How Should a Dental Practice Organise its Finances in 2021?

Dental Business Guide Podcast Episode | 2nd February 2021
George Bellamy and Arun Mehra

George Bellamy: Welcome back to The Samera podcast. I’m George and today I’m again here with Arun. Arun is our founder and chief or managing director, whatever you want to call it, of Samera business advisors and yeah, let’s just dive straight into it. So, hello Arun.

Arun Mehra: Hey, George, how are you doing?

George Bellamy: I’m very good. So, 2021 It’s a new year. Obviously, we wanted to start 2020 as the new decade, but obviously COVID had different plans for us. So, I’m just gonna dive straight in. So how should a dental practice owner organise its finances in 2021? Think of it as the new decade…

Automate Everything in Your Practice Finances

Arun Mehra: Okay, fair enough. So we’re put back by one year. Okay, but the same principle applies now and I think it applies even more importantly now, as a result of what we’ve seen in the last year.

Prior to COVID, we saw so many, we deal with hundreds of practices every year. Some are really organised and really manage their finances pretty well and others are in truth not great. They’re a bit of a mess, some are still using paper records which really should have been banished at least five or 10 years ago.

Now in this current environment, you can really automate everything in your practice finances, literally everything. So how do we do that? In a nutshell, you need to firstly embrace cloud accounting. So you might have heard of something called Xero.

Embrace Cloud Accounting

Read our article on the 7 benefits of cloud accounting software.

George Bellamy: Yeah, and QuickBooks as well isn’t there.

Arun Mehra: Yeah, there is QuickBooks Online. There’s a few others out there as well. 

George Bellamy: But do you personally vouch for Xero?

Arun Mehra: Yeah, we vouch for Xero, they’re the market leaders and their technology is really good. We’re a gold partner of Xero and we just know their stuff inside out. So we now use Xero.

So how does this work? In very simple terms, imagine you’re a practice owner, you receive invoices from someone like a dental directory every month. Now, historically, you would have had those papers, and you would have just paid those invoices as you went along and then you sent them to the accountant.

Now, really what the process should be now is, you scan those invoices to us into a software that we use called Hub Doc, okay. Hub Doc effectively extracts the key information from that and that kind of talks to Xero. Zero then processes that and then prepares the accounts. Okay, from that very simple because the technology is AI.

George Bellamy: Everything is all automated now, 15 or 20 years ago, there was a man such as yourself writing things down on a piece of paper, and then putting it into a computer.

Arun Mehra: I remember those days very much.

George Bellamy: So now, it’s all automated, isn’t it?

If It’s Garbage In, It’s Garbage Out

Arun Mehra: Yeah, God, and that saves us time and headaches a lot more. But the key is, as they say, in any automated system, if it’s garbage in, it’s garbage out, okay, so we need to make sure that the process works properly.

Read our blog on 4 steps to streamline your practice accounts.

So effectively, you would scan your invoices into Hub Dock, which talks to Xero, and at the same time you connect your bank account, which is all secure, and that is linked to Xero. So then we can then ultimately match off any payments that you make, any income that’s coming in, and reconcile the bank account very quickly and in a much easier fashion for everybody.

So no physical paper has to be transferred to anybody, because it’s all been going through the Hubdoc-Xero ecosystem. Now, going forward what you can do now then is, you might make your payments, say to either Dental Directory, or Henry Schein or whoever you’re making these payments to.

Make Payments Through Xero

But even with Xero now, you can actually make payments through Xero, which really is quite exciting as per se in the accountancy world, that is quite exciting, because effectively, you can tick all the invoices you want to pay in Xero, press one button, and you just make one batch payment.

So, you don’t have to actually pay every single supplier separately, you just say there’s 20 invoices here, I’m going to tick them all, and I make one batch payment, and off it goes, which is really game changing in terms of efficiency and time.

Now, all of that information then ultimately feeds into Xero, if everything’s done properly. That then leads to the management accounts being presented on a timely basis, that then leads to the annual accounts being done on a timely basis, which ultimately then leads to the tax returns and tax calculations to be done on a timely basis and accurately.

Everything on a Timely Basis

Okay, so it’s so, so important to automate and really systemize your finance function. Even if you’re a one-person dental practice, it will save you time, and it will save you money and if you’re a larger practice, you really should be doing this already.

George Bellamy: Oh, wow. That’s really interesting, actually. So more or less just automating finances it’s making sure everything’s done on time, because no one likes any of their finances being late and I can assure you that. So that’s really interesting. Anything else, Any other tips and tricks?

Automation Saves You Time and Money

Arun Mehra: In a nutshell, I think lockdown has exacerbated that. So over the last 12 months, we’ve had more and more clients come on board with this type of service, where it’s just you need to be focusing on the business, and, therefore, your finance function should be automated as much as possible, which will save you time, which will save you money ultimately.

Read our article on 10 things to look out for when choosing a dental accountant.

Which then you can then focus on growing your business and growing your practice. So, if you haven’t already looked into it, check out our website, you’ll be able to find stuff on Xero, you’ll be able to find stuff on Hub Doc, give us a shout and we’d be happy to kind of do a demonstration of how this all works. It’s not rocket science. It’s just understanding the process and we do this for many, many dental practices now.

George Bellamy: Amazing. Well, thank you so much, Arun, for listening and we’ll catch you on the next one.

Arun Mehra: Okay, brill. Thanks, George.

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Further Information on Dental Accounts and Tax

To find out more about how you can save time, money and effort on your accounts and tax when you automate your finances with Samera, book a free consultation with one of our accounting team today.

As dental practice owners ourselves, we know what makes a clinic tick. We have been working with dentists for 20 years to help manage their accounts and tax. To find out how we can help your practice’s finances, book a free consultation or contact us today to find out more.

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