{"id":10880,"date":"2022-06-17T08:00:50","date_gmt":"2022-06-17T13:00:50","guid":{"rendered":"https:\/\/www.cainwatters.com\/digitalblogs\/?p=10880"},"modified":"2022-06-17T09:39:16","modified_gmt":"2022-06-17T14:39:16","slug":"identify-overspending-in-dental-practice","status":"publish","type":"post","link":"https:\/\/www.cainwatters.com\/digitalblogs\/identify-overspending-in-dental-practice\/","title":{"rendered":"Identify Overspending In Your Practice With This Tool"},"content":{"rendered":"\t\t
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Leverage this under-utilized strategy to gauge practice health<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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As a dental practice owner, a lot of non-clinical factors fall on your plate: human resources, tax filing, contracts, insurance and keeping your accounting books straight. These are all things that are tempting to overlook, but when ignored, can inhibit growth and even cause significant problems in the business.<\/p>

\u201cThe importance of good quality bookkeeping is often the most underutilized tool in dental practices,\u201d CPA Judson Crawford<\/span><\/a> says. \u201cI\u2019ve found that when I teach my clients how to interpret and utilize their books, they are empowered to shift their business into the next level of growth and profitability.\u201d<\/p>

Bookkeeping is the practice of keeping accurate accounting records. Records that are essential to a company’s sustainability. Accurate bookkeeping helps a business not only manage its cash flow and meet its financial obligations, but plan its investments.<\/p>

Some business owners treat it as a painstaking necessity that must be done for their CPA to be able to file their taxes. Having good clean books can help you do more than just file your tax return on time. It can help you identify areas of over-spending, map business growth or even spot fraud<\/span><\/a>.<\/p>

TYPES OF FINANCIAL LEDGERS<\/h5>

Let\u2019s start at the beginning. Financial ledgers display an account of your business\u2019 profit and loss. The revenue coming in is compared against the dollars going out due to expenses.<\/p>

The two most important ones to look at are your profit and loss statement and your balance sheet.<\/p>

Balance Sheet: <\/strong><\/h4>

A balance sheet is a statement of a business\u2019s assets, liabilities, and owner\u2019s equity as of any given date. Typically, a balance sheet is prepared at the end of a set period (e.g., every quarter; annually). A balance sheet is comprised of two columns. The column on the left lists the assets of the company. The column on the right lists the liabilities and the owner\u2019s equity.<\/p>

The balance sheet is an important clue to a business owner about how his or her company is doing. However, the owner isn\u2019t the only one who would look at the balance sheet. Lenders review it when applying for financing, or even potential investors, partners or buyers, should you be looking to sell a portion or all of the practice.<\/p>

Profit and Loss Statement: <\/strong><\/h4>

A profit and loss statement (P&L), sometimes referred to as an income statement, is a financial statement that shows the businesses\u2019 revenues and expenses during a particular period. It indicates how the revenues are transformed into net income.<\/p>

Take a look at this profit and loss statement from the newest How Does Your Dental Practice Compare?<\/span><\/em><\/a> Report, shown for a three-doctor general dentistry practice:<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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\n\t\t\t\t\t\t\t\t\tBased on numbers from 527 practices across six specialties, the NEW Dental Practice Comparison Report provides vital insight into where you stand\u2014and where to focus for growth in 2022. Download for free now<\/span><\/a>.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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In addition to recording the practice\u2019s collections, the P&L breaks up your statement into two separate categories:<\/p>