Last year hit the dental industry hard — right in the bottom line, in fact. Sadly, the trends of increasing labor costs, staffing shortages, and high inflation are still making it difficult for practices to gain traction and keep their bottom lines healthy. Fortunately, one great way to improve your chances of achieving optimal profitability this year comes from applying a simple procurement technique to boost your cash flow — indirect spend management.
Dental offices must look at ways to grow their top line revenues without increasing expenses and overhead — and that comes from smart management of everyday costs, such as toner, printer ink, paper, and even standard office equipment such as printers, copiers, and fax machines. Also known as indirect spend management, this procurement strategy can help your dental practice add significantly to your bottom-line health.
Indirect Spend Management for Dentists
Indirect spend management is the process of managing and controlling the costs associated with indirect purchases such as toner, paper, etc. It involves analyzing procurement data to identify potential cost savings opportunities, negotiating better prices with suppliers, and ensuring that all purchases are made in line with organizational policies.
By focusing on indirect spend management, dental practices can gain visibility into their spending patterns and take advantage of cost savings opportunities. This can help them keep costs under control while also improving operational efficiency. Concentrating on areas such as purchasing, inventory management and operating costs, dentists can free up money that can be put toward more impactful revenue-generating initiatives.
For example, one group of researchers studied the spending habits of thousands of practices and found that overhead in dental offices is typically running anywhere from 4% to 6% higher than it needs to be. For a practice that makes $500K per year, that amounts to anywhere between $20K and $30K — which can make a significant impact to your bottom line. To keep costs in check, consider these tips:
- Bid Out Your Supplies
Bidding out your office supplies can be a great way to save money and time. Not only will you have access to the best prices on the market, but you'll also be able to get exactly what you need in a timely manner. Bidding out your office supplies allows you to compare different suppliers and find the best deal for your business. You can also take advantage of bulk discounts and other incentives that may not be available if you purchase directly from a single vendor, ensuring that you get the best value for your money while still getting quality products and services. When applying this strategy, be sure to reevaluate your vendor pool on a regular basis and re-bid as necessary.
- Remember that small purchases DO add up!
Don’t think that certain costs are “too small” to make a difference. Purchasing is a key area to focus on when attempting to reduce indirect costs. Dental practices should prioritize high-quality, cost-effective products when making purchasing decisions.
For example, buying a high-quality less expensive toner can be a great way to save on bottom line costs for your dental practice. The cost of toner is often one of the largest expenses for any business, and by reducing the cost of your toner cartridges, you can reduce overall costs and improve your bottom line. Larger practices can also consider buying in bulk to further reduce the cost of toner cartridges, or partnering with a strategic supplier to help drive down costs using your annual usage of your printer cartridge supplies. With these cost savings, dental practices can put more money back into other areas such as patient care, expanded services, or marketing.
- Proper Inventory Management
Inventory management is also essential for reducing indirect costs. It’s important for dental practices to keep accurate records of both products and supplies in order to avoid unnecessary replenishment orders and remove items from the budget that are no longer necessary. Additionally, setting aside an allotted budget for inventory control can help ensure that costs are kept within reasonable limits.
- The Wrap-Up
By focusing on these areas of #indirectspending, dental practices can reduce their overhead expenses meaningfully while freeing up funds that they can reinvest in other activities designed to grow their business. From increasing marketing efforts and investing in new technology tools such as digital radiography systems, dentists have plenty of options available if they want to boost revenues through indirect spend reduction strategies.
Choose Quality Imaging Solutions for Your Best Price and Gain Value
At Quality Imaging Solutions LLC, we thrive on helping our clients find simple ways to control their indirect spending by providing high-quality, lower-cost products to use in day-to-day business. For example, our selection of sustainable remanufactured printer inks and toners can save on average 40% over OEM brand name products, and are guaranteed to deliver the high level of performance and satisfaction your practice requires to keep things running smoothly. Ready to make a bottom-line saving change? Contact us today and let’s get started!