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While the COVID-19 pandemic had been keeping practices shuttered, dentistry is now re-opening in Canada. Many practice owners are worried about how restarting their practice might look from a financial perspective. Now is the time to consider steps that will optimize your practice finances, preserve cash flow and protect your practice as you work toward returning to full scale operations.
Anything you can do to keep money flowing into your practice right now will be critical. The return to full dental and recall services will take time, so we recommend reviewing opportunities for cash flows as follows:
Consider all sources of COVID-19 assistance — Government assistance is available for capital investment, wage support, rental relief and operating cashflow. Have you investigated how you can participate?
Collect cash — Politely reach out to patients and insurers who are currently in arrears on the payment of their accounts. Remember, you are owed the money because you did the work.
Review insurance policies — Find out whether your policies will cover losses related to the pandemic or other business interruptions.
Whether or not your practice is presently open for business, you will likely have been paying many of your ongoing expenses. Make a list of all your fixed and variable expenses to get a global picture of where your cash flow will be going during the next several months to identify potential cost saving strategies.
Fixed expenses — i.e. Regular contractual expenses and payments such as rent, loan, lease payments, etc. that do not typically change whether you are open or not. Be mindful that putting off payments may result in penalties, additional interest or service charges — plus may damage your relationship with lenders or other service providers.
If you rent your space, consider discussing reductions in rent with your landlord, including the opportunity to take advantage of government programs that may assist them in this regard. As a tenant, your reduction in revenues resulting from your practice closure is a requirement for your landlord to access the Commercial Rent Subsidy.
Variable expenses — i.e. Expenses that are more likely to fluctuate with your practice revenues and therefore likely declined while your practice was closed but will resume once you reopen. It will be crucial to manage variable costs during the re-establishment process — most significant of which will include employee wages and dental supplies. It is critically important that you have an employee recall plan that you can tailor to the needs of your practice restart.
Other expenses— i.e. Discretionary expenses such as building repairs and maintenance, office dental supplies inventory, professional development and merchant visa fees. Review each expense category and determine which are currently necessary expenses or whether there is the opportunity to defer to a later date.
Certain expenses may not be mandatory or contractually required but may be in your best interest to maintain, including legal and accounting services, advertising and social media.
New Required Costs — COVID-19 may require your practice to undertake new expenses at opening, including additional personal protective equipment (PPE), etc. Social distancing may also require renovations to premises, mandatory sanitation processes or additional training for staff.
Review Existing Contracts — Evaluate your supplier relationships to ensure you're getting the best rates and terms for your current situation. Try to re-negotiate where possible, including:
Balancing the health and wellbeing of your practice and your personal financial needs is always delicate — even more so now that your practice will likely have limited funds coming in.
Personal budgeting — Visit your household budget to clearly identify your personal fixed and variable costs. Try to eliminate non-essential purchases and expenses where possible.
Also, if it's within your means to do so, try to eliminate as much household debt as you can and avoid charging anything to your personal credit cards or lines of credit that you cannot pay back immediately.
Work with your bank — Review your existing mortgages, loans and lines of credit with your lenders. Some are offering payment deferrals on outstanding debt. They may also be willing to re-amortize loans and / or revise terms.
Be mindful that there may be limits to what is possible; also, understand your bank will expect you to show them a realistic cash management and practice restart plan that they can be confident in.
While you've received the green light to re-open your practice, it will likely be some time before things fully return to normal. Your patients and staff need to trust you have taken adequate steps to protect their health and safety while delivering the same standard of service and care they expect. You also need to prepare your practice for a significant reduction in patronage for the foreseeable future.
The following steps are critical for establishing trust, maintaining profitability and managing expectations as you adjust to your new normal.
Safety measures — Take proactive measures to reduce viral spread among patients and staff, including:
Scheduling adjustments — Prepare for the re-establishment of your practice by adjusting how you resource your clinic. This includes understanding how:
Client and staff communications — Be clear, concise, consistent and confident in the way you roll out your new normal to staff and patients. Take steps to:
Plan to recover. Your success will be determined by your preparation, implementation and your ability to adapt to the unexpected.
You will need to consider:
To find out how MNP can help your dental practice navigate uncertainty and persevere during this unpredictable time,
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one of our Professional Services Advisors in your region.
Strategies and tools to help your company navigate the coronavirus crisis, stay resilient and take the next steps towards recovery.
Related Topics:COVID-19; Business Resilience; Business Performance
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