June 5, 2025
In this final installment of our three-part series, we explore how to manage your practice’s cash flow during periods of economic change.
In Part 1, we focused on mastering your day-to-day operations. In Part 2, we tackled long-term investment planning without gutting your reserves. Now it's time to address the big picture: navigating economic turbulence and building a practice that can weather whatever the market throws at you.
To illustrate these concepts, we use real-world scenarios and numbers as illustrative tools. These examples are hypothetical, but they reflect daily decisions and financial dynamics private dental practice owners face daily.
1. Interest Rate Considerations
Interest rates remain well above pre-pandemic levels, and borrowing isn’t as cheap as it used to be. Whether you’re eyeing a line of credit or considering a major equipment loan, high rates can chip away at your margins. That doesn’t mean “no debt” is the answer; it means choosing debt strategically.
If you carry variable-rate loans, now's a good time to explore fixed-rate refinancing options. For new financing, shop aggressively for vendor-backed offers (like 0% promos) or consider shorter terms to limit exposure to long-term rate risk. Maintain strong credit and a good relationship with your banker to ensure access when needed.
Let's say you're considering financing a $40,000 CBCT machine. 2019, you may have secured a loan at 4% interest, but in 2025, the rate is likely closer to 8%.
Here is what that difference looks like over 5 years:
That's a meaningful cash flow impact. If you need the equipment now, consider negotiating a 0% promo through the vendor or finance a smaller portion if you've saved in advance. If the purchase can wait, monitor rates or build your reserve so you have more options later.
Cash flow tip: When evaluating loans, run the actual cost. Interest is generally tax-deductible, and a well-structured loan can pay for itself if it unlocks revenue-generating capacity.
2. Addressing Inflation
Inflation continues to push up costs such as dental supplies, lab fees, & staff wages. You're eating those increases if you're not revisiting your fee schedule annually. A modest fee adjustment (3-5% annually) isn’t just justified; it's necessary for sustainability.
Monitor your overhead categories closely. Can you lock in multi-year vendor contracts? Bundle maintenance plans? Join buying groups? Look for any way to stabilize rising costs. On the labor side, retention is cheaper than turnover. Pay competitively and invest in culture; it’s a smart use of your cash.
Cash flow tip: Adjust fees with transparency. Let patients know what's driving the increase and what they can expect in return: reliable care, excellent outcomes, and a consistent team.
Let’s look at the hypothetical case of “Dr. Patel," who runs a three-operatory practice. Dr. Patel used to spend around $6,000/month on supplies. In early 2023, this rose to $6,800, then $7,300 by 2025, an increase of over 20% in just two years. That same year, her hygienist’s pay increased by $3/hour due to market demand, costing her an additional $500/month.
She implemented a 5% fee increase across her top 20 procedures to keep up. Her average monthly collections rose from $78,000 to $82,000, more than covering the rising costs without patient drop-off. Communicating value, not just pricing, made all the difference.
3. Supply Chain Swings
Even in 2025, supply chain reliability is shaky. Prices on key items still fluctuate, and lead times remain longer than pre-COVID norms. Don't wait until you're out of essentials to reorder. Build redundancy into your ordering process by maintaining relationships with at least two vendors and carrying a small buffer of critical supplies.
If you notice cost creep on key items (gloves, impression materials, anesthetics), talk to reps about pricing tiers or explore group purchasing programs. Don’t overstock, but buy smart, especially if prices are poised to rise again.
Now, let's look at the hypothetical case of "Dr. Nguyen." Dr. Nguyen encountered a problem when his favorite anesthetic cartridges were on backorder for 10 weeks. He had to buy from a secondary supplier at a 15% markup in the scramble, spending an extra $450 for the month.
After that, he added a 2-week cushion to his ordering schedule and worked with his rep to pre-lock pricing for the next 6 months. That slight adjustment now saves him about $150/month in cost swings and keeps procedures on schedule.
Cash flow tip: Add a 5–10% cushion into your monthly supply budget. If prices spike, you're covered. If they don’t, the surplus can go into your reserve.
4. Shifting Patient Behavior
When the economy tightens, so do wallets. Patients might delay non-urgent care, cancel elective treatments, or skip hygiene appointments altogether. That doesn’t mean they don’t value care. It means they need more help managing the cost.
Offer clear payment options, including third-party financing and phased treatment plans. Double down on communication. Educate patients on the risks of delaying treatment. Emphasize value, prevention, and flexibility.
When gas prices spiked last summer, our hypothetical Dr. Ramirez noticed that her whitening and Invisalign cases dropped by nearly 30%. Instead of pulling back, she responded by launching a limited-time financing offer: 12 months, 0% interest for cosmetic cases over $2,000 using a third-party partner.
Within 60 days, she saw treatment acceptance rebound, adding $24,000 in additional revenue that quarter, cash that may have otherwise walked out the door. She also emailed patients about the long-term savings of doing treatment now rather than later, which resonated in a cost-conscious environment.
Cash flow tip: Monitor case acceptance trends closely. If you're seeing more pushback or deferrals, adapt your scripts and payment solutions before gaps appear in your schedule.
5. Build Slack into Your System
Resilient practices don't run on fumes. If you keep it close each month, the next curveball, be it an interest rate hike, a $15K equipment failure, or a patient drop-off, can quickly derail your finances.
Maintain an emergency reserve that covers 2–3 months of core expenses. This is non-negotiable. It prevents panic when things go sideways and allows you to make good decisions under pressure. Even $1,000/month into a reserve account adds up quickly.
Let's consider the hypothetical “Dr. Green." Dr. Green contributes $2,000/month to her emergency fund. When her compressor failed in October, she used $15,000 from reserves to pay upfront and got a $750 vendor discount for immediate payment.
She avoided dipping into her operating cash or taking out short-term debt. Her replacement goal is to rebuild the fund by spring 2026 by resuming regular monthly contributions and adding a $500/month bonus allocation from increased hygiene production.
Cash flow tip: If you use your reserve, treat it like a loan. Replenish it as quickly as you can before you face the next surprise.
Resilience Comes From Anticipation, Not Reaction
Cash flow management in a volatile economy isn’t about predicting the future; it’s about staying flexible enough to respond. The takeaway from these hypothetical examples is simple: resilient practices don't just react well, they plan well. Here's how to apply that in your practice:
When these cash flow strategies are embedded into your daily routine, you create a practice that can absorb shocks and keep growing, even when the economy doesn’t cooperate.
Not sure where to start? Contact us today!