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a blog by Chris Barrow

Cash flow crisis

Why am I getting calls from dentists (and their spouses) who are panicking after taking two weeks annual vacation and then discovering that cash flow is tight? The smaller the practice, the more dependent it becomes on the production of the owner. The owner takes a break – and so does the cash flow. Duh. The moral of the tale:

  1. when you prepare your annual cash flow forecast (you do – don’t you?) then the low-income months are anticipated and reserves are created in the high income months

  2. you don’t just save up for the holiday – you save up for the operating costs whilst you are on holiday

  3. you encourage as many patients as possible to become members of the practice and to pay a monthly subscription for their maintenance – you go on holiday and the standing orders just roll in

  4. perhaps over time, you build the business so that it becomes less dependent on Dr Big showing up

If you are thinking that all this is patently obvious. So am I. But the calls and emails continue to come in – even after all these years. I reflect that Dental Schools see themselves as the guardians of clinical skills training and have consistently refused to accommodate business skills training.

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