This is the last blog post in this series of 5 about the Principles of the Profit First for Dentists method. The final principle is to Enforce a Rhythm.
I hear from dentists pretty consistently they feel like the cash flow is a roller coaster. One month it’s up and the next it’s down. This causes a struggle when paying all the bills and meeting payroll demands.
Instead of playing catch-up or going into panic mode when all the bills are due, it’s best to establish a weekly rhythm and flow to the cash coming in and out of the business. Creating consistent cash flow week in and week out removes the panic button and replaces it with peace of mind.
This weekly rhythm allows you to allocate by percentage and transfer money each week thus funding all the accounts in the correct amount. Weeks that have a higher dollar amount in collections will serve to build up reserves in each account and then on the weeks when collection is a bit lower, it won’t matter because a reserve has already been established.
This one simple tool of weekly allocations will even out the cash flow pretty quickly. No longer will you need to read a cash flow or profit and loss statement to know where you stand – and if we’re being honest here, you don’t do that anyway. Understanding cash flow will be as easy as opening your bank accounts and checking the balances (which is what we typically do anyway).
This entire process is created using simple bank balance accounting. Profit First gives you the process and the measuring tool to make it happen. If you want to learn more about these principles and see how they might work for you, I’d love to chat. You are welcome to book a call with me directly at call.profitfistdentist.com. You'll find that link on my website where this blog is hosted. I look forward to talking with you soon.