5 reports that are vital for running a successful dental practice

You went to school to be a dentist, not a finance analyst. But as a business owner, you need to stay aware of your cash flow and overall revenue. In dental school, they didn’t go in-depth on how to use financial reports, but we’ve made it easy with these 5 reports you need to view, analyze, and act on to run a successful dental business.

A good business owner always knows how their business is performing, but that can be tricky when your primary background is clinical, not financial. You want to know how your dental practice is performing, but you’re unsure how to get the full picture — or what to look for once you see it. 

The financial reports in your practice management software paint a detailed image of how your business is performing and where it could use improvement. At DCS, we’re all about the data. 

We analyze many of these reports for our client-partners, but it’s important that every team and business owner understands them, as well.

We’re sharing 5 reports you need to run to ensure your dental business thrives. We also note how often you should be running, viewing, and analyzing these reports, and why they’re so crucial to your success.

3 key takeaways on financial reporting at your dental practice: 

• How your practice performs should inform your workflows
• The dentist and the team should understand these financial reports
• To reduce the risk of fraud or embezzlement, be sure more than one person is running and reviewing these reports

1. Dental Production Report

As you know, you have to produce in order to collect, so production values are a good indicator of how much revenue you can expect. Production refers to any procedures that have been performed on a patient and carry a dollar value.

A Dental Production Report can be run in any practice management software to analyze production by day, month, or year.

For example, let’s say you charge patients $1,000 for a crown. For every crown procedure performed, you produce $1,000. If the month’s sum of charges for crowns and all other procedures performed is $100,000, then your production for the month is $100,000. 

How often should the Dental Production Report be viewed? Production is typically measured monthly, or even weekly. You’ll have a wider scope of your business’ performance if you review the Dental Production Report monthly, but if you review it more often, you’ll be able to catch dips in production and address them before the causes have a larger impact.

2. Write-off Report or Net Production Report

A write-off is essentially any amount credited to the patient. Your Write-off Report — or Net Production Report — is important, as it indicates how much money was subtracted from your total production. While the Dental Production Report displays how much you’ve charged, the Write-off Report shows how much you’ll collect.

Write-off reports can be run in any software management system by day, month, or year.

There are various reasons for write-offs, but the two main write-offs at a dental business are: Insurance and professional courtesies.

Insurance write-offs: 

When you’re in-network with an insurance company, you agree to accept that insurance company’s fee schedule. This means you have a specific negotiated fee associated with each procedure that limits how much you can charge patients covered by that insurance.

For example, let’s say you have a MetLife patient coming in for a cleaning, and you’re in-network with MetLife. The standard fee you would charge an uninsured or cash patient, or a patient with an out-of-network insurance plan, is $100. However, you are in-network with MetLife, and their negotiated fee for a cleaning is $70. In this instance, you can only charge that patient $70, and the $30 discount will be written off.

$100 – $70 = $30 insurance write-off.

Therefore, $100 – $30 write-off = $70 total collected. 

In this case, your production is $100, but your net production is $70.

Read more: Write-offs at the dental office: do’s and don’ts of writing off payments

Professional courtesies:

These write-offs consist of any amount you agree not to charge a patient for any reason. Maybe the patient had a bad experience. Maybe the patient is a family member or friend, or you offer discounts to veterans. Regardless, whatever courtesy or discount you give will take away from your total production.

An example would be charging a cash patient $100 for a cleaning, but giving a 10% discount because they are a veteran:

$100 x 10% discount = $10 discount/write-off

Therefore, $100 – $10 write-off = $90 total collected.

In this case, your production is $100, but your net production is $90.

When tracking production, be sure you’re also looking at net production — your revenue after write-offs have been deducted — to avoid overestimates of how much you’ll be collecting.

How often should the Write-Off or Net Production Report be viewed? At least once a month, ideally when you review your overall production report. 

3. Collections Report and Collection Percentage Report

Collections are payments your dental practice has received from two entities: the insurance companies and your patients. The Collections Report can be run by day, month, year, or any selected period.

Your Collections Percentage Report is the best way to know if your team is hitting target numbers. It might sound backwards, but this is a good report to see how much money has not been collected.

Your collection percentage is a simple equation:

Collections / Net Production = Collection Percentage

So let’s say you produce $1 million per year at your dental business, and your collections percentage is 91% — which happens to be the national average (Dental Intelligence).

