Written by Kevin J. Bray, Partner @ the Dental Accounting Group

Navigating the financial landscape of a dental practice is a bit like perfecting a smile makeover – it requires precision, expertise, and a keen eye for detail. As dental CPAs specializing in accounting and business advisory for more than 400 dental practices in the Pacific Northwest, we’ve seen firsthand how crucial it is to keep a finger on the pulse of your practice’s financials. Much like advising patients on the importance of regular dental check-ups, we recommend that owners review their financials monthly as a preventative measure against fiscal decay and a strategy for cultivating a thriving practice.

What is Financial Benchmarking?

Financial benchmarking, in the context of a dental practice, involves the analysis and comparison of your practice’s financial performance against that of similar practices within your geographical area. Using local data vs national averages is important when creating budgets and production goals. For example, insurance reimbursements and staffing costs for a practice in Washington are going to vary significantly from a practice in Iowa. By comparing your financial health to that of like-kind practices, you will gain valuable insights into local market dynamics, competitive positioning, and potential areas for improvement or growth. This laser-focused approach enables you to make informed decisions, set realistic goals, and implement best practices, ultimately scaling your practice to new heights of success.

Key Overhead Benchmarks at a Glance:

  • Staff Expenses: 36.48%
  • Dental Supplies: 6.89%
  • Lab Fees: 5.01%
  • Facility Expenses: 6.85%
  • Marketing Expenses: 1.13%
  • Merchant Service Fees: 3.32%

Note: These benchmark figures are based on 2023 financial survey data for general practices between $800k to $1m in annual revenue. This is only a snapshot from our extensive Practice Analysis Report.

Additional Key Performance Indicators That Every Practice Should Track:

  • New Patient In-flow
  • Average Daily Production
  • Hourly Chairside Production
  • Gross Production, Net Production & Net Collections
  • Accounts Receivable Aging
  • Profit Margin Before Owner & Associate Compensation

Fiscal Hygiene: Clean Up Your Practice’s Accounting Records

At the heart of effectively managing these benchmarks lies the imperative approach of keeping clean bookkeeping records and a streamlined dental specific chart of accounts. This is equivalent to maintaining a well-organized dental office where every instrument has its place, simplifying diagnosis and treatment. Clean financial records ensure that every transaction is accurately captured, enabling a clear view of the practice’s fiscal state. At the Dental Accounting Group, we use a standardized dental practice chart of accounts across all of our clients, which allows us to synchronize data into customized benchmarking reports.

Create the Habit of Reviewing Your Financials Monthly

Don’t wait until the end of the year to complete your bookkeeping. If you don’t have the time, then hire a professional bookkeeper. Think of bookkeeping and reviewing your financials as your patient’s routine cleaning: it’s essential for identifying small issues before they require major restorations. Just as regular dental cleanings and exams are essential for maintaining oral health, a disciplined approach to bookkeeping and tracking your financials with benchmarks is crucial for the vitality of your dental practice. Embrace the routine financial check-ups with the same enthusiasm you have for patient care and watch your practice not just grow, but flourish!

Need better bookkeeping and financial reporting?
Reach out to us today

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Questions?  Please email us at mail@cpa4dds.com or call us at 425.216.1612

3015 112th Ave NE, Suite 210

Bellevue, WA  9804

 

STUDY CLUBS

If you would be interested in having us speak at one of your upcoming Study Club events, we would be happy to do so. Online meetings are available.  Contact our office for more details: mail@cpa4dds.com

Dentists, like any other business owner, have to worry about the financial aspect of their practice. This includes keeping track of their income and expenses, preparing and filing taxes, and making sure they are operating in a financially healthy manner. While some dentists may be able to handle these tasks on their own, it is often beneficial to work with a dental specialized CPA and accounting firm.

A dental specialized CPA and accounting firm has expertise in the unique financial needs of dental practices. This means they understand the specific tax laws and regulations that apply to dentists, as well as the typical income and expense streams of a dental practice. This specialized knowledge can help ensure that dentists are taking advantage of all available tax deductions and credits, and are properly reporting their income and expenses.

Working with a dental specialized CPA and accounting firm can also help dentists save time and hassle. These firms can handle all of the financial tasks for the dental practice, freeing up the dentist to focus on providing dental care to their patients. This can be especially helpful for dentists who are not trained in accounting and finance, or who simply do not have the time or inclination to handle these tasks on their own.

