.

Ed Gabriel:

Brandon Pearson: One question received, Could you review the pros and cons of paying employees versus having them file for unemployment costs, time delay, penalties, how long it takes to recoup costs, et cetera. I think that might be best for you to answer.

Ed Gabriel: Unemployment’s going to provide, cashflow to your employee that you don’t have to provide. now rates are probably going to go up a little bit in the future, but when you look at the offset, I think you’re better off having them on unemployment, especially with the federal subsidy coming in than, than paying them yourself.

Brandon Pearson: No, that one’s just tough because the last thing you want to do is keep paying your team if you don’t have money coming into your practice, but at the same time, it’d be nice to keep them and keep them engaged in doing things in your practice. It’s just, that’s a tough situation. It might be in your best interest to let them collect the unemployment and send out messages to them, do some remote work.

Ed Gabriel: It’s not an easy question here because they are allowing unemployment even if they’re getting partial pay. So they really need to, I mean you can kind of get the best of both worlds. Maybe still do some training, have some communications with your team, have them doing things in the office, and still getting some paid unemployment for the time they’re not there.

Jeremy White: Bonus Question: So, some of my employees, if they use their vacation pay during this time, does that, does that reduce their ability to, take out employment benefits Is there a threshold they have to stay under for amount of hours and all that

Ed Gabriel: Well, under the old rules, if they had any compensation for a week for that particular week, then they would not get unemployment compensation. generally, the idea is that if the business is paying them, then unemployment is not going to pay them. So I don’t know where, where the occasion is elective. I don’t know whether they can say, I’m going to take 10 hours of vacation this week and still get on employment. I’m not sure, honestly how that’s gonna work. That’s a question we’d have to ask. but I do know that the employees every week need to report in, say what their compensation has been and what their activity has been for the last week and that determines the level of the benefit for that particular week.

Jeremy White: Okay. I see. All right. I had, I had initially told my employees that I was going to pay them at least two days in addition to the training we’ve been holding just to kind of keep them going. should I back off on that strategy? I don’t know if I’ve caught myself in a tough situation there.

Ed Gabriel: I think it might be interesting to do that. Well, you’ve already been doing it, so let them make some unemployment claims for those weeks and see how they, how the formulas work out for them.

Brandon Pearson: Okay. Sounds good. Well, thanks for the course. That was great.

Ed Gabriel: Thank you for joining us.

Heather Porter: Things are changing on a daily basis, even multiple times a day. W e are staying up to date on everything that is happening and we’ll continue to disseminate information as we get it. looks like that is, it. Thank you so much for joining us today. if you have any more questions, please don’t hesitate to reach out to us. You can reach us at, info@drilldownsolution.com or 801-225-8474, We hope to see you at our next event. Thank you and have a wonderful, wonderful day.

Heather Porter

DrillDown Solution was founded in 2004 and has helped thousands of people save on taxes and achieve their best financial position possible.

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