Dentists, do you suffer from "Decision Fatigue"?
Wouldn't it be great if you had a crystal ball for your dental practice? It could lead you to the right answers and give you insight on how to grow your practice! Well, since you don't have a crystal ball, you depend on the experts and colleagues to help with the decisions. On the clinical/dentistry side, not quite as difficult. You've spent many years training to treat patients and the knowledge is there. So when decisions need to be made with running your practice, you can be confident in your choices.
Now, the business side can be a different story. Very little financial knowledge was part of your training, for most dentists anyways. So you rely on the experts to guide you on this part of the journey. However, how do you know if they are giving good advice or information? How do you know that they understand your practice or your goals? So many different ways you could go. Should I hire this CPA? Can this consultant give me the insights I need to be more profitable? What about this bookkeeping firm, will I get accurate information using them? What other experts do I need to hire? The list can go on and on. It is no longer just hanging your sign outside and it all comes together. Not that it was ever that easy, but dentistry has become a much bigger undertaking these days. With all this uncertainty, "Decision Fatigue" can set in and prevent you, the dentist taking any action and moving forward.
So how does the dentist get past decision fatigue and know that the right experts/professionals are being hired for their practice? Definitely knowledge is the key, but you certainly don't have time to go to business/accounting school, nor would you want to. The dentist first needs to identify their goals in order to begin finding the right experts to assist. A few examples may be:
Are you looking to grow your practice for a better income?
Are you looking to have systems set up to have a more attractive practice to sell?
Do you need to perform well in an audit for a better sales price?
Are you looking to wind down and scale back?
Maybe you would like your practice to run more smoothly and concentrate on patient care more?
Some of you might want to grow more quickly and acquire several practices?
There might be a goal as a dentist that you have not listed above. Either way it is important for you to know your goals before having the experts and colleagues tell you what you need. This can also help the dentist know what to look for in different experts. So, let's look at a few different experts and list things to look for and things to avoid:
If you are looking to grow your income you certainly don't want to pay more taxes. You need a proactive CPA that meets with you 2-4 times a year throughout the year. You will have a better outcome with tax payments and never have a surprise. This CPA should also be dental specific and understand how your practice works
Beware of “one stop for all” situations. There are many CPA offices that do a great job at bookkeeping and even helping with Practice management. However for some CPA offices, the bookkeeping is second fiddle and not done in a way to help you grow your business. The books should be done on an accrual basis and reports generated on accurate books. I have seen firms charging high prices for advanced reporting based on incomplete books and as much as a 25% variance from the PMS. Make sure you inquire more about the bookkeeping processes.
You may be told that your practice is taxed as a cash basis business and that is how the books should be done. That is incorrect, most businesses under 5 million are taxed on a cash basis, but in order to understand the true operational performance, the books need to be done on an accrual basis. They can be easily converted to cash for taxes. Some firms just prefer not to have to do the extra work. There are many informative articles out there comparing the two types of accounting.
A good consultant can help with many of the above goals and more. Their main goal is for you to have better insights on the financials of your practice. Again they should be dental specific. They can help you understand the more advanced reporting along with some forecasting and budgeting.
Some consulting firms also offer bookkeeping services and this can be good to make sure their reporting is accurate. Again, make sure the bookkeeping is done on an accrual basis. Cash basis is not historical, operational and does not use the matching principle in GAAP to accurately record when activity happens.
Practice Management Consultant
Another great resource to help your practice improve income, systems and create a less stressful environment. They will work with the staff and yourself to achieve these goals.
A PM consultant works mainly with what is happening in your PM software and improvements on the clinical side. Some will also want to be involved in the bookkeeping since the PMS software only tells part of the story. Again check up on the type of bookkeeping. Some consultants only know the basics or less when it comes to the accounting side. One clue is if they comment that the books do not match the PMS. The books usually don't match because of timing differences and the differences can be reconciled. I had one doctor really upset because the PM consultant told a wonderful story of high production/collections based on the PM software and the accounting in the books told a less attractive story.
I might be biased, but I think good bookkeeping can help with most of the goals above. It all starts with having timely and accurate books. It also starts with a good foundation, great systems being set up and accrual accounting with advanced reporting. The foundation being the books set up to match the taxes with a dental specific Chart of Accounts. Systems for your bill pay and fraud prevention (another topic to research)are put in place. Lastly with accrual accounting that uses the matching principle, your advanced reporting will show true operational performance.
A great bookkeeper will have bills, invoices and receipts attached to the transactions in your books. This is so important if having an audit whether it be by the IRS or a bank determining the value of your practice.
True forecasting, projections or budgeting to help you prepare for any bumps in the road, cannot be done with cash basis accounting
Lastly make sure your bookkeeper is dental specific and speaks your language.
If you know what you are looking for and why, you can inform yourself with the above recommendations to find the right experts for you and your practice and cut back on "Decision Fatigue". Would you like to see how Bookkeeping Aesthetics can help you have better insight and grow your practice? Click on the link below to schedule a free consultation.