Another benefit of working with a dental specialized CPA and accounting firm is the peace of mind it can provide. These firms are knowledgeable and experienced in their field, and can provide assurance that a dentist’s financial affairs are being handled properly. This can help dentists avoid mistakes and costly errors that can have negative consequences for their practice.

In addition to their specialized knowledge and expertise, dental specialized CPA and accounting firms can also provide valuable guidance and advice on financial matters. This can include help with creating a budget, setting financial goals, and identifying areas where the dental practice can improve its financial performance. This type of guidance can be invaluable for dentists who want to grow and succeed in their field.

In conclusion, dentists should consider working with a dental specialized CPA and accounting firm to help manage the financial aspects of their practice. These firms have specialized knowledge and expertise that can help dentists save time, avoid mistakes, and ensure their practice is operating in a financially healthy manner. In addition, these firms can provide valuable guidance and advice to help dentists grow and succeed in their field.

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Questions?  Please email us at mail@cpa4dds.com or call us at 425.216.1612

3015 112th Ave NE, Suite 210

Bellevue, WA  9804

 

STUDY CLUBS

If you would be interested in having us speak at one of your upcoming Study Club events, we would be happy to do so. Online meetings are available.  Contact our office for more details: mail@cpa4dds.com

Bookkeeping is an essential aspect of running a successful dental practice. It involves keeping track of the financial transactions of the business, including income, expenses, and profits. Proper bookkeeping allows dental practices to monitor their financial health, make informed decisions, and meet their financial obligations.

Bookkeeping for dental practices typically involves recording transactions in a system of accounts, such as a general ledger or accounting software (we utilize QuickBooks Online). This is a separate system from the office’s patient management system (think Dentrix or Open Dental). While the patient management system records production and collections, the QuickBooks Online accounting system is synced with bank, credit card and loan accounts. It’s best practice to have separation of accounting functions in an office- never let an office manager have direct access to your private bank information. Using a modern cloud accounting system like QuickBooks Online (QBO) allows dental practices to classify and organize their financial information into categories, such as revenue, expenses, and assets.

One of the key aspects of bookkeeping for dental practices is tracking income. This includes recording payments from patients, insurance companies, and other sources of revenue. It is important to accurately record income in order to properly calculate the profitability of the practice. Some of this information is recorded in both the patient management system, and again in the QuickBooks Online accounting software. The final collected revenue in these two separate systems should reconcile (match) at the end of the year. 

Expenses are another important aspect of bookkeeping for dental practices. This includes tracking the costs of running the business, such as dental supplies, rent, salaries, and utilities. By tracking expenses, dental practices can monitor their spending and identify areas where they can save money. Salaries are the largest expense line item in running a practice and one that the owner has the most control over. Sometimes an owner will “over staff” their office by mistake, which will result in lower profitability. Partnering with a skilled dental practice business advisor like us can help discover if you have a “right-sized” staff model for your revenue level. 

Profit and loss statements, also known as income statements, are a crucial tool for dental practices to monitor their financial performance. These statements show the practice’s income, expenses, and net profit (or loss) over a given period of time. By regularly reviewing these statements, dental practices can make adjustments to improve their profitability.

Another important aspect of bookkeeping for dental practices is tax compliance. This involves accurately tracking income and expenses in order to properly report taxes to the government. Dental practices must also keep records of their financial transactions in case they are audited by the Internal Revenue Service (IRS). Income tax audits can become huge issues if you don’t have clean and accurate bookkeeping records. We recommend owners follow strict guidelines for keeping business and personal expenses separate. The IRS has increased funding and will be pursuing more audits in the next decade. 

In conclusion, bookkeeping is an essential part of running a successful dental practice. It allows practices to track their income, expenses, and profits, and make informed decisions about their financial health. By properly managing their bookkeeping, dental practices can ensure their financial stability and compliance with tax laws.

