Know the value of your practice ( 469 ) 222-3200 | ADStexas . com
Net-Fee-For-Service
Net-fee-for-service is the amount that the practice actually collected from patients and payers . This is the most important AR category for a dental practice as this is the actual cash the practices received for services performed . For cash-and modified cash-basis practices , this amount is simply cash collections from fee-for-service accounts ; net of any patient refunds , or nonsufficient funds fee and returned checks .
A / R and Collections Issues
The distinction between gross , adjusted and net receivables is critical to understand for several reasons . First , the amount of cash collected is the driving forces behind your practice ’ s profitability and success . Many practices use outdated software or popular accounting programs that book revenue on a gross basis at the time services are rendered , acknowledging any discount or bad debt expense write offs only after the cash is received . Utilizing this method of accounting makes it difficult to successfully manage a practice . The dentist may not be able to accurately identify the actual revenue associated with treating a specific patient because different payers may have different negotiated rates for the same procedure . Dentists have choices in the particular way they provide services for their patients . Experience has shown that when dentists have quality , timely , and accurate information about revenues and expenses for a particular course of treatment , they can make more cost-effective decisions without sacrificing quality .
Cash flow is the lifeblood of any business , and dental practices must partner with a quality banker who understands the profession and can provide the right advice to help maximize cash flow and build a profitable , long lasting practice .
Have your merchant card processing evaluated at least once a year to ensure your processor is still competitive . Many processors will raise their fees and place the blame on Visa and MasterCard . Make sure you are processing with a reputable vendor . By processing with a reputable vendor ( such as a major bank ) ensures that the software and equipment will meet ever increasingly stringent regulations . Do not sign contracts with your processor . There are too many processors that do not require contracts . Many of the small processors state that in order to receive a discount a multiyear contract is required , this is not the case .
REMEMBER , INCREASING COLLECTIONS BY 3 % IN A $ 1,000,000-A-YEAR PRACTICE ADDS $ 30,000 TO THE BOTTOM LINE .
There is a lot to consider when owning a dental practice , from making payroll each week , executing a successful marketing plan , navigating employee and patient issues to staying current with technical and scientific advances . Understanding exactly how much cash your practice collects is vital . There is a saying in banking , “ Cash is King .” Staying on top of collection will have a major impact on the profitability of the practice . In some cases increasing profits is not about acquiring more patients , or working more hours , but increasing the operational effectiveness of your current patient base .
Matthew Caldwell is a veteran of the United States Marine Corps with more than 15 years experience in the banking industry . He has more than 10 years experience working with dental professionals in the Dallas / Ft . Worth area . He primarily focuses on financing practice acquisitions , expansions and dental office buildings . In his free time , Matthew enjoys cycling , traveling , photography , and outdoor activities . Matthew can be reached at ( 214 ) 525-9049 or by emailing : matthew . caldwell @ plainscapital . com .
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Know the value of your practice ( 469 ) 222-3200 | ADStexas . com
Jeremy Brown JD , Joe Piazza DDS , Terry Watson DDS , & Frank Brown JD
Merchant Processing
A few quick points on merchant service processing . Visa and MasterCard reserve the right to raise their processing rates twice a year , usually in the spring and fall .
Practice Sales & Appraisals
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