How to
Save on Other
Expenses
You may be paying too much for any of the
following services. This is why your overall "other expenses" category percentage may be
high. here we will go over a few ways you can save in these areas:
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Saving may seem unworthy
in some areas, but the point to remember is that when you do the same for
all the categories, then you are talking about a significant amount
of savings... definitely "worth" trying. |
Some savings may seem small, but they
quickly add
up to a considerable amount if done in all categories.
A merchant fee is what you pay the
company that processes your patients' credit card payments. These companies grow
like weed and everywhere you look there area
few of them.
The good thing about them is that
they are pretty much the same as far as
the payment processing is concerned. By this I mean
that regardless of where and through whom you get your Visa or MasterCard merchant
account, you can expect the same overall service.
Having said this, I do
not understand why some dentists
pay up to 4% of their income to some of these companies, when they can
pay as little as 1.4%!! Yes, the customer service of some of these companies may
not be that great, but how many times a year do you have to deal with them? Not very often.
So what if the person who answers the
phone has an attitude? Let's tolerate that attitude and save 1-2% on all our
credit card receipts. For an office with an annual income of $500,000, the
savings can add up
to over $10,000!
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In reality, every dollar of non-deductible savings is
tax-free and overhead-free income! |
Remember, every dollar of savings is tax-free, overhead-free income!
If you are paying anything over 1.5% for
your Visa and MasterCard processing, you may be able to save by switching
companies. To do this, simply search the internet or read some of the direct mail
ads you receive; you will see many of these companies that offer considerably low rates (check
solution21inc.com for some resources).
You can
also ask around and find a company
that your colleagues or friends in other businesses are happy with. The
difference can be substantial. In our classic example of an office with an
annual gross income $500,000, with $250,000 of income received through credit
card payments, you can save as much as $10,000 in a year depending on the rate you pay now.
Of course, there is another option: You can
see more patients and give that $10,000 of extra income to your existing merchant
company! Your choice...
Before switching
companies, make sure there is no early termination fee on your existing account.
Yes, this is a possibility... remember the fine print on your merchant
contract you didn't read?!
Also, if you are leasing the credit card
machine it is often better to buy it instead. To find out, compare the total amount you would pay by the end of the lease to the price of purchase. Sometimes you are paying as much as
three times more to
lease a machine, which is money you could be saving!
If they tell you a lease is tax deductible
and equipment is not, remember that thanks to new laws up to $100,000 worth of
equipment is deductible every year. So, if you have not purchased that much this
year, go ahead and buy the machine if it saves you money (check with your
accountant for tax laws).
More and more banks charge customers for
their accounts, particularly those with business accounts. Although there are
always other banks that offer better deals, I admit that it is not easy to change
your entire bank just because of few dollars in fees.
The way out of this is to regularly check
within your own bank for their new products. They constantly come up with new
account types that you can switch to without changing your account number or
other information. This way you can save on some fees, especially if
they are starting to add up.
The
same technique you learned for saving on
purchase of
Dental Supplies can also work for your uniforms. What I do in my office is
use disposable gowns which cost the same and look much better and
cleaner. Patients love them. As I explained in the
Image section, it
conveys that your office is clean and sterile.
To save in this area,
I do two
things.
1- If you design and print your own office
forms (by computer) and copy them, depending on the style, you can save a lot as
opposed to buying the prepared ones. The other advantage of doing this is that
you can update your forms whenever you want. You can use our "Form
Center" for
templates and samples of many forms you may use in your office.
For example, every once in a while there
are new questions that need to be added to your forms, like "Have you taken Phen-Fen?"
Now, if you have already purchased 1000 generic forms, you may have to throw
them away and shop around for new ones. If you have your own forms, you can
just add a sentence to the form and copy new ones for yourself. There are people
on your staff who can easily type and nicely format all your forms in one
day.
2- The other killer cost in the office is
ink; who could believe a few drops of paint could cost this much?! So next time
you buy a printer, copy machine, type machine, fax machine or label printer,
do not just look at the price of the machine you are buying, look at the
price of the refill ink or cartridge!
I remember one time I happily bought a
label printer for a great price of $17! After few months I bought another one
when I realized the cost of the tape for that machine was a whopping $500 a
year! And we only used it to print patients’ names on the charts! Each label
cost almost as much as the entire paper chart!
I once added up the cost of all the ink based
products in our office, and I realized we were paying around $5,000 a year for
them! The next day I bought a new printer, label printer, and copy machine, all
for the price of $550. Our ink cost dropped to around $2,500 a year!
Use email, fax machines, and free electronic
insurance claim submission to save significantly on postage costs.
Also, as explained in the
Collection section,
put an end your costly billing system today. You can save
around $1500 to $3000 a year on postage costs alone!
Thanks to deregulation laws, these days
most of us have choices when it comes to local and long distance telephone
companies. Also, whenever you switch companies you can keep all your present
phone numbers. So, why are you paying more than the minimum you have to for
telephone use?
Don't have time for this? Have one of your
staff shop around for you and give half of your savings for the next 3-6 months to
him/her as a bonus. You can keep the rest of the savings yourself!
Also, browse the list of numbers dialed from
your office once in a while, or have a trusted staff member do it for you. You may
find a lot of
personal long distance calls by your staff, especially front office
staff. Deal with it, not only to save on the phone bill, but to
save on payroll!
(Paying someone
to talk to their friends for hours a day... not a good idea!)
- Negotiate with your landlord if you can, so they pay the utilities.
- Buy an automatic thermostat for your AC system.
- Make sure everything is turned off when the office is closed. (See
the
Rent section for more on negotiating with your landlord.)
On average these services cost
a dental
office around $2,500 to $5,000 a year, depending on how you categorize your
expenses. These are costs such as service visits, plumbing checks, repairs, etc.
Delegating and sharing the savings with your staff works here as well. Come up with
a price or cost estimate yourself and then delegate the saving task to someone,
sharing some of the savings with them. It works every single time I do it.
I am not going to talk about income taxes,
which are out of the area of this software. However, there are taxes that you may be
able to save on. The important one is the payroll tax. I talked in detail about
Payroll Costs and how to save on them. Following those
recommendations can save you thousands of dollars in taxes as well.
Whenever you can and the law
allows, you should attain professional services from independent contractors as
opposed to employees. It saves you around 7% of the amount you are paying that
person. Check with your accountant or attorney about this one because the
definitions can be complicated, but the savings and liability benefits can be significant!
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