Dental practice cash management is one of the most critical administrative functions to maintaining the financial health of the dental practice. Unfortunately, dental practice cash management is not adequately taught in any dental school.

The practice owner may get a short course on accounting, but accounting is NOT cash management planning. There’s a big difference between the two.

The only thing an accounting program can do is tell the dental practice owner what happened in the past – how much money came in and where it was spent. So if a practice owner is looking at how much it has cost them to make payroll and pay the bills, and that is the income target they are going after, then they are aiming for a break even target. As costs go up they tend to start losing money. Then they just pay bills as they get them. So, in essence, the cash flow controls the dentist, rather than the dentist controlling the cash flow. (more…)

The following is a transcript of a telephone conversation with Sandra Simmons, President of Money Management Solutions and creator of the Money Management Solutions software system…

Sandra Simmons, President Money Management Solutions

Sandra: Hi [name withheld] how can I help you?

Business Owner: Your business money management software doesn’t work for my business.

Sandra: What do you mean exactly when you say it doesn’t work for your business?

Business Owner: Well, for one thing, what good is going to all the trouble to fill out the budget? I already know how much money I’m spending.

Sandra: The budget module isn’t meant to tell you how much you’re spending. It’s designed to tell you how much you should be making.

Business Owner: What?

Sandra: And just making break even isn’t good enough, you have to budget to do better than break even.

Business Owner: Huh?

Sandra: Have you built your budget in the Money Management Solutions software?

Business Owner: Yeah.

Sandra: Okay good. How much did you budget for your Emergency Fund?

Business Owner: My what?

Sandra: Your Emergency Fund.

Business Owner: What’s that for?
(more…)