Prevent Profit Drain

I’ve seen too many dentists working incredibly hard, only for them to be shocked that what they’re getting in return is less than expected. The truth is, there are hidden gaps within every practice where money silently drains away, and learning how to close them is crucial not just to make more money, but to take back control of your practice and your life.

The Effort Gap 

This is your Gross Production minus your Net Production, or in other words, the difference between the effort you put in, and the results you get. The key factor in this gap is write-offs, because the more you’re giving away, the more you feel like you’re running at full speed while receiving a disproportionate amount of profit. It’s like Kirk says, “If you’re writing off 30%, then you’re working one out of every three days for free.” This isn’t something you’re going to fix overnight, but you can get started by always billing your full fee, because then you will understand exactly how much you’re writing off. Reducing your PPO dependency is the next step, so learn how to achieve PPO Freedom today!

The Collections Gap 

This is simply the difference between what you produce and what you actually collect. Dentists love to brag about how much they produce, but if you’re not collecting that, then it doesn’t matter. We advise that collecting 98% of your Net Production is your minimum, but 100% should be the goal, and it is attainable. To do so, it’s important to set up good financial arrangements, like a same-day payment policy where all patient portions are collected at the time of service. To make sure you’re maximizing your collections, learn how to improve your Accounts Receivable with this resource!

The Overhead Gap 

This gap refers to the difference between what you should be spending to run your practice, and what you are spending. I see a lot of dentists overpaying in multiple areas, such as payroll or supply and lab costs, which cuts into their overall profitability. I recommend using a tool like our Supply Budget Tracker to help you stay on budget each month. From there, you should pick a different expense category each month and perform a review of it, checking to make sure you’re getting the best rates and that you’re not spending unnecessarily. 

The Cash Flow Gap

Many practices look profitable on paper, but still have problems with their cash flow, and that’s because they have a lag between their gross profit and when the money actually hits their account. Practices struggle with cash flow for several reasons:

• Failure to budget and save for tax and loan payments
• Large, one-time expenses 
• Lack of cash reserves

Ideally, you should have one month’s operating expenses in cash reserves at all times, so anything unexpected doesn’t throw off your cash flow. The key to closing this gap lies in your understanding how money moves through your practice, which you can learn about with this awesome tool!

Every practice has these same gaps, but the difference between a profitable practice and one that loses money is that a profitable practice has shored up their gaps to prevent unnecessary loss of money. The gaps won’t fix themselves, so it’s up to you to be proactive and implement the changes that will make a massive difference over time. Start small, with our GAPS at a Glance tool, and decide which gap is hitting your practice the hardest right now. 

To learn more about ACT and how we can help you build a Better Practice and a Better Life, reach out to Courtney!

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