This past week our dental practice managment experts met with 2 prospective clients. Each client complained about how much time that doing their books was taking them. Both admitted they were several months behind in their reporting because there were other more pressing needs in their practice and they just haven’t been able to get around to the accounting. Despite being an accountant, I completely get that. Doing dental practice accounting is usually never the most pressing need in running a business even though it’s a very important thing to get done.
To me, the solution was pretty simple. In each case I told them we could take over their financial statements and payroll for $350 per month. My position was that this would provide them with 2 big benefits: the first was that they would have timely financial information, which would help them manage their business and help me stay on top of dental practice tax planning opportunities and trends happening in their business. If you’re 6 months behind it’s just hard for me to add any value to a client. The second benefit was that it would completely take these tasks off their plate so they could focus on things which would continue to improve their business.
Not surprisingly both clients were reluctant to do this. Despite both practices being successful they thought the cost of us doing the work might be too high. Perhaps that was the reason, but the real reason probably had to do with the client not wanting to cede control and not wanting to admit they weren’t very good at something, whether dental practice accounting or dental practice management in general.
All our clients are business owners and many of them are doctors. All of them are very intelligent people who got where they are in life by being very smart and driven. The trouble is, it’s hard to be good at everything and it’s not even necessarily efficient to try to be good at everything. Clients figure, “I’m a smart person, I should be able to do this”. Our average dentist can produce $450 an hour in dentistry and some can produce a lot more. Is it a good use of their time to spend several hours trying to create their financial statements or running their payroll? The math simply doesn’t add up. Our average clients spends 4 hours per month doing their books. So is it better for them to be in the chair producing or is it better for them to try to be dental CPA’s? Given the math, many clients are costing themselves $1,450 per month.
Dental practice managment is hard work. Some of our clients are very good at dental practice accounting and running their own books; in fact, some seem to actually enjoy it. Having said that, outsourcing tedious dental practice accounting might be the right move for your business.