Nowadays, there is a rising trend towards expanding beyond a solo practice into owning multi-location dental clinics. As a practice grows into multi-office locations, so too does the importance—and hurdles—of designating and maintaining consistent financial processes.
It is essential to have accurate and timely financial information to maintain visibility on all locations, ensure proper controls, and establish effective communication protocols.
Effective financial management is the foundation for success at the multi-office dental practice.
To achieve this, we break down the essential steps you need to take to develop the proper systems you’ll need.
General Ledger System Choosing the right accounting software is incredibly important. As we approach a post-pandemic era in Canada, cloud-based accounting tools are the only way to continue going forward for several key reasons:
- It gives visibility to all involved parties
- It’s updated in real-time
- It can be automated
- It’s very scalable and accessible
- You can seamlessly connect/integrate cloud-based accounting platforms with other tools.
Reporting All locations should be using the same chart of accounts and general ledger system.
Why might you ask? Well, here’s an example.
How do you define repair and maintenance expenses? And where do you designate the different associated costs on your general ledger systems? It would be highly problematic if one clinic defines and lists expenses differently from another clinic under the same ownership.
To learn more, we explore the importance of standardizing your financial statements in-depth here:
Assess Each Clinic Individually When managing multiple locations, it’s essential to look at the smaller picture before getting to the bigger one. You want to be sure that each clinic is profitable on its own.
Something to keep in mind is, as your organization grows, you must ensure that the financial processes are standardized and consistent at each location. For example, handling cash, depositing cheques, and entering payments etc.
Evaluate each line item on your reports and look into inconsistencies. Are some expenses over or under industry benchmarks? If so, investigate the reasons for any discrepancies and work to correct them. Benchmarking each location to other locations in your organization or industry for deeper analysis is imperative to ensure your practice is operating according to standard and remaining profitable.
Roll-Up Your Entities and Reports Once you are confident in each individual clinic operating on its own, you want to do what’s known as a roll-up or consolidation report. This is when you combine standalone entities and place them under an umbrella organization. Rolling up your financial statements allows you to have overall visibility into how your organization is performing financially as a whole. It helps to know how much cash is coming in, the total liabilities, and what assets are.
Technological Integration When expanding, practice owners often purchase pre-existing clinics; the new clinic usually runs on a different practice management software, resulting in a problematic situation where multiple locations are each running additional software known as silos. Silos are individual systems that operate as a stand-alone and do not speak to each other, therefore require data to be transferred manually rather than automated integration in real-time.
Silos create an environment of disparate systems within a business, resulting in delays in reporting, the potential for increased error, and requiring more and more of your attention, which you may not always have the time for.
An alternative to this is software migration. However, this is often tedious and costly.
Dashboarding tools are an intuitive solution that allows for multi-location practice owners to connect the different practice management software and let them speak together so that you can maintain overall financial tracking.
Communication Although the proper technological tools are central to managing the finances of multi-location healthcare practices, without communication, problems will arise. If neglected, the entire business structure is left vulnerable.
Implementing communication protocols, such as weekly meetings, with your administration team to touch on collection issues, payment discrepancies, financial matters, etc. are all examples of basic approaches to ensuring that everyone is on the same page and any problems are being addressed as they arise.
Takeaway Establishing the right systems that touch on various critical operation pieces in a clinic can ensure the successful financial management of a multi-office practice. From standardizing your books, individualizing each clinic’s financial health, rolling up your financial reports, integrating practice management software, to instating communication protocols - these are all elements that will land you on the path to success and profitability for your organization as a whole.
Shift Accounting works with over 80 successful clinics across Canada. We go beyond basic book-keeping, providing a range of financial and administrative services, as well as consulting and CFO contracting. We are invested in your success. Contact us today for more information on how you can take the next step to grow your practice and build a more profitable business.