Financial management

To achieve your business objectives you need to research, forecast and monitor your financial performance. Good financial management deals with the day-to-day cash-flow of a business and financial planning to meet future business needs.

The success of your practice will depend on the right pricing structure, accurate management of operating costs and monitoring financial performance against forecasts. Cash flow forecast plan (Expert members only)

If you are converting from an NHS to a private practice be sure to prepare for any financial impacts of the switch.

All these extra cost implications should be considered in cost analysis, and they are likely to increase over time. Dentists will need to increase their prices annually to cover these costs, so it is better to do this regularly in small increments.

Business plans

A business plan sets out what you want to achieve for your business, where you are now and how you can reach your goals.

With it you can:

Identify strengths and weaknesses to help you develop a strategy and plan
Outline your options, areas for development/growth and monitoring/control
Develop a benchmark to monitor progress against tasks and targets
Monitor practice finances and identify funding requirements
Set the direction of the practice.

Without a realistic and measurable business plan, you may:

Lack insight into services that you could develop and the potential income
Be unaware of potential threats from competitors
Overestimate demand and expand too quickly
Experience cash-flow problems
Lack a marketing strategy to recruit and retain patients.

Business continuity planning

A simple business continuity plan may include details of key staff and suppliers, data backups from the practice computer system, copies of insurance contracts, certificates, NHS and governmental instructions, and other important documents.

A more detailed plan might include potential alternative work sites, technical requirements for re-equipping the practice and fully costed plans and suppliers to re-establish services.

Expert member template: Business continuity and disaster recovery policy

Fee setting and collecting

Setting your fees at a level that covers all your costs and provides you with a target income can go a long way to mitigate uncertainty.

The fee setting process requires a disciplined approach to identifying all your costs and realistically setting an income that covers your general and day-to-day expenses.

Most practices have a strict policy for collecting fees. There are various approaches to

written estimates, payment methods and timing.

Ensuring the prompt collection of fees is crucial to maintaining cash flow and keeping your business operational. Be clear with patients about the fees they need to pay and when.

Make it easy for them to pay
If you offer credit, check if you need authorisation
Follow up late payments promptly but consider how you pursue them and how far.

Most practices will have a procedure for dealing with bad debts. This should involve sending letters and accounts to patients and, when all reasonable steps have been taken to obtain a settlement, referring the matter to a reputable debt collector or the small claims court.

Debt recovery letters (Expert members only)

Capitation schemes

Private dental plans allow you to offer treatment options to your patients for an agreed price and can ensure a regular income if built up successfully.

The available commercial plans vary in the range of treatments covered, eligible patient groups, and the terms and conditions, including costs.

Members can get preferential rates on Lloyd & Whyte's patient payment plans.

Useful resources:

Practice management books and ebooks are available from our library.

BDJ collection: marketing and dentistry