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Embracing technology can help improve your practices cash flow, while also building the dentist-patient relationship.
Cash flow is the life’s blood of any business, and a dental practice is no exception. Dentists understand that.
But what many don’t understand is how to improve cash flow. Fortunately, says Jordon Comstock, founder of BoomCloud Apps, a software company that allows dental practices to accept payments through their website, there are many options dentists can use to enhance practice cash flow.
It sounds like a no-brainer, right, but the easier you make it for patients to make payments, the likelier it is they will—and do so in a timely fashion. Comstock explains that today’s technology enables dentists to create a gateway on their practice’s website from which patients can make payments.
“I’m a big believer in utilizing the web to its fullest potential,” Comstock explains, “and making the website not only a marketing tool but a collections tool as well.”
Many practice still send paper statements and invoices through standard mail. That’s fine. Just include a link alerting patients of the bill-pay option that you’ve added to your website. It can mean the difference between getting paid within two to three days, or waiting two to three months.
There are other strategies to encourage patients to pay in a timely fashion. Consider offering a discount if patients pay their entire bill upfront. Or, create an in-house membership program (Check back for more on this strategy in future weeks).
“It’s kind of like Amazon Prime,” Comstock says “Customers purchase a subscription, and then you get certain benefits. And allowing the patients to essentially subscribe to the office brings in a lot of cash flow if you can get a lot of patients doing that. And it’s predictable cash flow.”
Payment plans are also effective, especially for patients who either can’t pay the full amount up front or don’t have dental insurance.
“A lot of dental practices say they don’t want to become a bank, but banks are profitable,” Comstock says. “So, if you can finance or create monthly payments with interest for the patients, it’s a great model to go to. You get the cash flow each month plus interest.”
Setting up an auto-pay program is another option. Just as many consumers today pay their home utility bills via auto payments deducted from their checking accounts, the same can be set up within your dental practice.
“When you can automate cash flow like that, life is going to be a lot easier as a business owner,” Comstock says.”
Maintain a Reserve
You’ve likely heard the expression of saving money for a rainy day, right? Well, building up a reserve fund is just as important. As Comstock explains, dentistry can be an up and down industry. Your practice can be bustling in April or May, and empty in July when families go on vacation. That can negatively impact your cash flow.
“It’s essential for practices to build their reserve funds so that when they hit their bad months they have funds to draw from so they can pay all their employees, purchase supplies, and make sure the business keeps running smoothly,” Comstock says. “I was part of a company that didn’t want to build a reserve fund, and it caused some huge problems. They ended up laying off several key people because they weren’t able to pay for them, because they weren’t prepared for slow times.”
Just make certain not to stash your reserve fund in a potentially volatile stock situation.
Just as important as the strategies you put in place to improve cash flow is training the staff that will implement those strategies. It’s essential for staff to understand the importance of cash flow to the practice, as well as remain courteous during the course of collecting.
Comstock explains that poor collection skills can hurt a practice in the long run. He recalls managing a dental lab, and one of the dental practices using the lab’s services was poor at maintaining cash flow, therefore, the practice was also poor at paying the dental lab.
“They racked up a bill of about $25,000 because their cash flow was so bad,” Comstock says. “And if you think about it, that’s kind of scary. If your collections aren’t in order, you can up a $25,000 bill with one supplier.”
The Third Party
There may be times where you feel the need to utilize the services of a third-party collection agency if your own efforts come up short. It can certainly send a message to your patients that you’re serious about the importance of timely payments. But, it can also have a potentially negative impact.
“If I were to hire a third-party collection agency, I would make sure that they do a good job and are not scaring patients away,” Comstock cautions. “You don’t want to lose those patients because of a collections agency.”