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You need to know your break-even point

These are challenging times for a practice owner. You have to handle many issues, such as infection controls, staffing, lower patient volume and patients with health and financial concerns.

To measure the financial recovery of your practice, you need to determine the break-even point. At the break-even point, your practice is generating sufficient cash flow to pay for the operating expenses. It excludes debt servicing costs and any compensation paid to yourself. 

Suppose, the monthly fixed costs including salaries, rent, office expenses etc. are $50,000. Dental supplies and laboratory fees are 10% and 5% of revenues, respectively.

The break-even point is $59,000. If your revenues exceed this amount, then you are generating a profit. If your revenues are below $59,000, then you don’t have sufficient cash flow to pay for the expenses. It forces you to take remedial action immediately to get back into the black. If you are struggling with the profitability of the practice, you should consider calculating the break-even point weekly rather than waiting until the end of the month.

Feel free to contact us to help you calculate the most important number you need to know.

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