Dentists are one of the busiest professionals in the medical industry. For a dentist, a typical day in the office would involve seeing different patients and handling issues concerning oral health. Sometimes, you find dentists so swamped with seeing patients that they don’t even have time to come out of their offices. One would think that this dedication to patient satisfaction would mean that your dental practice remains valuable. However, it’s nearly not enough.
Giving all your attention to patients without addressing other aspects of running a business can be a recipe for failure. For your practice to be valuable, you’ll have to focus sometime in addressing the different parts of the firm. Aspects like your financial management, staff organization, and other day-to-day activities need to be closely monitored. Also, you have to keep an eye on your Key Performance Indicators (KPIs) to know how well your practice is doing financially and in comparison to others.
With the help of a Dentist CPA San Diego, you can understand all these other business aspects of your practice and manage them better. Your CPA will tell you some indicators to watch if you want to increase the value of your dental office. These indicators can tell you if the business is getting more valuable, stagnant, or losing value. Here are the primary stats of your firm that you should monitor to increase profit.
Level of Production
Firstly, you have to know your practice’s production level. How much of a production growth have you had over the years? This is the number one indicator of value in your practice. If your production has been increasing, then your profits are supposed to rise, and that makes the practice more valuable. However, if you can’t see any positive business production growth, then it’s time to address your management practice. You can hire a Dentist CPA San Diego to help you determine if your production level is right.
Did you know that your level of production can be increasing, but your profit remains the same? In calculating your company’s profit, you have to factor in your overhead costs too. Your income-to-profit ration should tell you how much your overhead is. With a high overhead, your profit can remain stagnant even when income/production increases. You’ll have to examine why your running expenses are up and how to reduce it. A proper overhead analysis with your Dentist CPA San Diego will help you increase the profit ratio of your practice.
The Amount of Collections Still Left to Make
Another factor that affects your practice’s value is the number of collections you still have to make. When your production is high, but you have a lot of collections to make, then your cash flow can get affected. Your revenue is only what you have at hand at any point in time, not what you’re owed. Always make sure you have a low “outstanding collection” level to keep your practice valuable.
A lot of dentists believe that providing quality service for patients is the only way to make their practice successful. Although this is very essential, running a valuable business involves much more than that. If you want to make your company valuable, ensure you address the indicators listed above with the assistance of your dental accountant.