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How to Manage Accounts for a Dental Group

Last updated on , by Arun Mehra

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Over the last 20 years, we have seen many dental groups emerge across all parts of the world. Some very large, others smaller, but often seeking to be acquired by the larger groups at some stage, or even the vague hope of an IPO (Initial Public Offering).

The basic premise has always been to buy a dental practice or office at a certain price multiple of EBITDA , add a few more, or a few hundred more, and then sell the whole group at a much higher multiple (with a much bigger EBITDA) than what the individual practices have been acquired for.

Sounds simple – what could go wrong?

Well in a rising market, buyers and group owners who timed their exits rightly have done well financially.

But what about the many hundreds or even thousands of dental groups across the globe that still are operating, but the arbitrage exit opportunity they were hoping for has not manifested?

In the UK in this current high-interest rate environment things look very different for many dental groups.

When rates were low, borrowing was cheap, which aided the growth strategies of many of these groups, yet today, whilst some groups are buying, the appetite to purchase a practice has drastically diminished from not only the smaller groups but also PE-backed ventures too.

Along with the aforementioned higher interest rates, the cost-of-living crisis, and a difficulty in recruitment, have also contributed to the slowdown in many dental groups.

The lack of available manpower has contributed to many NHS-funded dental groups, returning funds to the Department of Health unable to meet their UDA targets.

According to the FT, NHS Dental clawback was around £150million in 2022-23. I expect it won’t be very pretty this year either, from the groups I have been talking to. 

Whilst some private dental groups, have struggled to grow the top line as quickly as they had hoped, again due to manpower issues, increased competition and a lack of personnel.

In the good times, its  relatively straightforward to make money building a dental group, but in my view it will be the groups that really get to grips with their financials that will emerge strongest in the down times.

With my wealth of experience over the last 20 years working with a whole host of groups, these are my 6 tips to build a finance and accounting function that will actually grow your EBITDA, but also ensure you achieve the price multiple you desire upon exit.

Tip 1: Have you got a Systems Based Mindset?

The backbone of anything successful organisation are its systems – with the financial and accounting function paramount to success. Unfortunately, I have seen this as a major afterthought by many dental group or DSO owners, seeing it as an overhead rather than something that could help them grow a successful empire.

The first step really is about changing your mindset, and thinking about what data and information do you need to have available at your fingertips to make better decisions.

As it will be interpreting the data to ensure high quality decisions that will determine the success of your group.

You will need robust systems for everything from HR to marketing to compliance to accounting.

I personally like to call it a Systems Based Mindset. So, If you have this, you are on the right track.

Now in the context of finance and accounting, you need to have a solid framework and system in place. 

If you don’t, that’s your first starting point. So ask yourself what financial data do you need to know to make good decisions? Examples could include:

The list is endless, but the above are a good starting point.

Click here to read our article on How to Build a Dental Group.

Tip 2: The Framework for Success

The framework will depend on your business structure and how you organised your group but the key factor here is you must be able to see the performance of each of your practices in your group.

There really is no excuse to not be able to see which sites are doing great and which ones aren’t. 

They may all be under one company, but it really is essential to have the financial visibility of each site. If you don’t have this, you are at a significant disadvantage when it comes to making quality decisions.

Remember, quality business decisions can only occur when you have visibility of performance. If it’s all jumbled together, you will only get so far, and you won’t be able to develop your group further until you have clarity of performance.

Click here to find out more about our accounts for dental groups services.

Tip 3: Technology and Software Requirements

Once you know you need to have financial performance information for each site, then there are numerous accounting systems available to really help you gather the information and automate much of this process.

But the key has to be implementing this correctly. You will need to consider the following:

More questions than answers, but this process of evaluating the right technology and software is paramount to ensure an efficient finance and accounting function for your dental group.

Click here for more information on how to structure your dental practice’s finances.

Tip 4: Choosing the right accounting tech stack for your group.

The world of accounting software has exploded in the last decade. 

Of course, the software should be cloud-based, but apart from that you will need professional help to determine the right accounting technology stack for your dental group.

In terms of bookkeeping software, there are well-known products such as Xero, Quickbooks, Sage just to name a few.

But then there is the range of additional apps that could help you streamline and speed up the whole data capture side of things, these include Dext, hubdoc, Approvalmax, Lightyear.

Then when it comes to accounts payable you will want software that will integrate into your chosen bookkeeping software. Software such as Telleroo, Crezco, Payhawk are examples here.

