April 24, 2025

Cash flow management might not be the most exciting part of running your dental practice, but it is one of the most important.

This is the first of a three-part series designed specifically for private dental practice owners who want to feel more confident and in control of their financial health. Here, in Part 1, we tackle the basics of short-term cash flow and how to keep things running smoothly day-to-day, even when the economy gets a little bumpy.

Stay tuned for Part 2 next month, where we'll dive into planning and financing long-term investments, from new equipment to office renovations and growth strategies.

Cash Flow ≠ Profit

Cash flow management is all about timing. You can earn a great income, but if your expenses and collections aren't in sync, you'll end up in the red, at least temporarily. These temporary gaps can be stressful.

For example, you might bill $80,000 monthly, but if insurance claims take 45 days to pay and payroll is due Friday, you're in trouble. This mismatch can lead to scrambling, borrowing, or deferring expenses, not because your practice is unhealthy but because your cash isn't landing when needed.

Every Practice Needs an Emergency Reserve

One of the smartest moves you can make is setting up a cash reserve, your financial cushion for those "just in case" moments. Every private dental practice will face a surprise, such as a broken autoclave, a software glitch that delays claims, or a slower-than-usual collections month. If you've got a reserve account with a few months of overhead set aside, these things become manageable instead of catastrophic. Even if you're doing everything right, slow months and large, unexpected expenses happen.

You don't need to stash away six figures right out of the gate. Start small. Set a goal to build up one month of overhead, then two, then three. The key is consistency. Even contributing a few hundred dollars a month makes a difference over time.

Cash Flow Forecasting

Forecasting your cash flow is one of the most underused tools in a private dental practice. This isn't about complex financial models. It's as simple as looking ahead a few months and considering which big expenses are coming up. Are there seasonal slowdowns you need to plan for? Do you have enough cash on hand to get through the next quarter?

Block off an hour a month to review your bank balances, receivables, payables, and any large upcoming bills. A good forecast helps you spot issues before they become emergencies. For example, if you know your malpractice insurance renewal and a major equipment order hit in the same month, you can space them out or line up temporary financing. It's all about staying ahead of the curve.

Fixing the Leaks: Billing and Collections

One of the biggest culprits behind cash flow issues is slow collections. And the frustrating part? You've already earned that money but haven't received it. Too often, billing happens late, follow-up is inconsistent, or payment options aren't patient-friendly.

Speeding up your collections doesn't mean being aggressive; it means being clear, consistent, and convenient. Send billing statements promptly. Offer easy ways for patients to pay (online portals, text to pay, etc). Be transparent about payment expectations from the first appointment. Most importantly, follow up on overdue balances early. A friendly nudge at 7 days past due is much more effective than a desperate call at 60 days.

The longer you wait to collect, the harder it becomes. Keep the money moving by tightening up these systems. It's one of the easiest ways to boost your cash flow without increasing your workload.

Making Care Affordable Without Hurting Your Bottom Line

These days, many patients are more cost-conscious than ever. That doesn't mean they don't want treatment. It just means they need flexible ways to pay. Offering payment plans or third-party financing can make care accessible while keeping your cash flow steady.

Third-party financing options like CareCredit or local lenders can be a win-win. Patients get manageable payments, and you get paid upfront. If you prefer in-house plans, keep them limited to patients with a solid payment history and always use written agreements with clear terms.

The goal is to keep patients saying "yes" to treatment without risking your practice's financial health.

Controlling Costs

Prices are higher than they were a few years ago and are not always predictable. Everything from gloves to handpieces has crept up in cost, and vendors pass those increases straight to you.

That's why it pays to be proactive. Negotiate with suppliers when you can. Join a group purchasing organization for access to bulk discounts. Be smart about ordering, buy in bulk when prices are favorable, but avoid overstocking so much that cash sits on a shelf.

And yes, sometimes you'll need to raise your fees. That doesn't make you greedy; it makes you realistic. If your lab costs or staff wages go up and you don't adjust, your margins shrink. A modest fee increase (4–6%) keeps your practice sustainable. Frame the conversation around value and quality your patients will understand.

Schedule Smarter, Not Harder

Empty chairs don't just waste time. They drain your cash flow. That's why optimizing your schedule is as important as managing your bills. Confirm appointments aggressively. Use text reminders. Keep a short-notice list of patients who want to come in sooner. If a cancellation happens, you can often refill that slot with a quick call or text. For more information, check out our December 2024 article, Using a High-Value Short-Notice List to Fill Schedule Gaps.

Revisit those outstanding treatment plans sitting unscheduled. Don't let potential revenue slip through the cracks. Often, the fastest way to improve cash flow is to activate what's already in your system.

The good news? You have control. Build your reserve. Know what's coming. Collect what you've earned. Control what you spend. Use tools like credit lines strategically, not out of desperation, but as part of your toolkit. With these habits, your cash flow becomes a steady, dependable engine that powers your practice forward.

Next month, in Part Two, we'll walk through how to plan for major investments such as equipment, renovations, or expanding your operatories. Stay tuned for strategies to grow your practice without draining your reserves.

Not sure where to start? Contact us today!