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Questions?  Please email us at mail@cpa4dds.com or call us at 425.216.1612

3015 112th Ave NE, Suite 210

Bellevue, WA  9804

 

STUDY CLUBS

If you would be interested in having us speak at one of your upcoming Study Club events, we would be happy to do so. Online meetings are available.  Contact our office for more details: mail@cpa4dds.com

There is more to our profession than “dropping numbers in boxes”

There is more to our profession than “dropping numbers in boxes” and filing tax returns once a year. We are more than your average accountant, CPA, EA or Bookkeeping professional. We pride ourselves in our bench of knowledge, client obsession and proactive approach. We are students of the business of dentistry. Through working with only dentists and staying up-to-date with compliance rules, best business practices and industry trends, we are able to consult with our practice owners and help guide them to greater financial success.

Not all CPA’s are created equal. We focus on business, specifically the business of dentistry. We also work with high net-worth family groups and real estate owners through our affiliated company, Benton Bray PLLC. Through this experience, we are able to bring an extra layer of advisory and estate planning to our engagements. We are fortunate to have curated an awesome team of accounting professionals. We collaborate daily and are always working hard to level up our skills and knowledge base.

We build communication into our engagements and perform a mid-year and year-end tax projection so there are no surprises. We are also available as-needed to additional business advisory meetings. If we also partner with other industry consultants to support our clients.

If you are ready to take your practice to the next level, contact our team to schedule an intro Zoom meeting to discuss.


Kevin manages marketing, business development, and customer success for Dental Accounting Professionals LLC & Benton Bray PLLC. He is highly analytical, creative, and forward thinking in his approach to working with clients. His background is in commercial real estate with a focus in dental office leasing and investment sales. Kevin’s passionate about investing for the future and implementing new technologies to streamline outdated workflow processes to increase bottom line results.  

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Let’s face it. Did you go to dental school to do bookkeeping?

I would imagine (and hope) your answer is “No.”

Let’s face it. Did you go to dental school to do bookkeeping?

I would imagine the answer is “No.”

You should be focusing your time on the profit generating aspects of your business. Your hourly bill rate is better spent chair-side with patients. Leverage our team to take care of the numbers and compliance headache for you. Let us simplify your accounting workflow process.

And no… you should NOT hand over your bookkeeping to a “trusted” employee. This opens the floodgates to potential fraud & embezzlement and adds an awkward dynamic to the team when one staff member has a window into your financial world. You should keep these details private.

Can you do it yourself? maybe. Can your spouse figure it out the basics of posting expenses? probably. Chances are there will be reconciliation errors or missed fillings… we see this all of the time. We are the problem solvers at the end of the year. Why not chase perfection throughout the year? Having a clean set of bookkeeping records is important to understand the financial health of your business.

I preach this all of the time to business owners. You should surround yourself with experts so you can be on a “Need to Know” basis to have more time to focus on what’s important (being chair-side with patients). Stop the DIY mindset. Leverage is key to exceptional financial results in your business. Leverage our team so you can gain more time back in your day, month and year to focus on leveling up your practice.

Ready to get started? Schedule time with our team to discuss next steps.


Kevin manages marketing, business development, and customer success for Dental Accounting Professionals LLC & Benton Bray PLLC. He is highly analytical, creative, and forward thinking in his approach to working with clients. His background is in commercial real estate with a focus in dental office leasing and investment sales. Kevin’s passionate about investing for the future and implementing new technologies to streamline outdated workflow processes to increase bottom line results.  

Follow Kevin J. Bray on LinkedIn

Dental Practice Fraud: How It Happens & How to Discourage It

According to an American Dental Association survey, one in three dental practices will experience some form of employee fraud or embezzlement during their lifetime. Dental office fraud occurs more often than it should, and is often the product of poor or non-existent internal office checks and balances, too much autonomy and authority given to one specific employee, lack of oversight by the practice owner, and failure to prescreen employees adequately.

Common Types of Employee Embezzlement:

Skimming Cash

Petty cash or the occasional payment from a patient is often the first asset that a fraudulent employee targets to see if they can steal money without being detected. Fraudulent employees rationalize their misdeeds; i.e., “I am underpaid” or “the doctor makes more than enough money.” $10 turns into $100, and that turns into thousands. It is not uncommon for a fraudster to increase the magnitude of their theft as time goes on. They get braver, bolder, and feel invincible.

Deleting or Altering Transactions

Once a fraudulent employee perfects their scheme to steal money from the practice, they need to cover their tracks in the patient management system (PMS). In other words, they need to show that a payment has been made in order to clear the accounts receivable. This can be done by adjusting or deleting activity in the PMS.