Then for reporting purposes, you may want to consider Spotlight, Syft or Joinn.

The right tech stack can only be implemented once a full understanding of the workflow within your accounting function has been determined.

Tip 5: What About Your Accounting Team?

Time and time again, I have seen inexperienced non-accounting team members get involved in probably one of the most important parts of the group – the money.

Why have a practice manager perform the bookkeeping, when a bookkeeper could do this efficiently and properly?

Garbage in means, garbage out, it is essential to have accurate data entry in a standardised manner, or else any reports you rely on will be inaccurate and lead to poor decision-making.

Therefore, having the right people doing the right job is a pre-requisite here. 

The larger the dental group the larger the team will be, which will include bookkeepers and accountants. 

You can hire internally for these roles, or alternatively outsource this to firms like ours that have the experienced manpower to support your group.

Click here to find out more about offshoring your accounts.

Tip 6: The Numbers Ultimately Tell The Story

The bookkeeping should be done daily, with the management accounts available at the end of each month, and a review of each practice’s performance should be evaluated – that’s when you know if things are going to plan.

Without a regular review of performance, assuming you have followed steps 1 to 5 above, it would have been a pointless exercise.

Therefore, make sure you review the performance of each site and then take any necessary action swiftly.

The numbers always tell the story, but your whole finance and accounting function must been structured and enabled to tell you the full story, not a half-baked cobbled-together story of your dental group’s performance.

Click here to find out more about our financial health check up services.

Want to know more?

If you are a Dental Group or DSO anywhere across the world, with our shared service centre with talented team members, we can help you implement and run a much more efficient accounting and finance function but also help you grow a better dental group or DSO.

As that’s the ultimate aim, to build a quality dental group that creates value for all stakeholders.

Good luck, and get in touch if you need assistance.

Book a call with us today.

Dental Group Accounts FAQS

I have a small dental group of just 2 sites, does the methodology outlined apply here too?

Yes.

In our experience, having a well-thought-through workflow which is expandable is key to success. Get this structure right, and you then have a solid platform for your 2 sites, and any additional sites you acquire or start up.

This sounds complex, can Samera help my dental group?

Simply yes. We can help you with the whole set up and running of the accounting and finance operation of your dental group, or just one aspect, including providing experienced team members to carry out all aspects of the work required.

What’s the first step in setting this all up?

In our experience, the key is to understand your existing processes and workflows, and then define a detailed workflow for your organisation. Our advice would be to implement this stage by stage, rather than all at once.

How much experience does team Samera have in this area?

We have been working with Dental groups and DSO’s for over twenty years, so we have seen most things, and also through our sister business, The Neem Tree Dental Group, we test all our processes, to ensure they are robust before sharing with our dental group clients.

Does team Samera work with international Dental Group clients?

Yes.

Our expertise in this area is second to none, so we can work with DSO’s or Dental Groups across the UK, Europe, North America, the Middle East and Asia,

Case Study

Dental Accounts & Tax Specialists

As dental practice owners ourselves, we know what makes a clinic tick. We have been working with dentists for over 20 years to help manage their accounts and tax.

Whether you’re a dental associate, run your own practice or own a dental group and are looking to save time, money and effort on your accounts and tax then we want to hear from you. Our digital platform takes the hassle and the paperwork out of accounts.

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.

Dental Accounts & Tax: Further Information

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Arun Mehra

Expertise: Dental Accountancy, Dental Practice Sales, Setting up Squat Practices, Dental Practice Growth, Financial Director, Dental Groups and DSO's. Qualifications: Fellow of the Institute of Chartered Accountants in England and Wales (FCA), Bachelor's in Engineering, First Class (B.Eng) Experience: Arun has been setting up his own successful dental practices for 20 years. Vice President at Bank of America. Accountant at PwC. Accountant for 25 years. With almost twenty years of commercial experience and knowledge in Dentistry, Arun’s expertise is valued by hundreds of businesses across the UK. His financial acumen and know-how, along with his hands-on commercial expertise have helped clients, large and small, new and established to achieve great things. His energy and passion for helping clients is infectious and leading his team to do their best is at the top of his list of business priorities. He has a vast network of experienced contacts he can draw on to help clients when needed. Arun is the founder of the Samera Group, starting the business with just one client sitting at his father’s dining table. Fifteen years on, Team Samera now service hundreds of Dental clients, run exciting events, help clients raise finance, and are very active in helping clients buy or sell Dental practices.

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