Dental Practice Financial Statements | Dental office management training

How to run a dental practice

Financial statements – Whose job is it to make them accurate?

As a dental consultant, the main reason I do the work that I do is to help good dentists get out of bad financial situations. I loveHow to run a dental practice nothing more than to talk with a dentist to discover a generous heart and desire to do the right thing – and then I help them to improve the business side of the practice so they can continue taking care of family, staff, patients and their charities.

I have found that one common denominator for a dentist in a bad financial situation is the lack of a good financial statement. Some dentists don’t have any financial statements at all, while others have them – yet they are useless. Without an accurate financial statement, dentists (and all business owners) cannot make good decisions. Frankly, I didn’t think you could run a business without a financial statement, but I have discovered that many dentists do not have any financial statements! These dentists knew that they needed help with the business-side of dentistry, but for one reason or another, they just never got a regular report on the finances of their practice.

“Not my job to provide financial statements for management”

Recently, I was in a meeting with a private accounting firm where the owner of the firm informed me that it was not their job to provide accurate financial statements to my dentist client. And in fact, “if I didn’t mind that he tell me how to do my job” that I shouldn’t bother with where items are placed on the income statement – instead I should spend my time helping the dentist to make more money. This accountant went on to clarify that they only create financial statements for clients who need that service in order to do their taxes – but that he does not ever expect them to use these financial statements for management. His final comment, “I’m sure that these companies know their business and are using other financial reports for management.”

I have had the pleasure of working with several highly skilled, professional accountants and bookkeepers who worked diligently with me to refine clients’ financial statements – and as a team, we were able to combine our expertise in accounting and operations to best serve our dentist clients. Thanks to these past experiences, I made the assumption that all accounting firms handled financial statements in this manner. So – I bring the question to you, dear reader, is this accounting firm simply a different stripe than I am accustomed to – one merely focused on tax preparation, rather than accuracy of financial statements – and is that okay?

Just a different type of accountant?

If there are simply different kinds of accounting firms serving dentists – and some work to create accurate financial statements while others do not – how do you know which kind of accountant you are working with? On the other hand, if this is simply poor service, then that’s good to know as well. As often occurs in business relationships, my dentist client has a several-year relationship with this firm and until now has had no reason not to feel confident in their services.

Your opinion?

So – what do you think? Have you worked with accounting firms that do not provide financial statements for management decision-making? How do you select your accounting firm and how do you know you are receiving the quality of service you deserve? Thank you in advance to any dental accountants and dentists that share an opinion and comment. Please feel free to contact me via email if you would prefer a more private discussion.

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Having accurate financial statements is just one way to run a successful dental practice. If you’re interested in new ideas on running a dental practice, please subscribe to my weekly blog. One of the biggest challenges to managing a dental practice is managing dental insurance. With dental insurance handled, then dental marketing for new patients becomes a primary focus. In today’s day of online reviews, handling patient complaints well is essential. As your practice grows, hiring dental staff becomes more important. With 18+ years of dental practice management experience, I’m open to your questions to help you run a successful dental office.

AUTHOR: Jill Nesbitt
jill@dentalpracticecoaching.com
1 Comment
  • lol SOOOO true. nice article Jill.

    Dental accountants should be giving proactive accounting advice. Just like the dentist should be providing proactive dental advice.

    September 15, 2015