Modifying Patient Checks

Patients typically pay their portion of fees on the day of service, either by credit card or by check. One fraud scheme involves a fraudulent employee telling the patient to leave the “pay to the order of” section of a check blank because they have a stamp. The stamp would be made out to the fraudsters’ own bank account using a “business-like name” that wouldn’t raise any suspicions from the patient. Without internal checks and balances that reconcile the PMS activity to actual bank deposits, this scheme goes undetected.

Refunding Patient Credits

Offices typically estimate and collect the patient’s portion of fees on the day of service and when the EOB clears; it is not uncommon for patients to have nominal credits in their account. This fraud scheme involves a fraudulent employee processing these nominal patient credits as refunds to their own credit card. Patients may not be aware that they have a nominal credit and never inquire about it. Without oversight, no one is the wiser and the fraudulent employee has successfully stolen money from the practice.

Unauthorized Expenditures

Offices commonly give a key employee (office manager) a business credit card to pay practice expenses as they arise (dental supplies, lab bills, utilities, etc.). Some offices even give that employee signature authority on the business checking account. Without oversight or protocols that are designed to monitor the practice’s financial affairs, a fraudulent employee can pay personal expenses and simply post those transactions like any other legitimate business expense.

We provide all of our prospective client’s with our Fraud Monitoring Checklist. Contact our office to learn more! info@dentalaccountingpros.com 

Originally posted July 3rd, 2017. Updated July 21st, 2020.

Every time we meet with a new practice owner who is in the process of a dental transition or start-up, we ask them who is on their professional team. You should have a go-to team of dental industry professionals working with you toward your business success.

Every successful Dental Transition or Start-Up has a team of professionals behind it:

Buyer-Rep/Dental Practice Consultant
Your Buyer-Rep helps you learn the process of buying a practice and fields initial purchase or start-up opportunities. Your practice consultant is your business coach and helps you identify and implement business improvement initiatives. Your coach offers expertise on best business practices – operating systems and protocols – that drive improved results in the key operating functions of your practice such as scheduling, recall, case presentation, etc.

CPA
Your CPA fills the role as one of your key business advisors, guides you on structuring your taxes to pay no more than required, and handles your tax filings in a manner that keeps you out of trouble with the IRS. Your CPA helps with the cash-flow analysis on a transition and works in tandem with your buyer-rep, attorney and dental banker to help get the deal done. You should engage with an accounting firm like ours to help set up your accounting systems and payroll about two weeks prior to closing. We recommend Gusto: https://gusto.com/partners/invite/dental-accounting-pros

Dental Banker
Your banker coordinates your financing needs for acquisition or start-up funding, real estate purchases, new equipment loans, and operating lines of working capital. Dental bankers are experts at matching loan structures to the funding need, and many times, act as a key business advisor.

Attorney (With Dental Transition or Start-Up Experience)
Your attorney is instrumental in making sure your contracts for acquiring a practice or real estate, employing an associate doctor, adding a partner, leasing a clinic facility and so forth are structured to protect your interests and safeguard your business.

Real Estate Broker
Commercial real estate brokers help negotiate a new lease, renewal or purchase of real estate for your dental practice. Most tenant-rep brokers are paid by the landlord when representing you (the tenant) on a new lease or renewal. They know what lease rates should be and what market concessions you should be getting in the deal. These terms are always changing as market forces change, which is why it’s important to enlist the services of a qualified broker.

Dental Accounting Pros helps with organizing your accounting systems and setting up payroll prior to acquiring or starting up your new practice. We work in collaboration with Benton Bray PLLC to offer tax services, business advisory, and continuing education.

Need help with your transition, start-up or need quality accounting services? Schedule an intro Zoom meeting with our team to discuss next steps.


Kevin manages marketing, business development, and customer success for Dental Accounting Professionals LLC & Benton Bray PLLC. He is highly analytical, creative, and forward thinking in his approach to working with clients. His background is in commercial real estate with a focus in dental office leasing and investment sales. Kevin’s passionate about investing for the future and implementing new technologies to streamline outdated workflow processes to increase bottom line results.  

Follow Kevin J. Bray on LinkedIn