New dentists often look at a “small raise” and think to themselves, “What’s another buck-fifty an hour? S/he’s a loyal, hardworking staff member who has helped me establish my new practice.” That may well be the case, and you may sincerely want to give the raise. Just make sure you make a truly informed decision. Take 10 minutes to conduct an Employee Salary Review.

Here’s why, every increase in salary, no matter how seemingly small and insignificant has a direct impact on your overhead. The Employee Salary Review is a clear and simple mathematical tool that you can access immediately to determine exactly how much more money you’ll need to collect each month to cover that “itty-bitty” increase.

Don’t fool yourself into thinking that any raise is so small its impact won’t be felt. Without a clear plan to increase revenue, a little raise here and there will rip through your profits, and I guarantee you’ll be stunned at the thundering impact.

To ensure that salaries do not exceed 22% of average monthly collections, you must have a plan to increase revenues to balance the impact of the raise. If the team wants to make more money the practice must make more money, and employees are vital in accomplishing that.

First, take a look at collections. Your financial coordinator should achieve daily collections of 45% or higher. If you don’t already have one, establish a collections policy with treatment financing options and follow it.

Monitor your money monthly. Review the aged accounts receivable report every 30 days. It should list each account with an outstanding balance and date of last payment. Total all monies over 90 days delinquent. The percentage should not exceed 15% of your total accounts receivable. If it does, delinquent account calls need to be accelerated.

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Need more help with Employee Performance Reviews?  Our bookstore offers great resources right here: http://thenewdentist.net/performance-measurements.htm

Sally McKenzie is the Publisher and Owner of The New Dentist Magazine. She can be reached at Toll Free 877-777-6151 or via email at Sally@thenewdentist.net

“No problem, Tom. I’m sure Erin my financial coordinator can work up a little arrangement for you to pay – oh say, $50 per month?”

“Uhhh, how ‘bout $25, Doc?”

“Well, yeah sure. We’ll take care of you, Tom, you’re just like family.”

New dentists can find themselves in the awkward position of financial negotiations with patients, particularly when it comes to family and close friends. And that can put practice finances into jeopardy in no time. With so many things on the new dentist’s plate, it can be easy to forget that profitability and collections are the Siamese twins of dentistry. One doesn’t go anywhere without the other.

It’s essential that when it comes to financial plans and promises, new dentists assign this duty to a trained financial coordinator and establish a financial policy that they are comfortable with. Generally, offering patients a few payment options is most desirable rather than a laundry list of payment plans to choose from.

Most importantly, do not get into the habit of extending credit to patients. This will be very difficult to break as your practice grows. Rather, partner with a patient financing company, such as CareCredit.

Consider offering a slight adjustment in the fees for more costly procedures paid in full that are not covered by insurance, such as a 5% adjustment for procedures over $500 paid in full.

Require insured patients to pay a portion of their payment responsibility when services are rendered.

Do not accept post-dated checks.

Give patients the opportunity to pay in full within 30 days before assessing a financing charge on the account.

Sign up for an electronic billing service. And file all insurance claims electronically.

Interested in additional resources to help you manage the financials of your dental practice? Click Here.