Build an emergency fund
Many dentists, particularly new dentists, may be focusing on student loans and other debt — which is great — but it’s always important to be prepared for a financial emergency, he said. Most financial advisers recommend maintaining a cushion of at least three months’ expenses. During times of economic uncertainty, it may be prudent to save even more.
Evaluate all expenses
For dentists who own dental practices, Mr. Schiff said they may want to consider re-evaluating the working capital within the practice. “We often always suggest anywhere from 30 to 60 days of working capital within your practice,” he said. He also advised dentist owners to review the current debt on the practice. “As of [Nov. 1,] the prime rate of 6.25%,” he said. “You may have an opportunity to refinance your practice debt at a lower effective interest rate. Please be sure to meet with your dental CPA to assist you with this process.”
Nurture your team
“It’s important you keep your team in place, especially with a recession on the horizon,” Mr. Schiff said. “The No. 1 asset within a dental practice is the dental team. Be sure to show gratitude to your team, especially after a tough day. Your team likes to be recognized and it is important for you to fulfill that role.” This includes being competitive with salaries. “As the market readjusts post the pandemic, please be sure you are competitive within the hourly rates for your dental personnel and that you remain competitive within the market which you serve,” he said. “Hourly rates are changing rapidly. Be sure to reach out to your dental CPA for their input as well.”
Work with patients who may also have financial concerns
When presenting treatment options to patients, make sure to take into consideration how they view the need for their treatment, what the benefit of the treatment is and how you can make it affordable. Consider offering a payment plan that will give the patient the ability to pay over several months. For example, for a multi-visit treatment, consider allowing the patient to pay one-third down at the first appointment, another third at the next and the final installment 30 days later.
The Academy of Dental CPAs recommends that dentists continue to maximize the funding of their retirement plans. “Please do not touch your retirement plan by withdrawing funds to pay off practice debt,” said Mr. Schiff.
To read more about how the economy affects dentistry, and see other research reports, visit ADA.org/HPI
Editor's note: The information in this piece is not intended to be, nor should it be construed as, tax, accounting or legal advice. Readers are urged to consult a qualified professional when seeking such advice. The ADA makes no endorsement of the above advice, nor of any website or organization mentioned in the above piece.