$910,000 (collections) / $1,000,000 (net production) = 91% (collection percentage)

While 91% is an average for collections, you should aim for at least 98%. Surrendering 9% of your production means you’re missing out on $90,000/year or $7,500/month of your earnings. That’s a huge amount that you could do a lot with!

The reasons why the average dental practice collections aren’t closer to 100% is evident in the state of dental business’ A/R (account receivable) reports. Let’s get into that next.

How often should the Collections or Collection Percentage Report be viewed? Daily, alongside the Reconciliation Report, which we’ll look at later in the article.

4. Accounts Receivable Reports: Patient A/R and Insurance A/R

All revenue still owed to you by insurance and patients can be found on the Accounts Receivable reports. You can run an A/R report that combines those revenue sources, or run separate reports for each. Both sets of reports are equally valuable, and they can be run in any software management system by day, week, month, or year. 

Carrying on with our Collections Percentage example, let’s say the year’s combined Accounts Receivable Report shows you are owed $90,000 — who owes you this money?

When you run your Patient A/R Report, you see you are owed $10,000 from patients, and when you run your Insurance A/R report, you find the other $80,000 is owed by insurance companies.

Learn more about managing your A/R in this case study: 

A large amount owed to you by insurance indicates a need for efficiency updates to your insurance billing process. We know dental insurance is difficult to collect from, but you have the power to optimize your workflows and collect more revenue from payers.

And if those numbers were reversed, and it was your patients that owed you $80,000? Same idea, different process. In this case, it’s your patient collections process that needs to be reevaluated so you can collect all that you’re owed.

Read more: Which of these A/R issues is draining your dental business profits?

How often should Accounts Receivable (A/R) reports be viewed? Weekly, because insurance claims have non-negotiable timely filing limits. A claim can never be collected after that reimbursement deadline has passed, so it’s essential that unpaid claims be tracked and followed up until they’re paid.

5. Daily Deposit Report or Reconciliation Report

Earlier in the article, we said we would discuss this report. Now, here we are!

Your Daily Deposit Report — or Reconciliation Report — lists every payment made to your office on that work day, regardless of source or form of payment. As its name states, it’s run by the day.

There are only two entities that pay your office: patients and insurance companies, but those payments can come in many forms. Patient payments can come via credit cards, digital wallets, checks, and cash. Insurance payments can come via virtual credit cards, checks, and direct deposits or electronic funds transfers (EFTs). 

No matter how you receive funds, the amount that appears in your bank account needs to match the deposit report in your dental software — to the penny. That is the definition of reconciliation.

Related: The importance of a daily deposit report at a dental practice: 3 benefits

Not running this report or not reconciling your payments every day is a recipe for disaster, and also an invitation for embezzlement and fraud.

For example, if insurance checks are deposited into your bank account, yet some of those checks aren’t also posted in your dental software, your software will show you are still owed money when you’ve already been paid. It’s already time-consuming to get paid by insurance, you don’t want your team following up on claims that have already been reimbursed!

Running your Daily Deposit Report can also help pinpoint fraud or embezzlement quickly. This report can highlight things like a $100 cash payment applied to a patient, yet that $100 isn’t showing up in your bank account balance.

These are just two examples of the many things that can occur, and it’s much easier to fix errors and protect your revenue when accounts are reconciled every day. 

How often should the Daily Deposit or Daily Reconciliation Report be viewed? Daily. (We’ll say it until we’re blue in the face!)

Track your dental practice’s performance and make business decisions with confidence

To recap, here are 5 reports that are vital for a successful dental business: 

1. Dental Production Report
2. Write-off Report or Net Production Report
3. Collections Report or Collection Percentage Report
4. Accounts Receivable Reports: Patient A/R and Insurance A/R
5. Daily Deposit Report or Reconciliation Report

Running, reviewing, and analyzing reports from your practice management software is how you determine your business’ performance. It’s how you spot trends and errors so you can make plans and take action to improve. It’s also how you stay compliant and protect your business from fraud or embezzlement. 

If you notice dips in your collections, have a collection percentage below 91%, carry a high A/R report total, or struggle to reconcile a Daily Deposit Report, we have services and software that will make improving those numbers easy — and even hands-free.

DCS offers full-service revenue cycle management solutions to dental businesses of all types and sizes. This includes our ZeroBalance software to help you collect from patients automatically, as well as our Insurance Billing services that pair you with a dental billing expert to ensure claims are paid promptly, and also posted and reconciled daily. 

Want better numbers on your financial reports? You can increase your revenue and improve your cash flow with Dental Cashflow Solutions on your team: Book a free 30-minute call today.