Dental Collections vs Production: What the Bank Actually Sees

The debate over dental collections vs production usually ends the same way. Someone pulls the report, points at a collections percentage in the high nineties, and the conversation stops. The number looks good, so the assumption is that the money is fine.

Then the operating account gets tight in a month with no obvious explanation, and nobody can point to what changed.

Nothing changed in the percentage. That’s the problem.

A percentage is a ratio, not a rate

This is the distinction that gets missed, and it isn’t a small one.

Your collections percentage is a ratio. It answers one question: of the dentistry we adjusted and billed, how much did we eventually recover? A high number means your team is working claims and your fee schedule is being honored.

Cash flow is a rate. It answers a different question entirely: how fast?

Two practices can collect 98% of adjusted production. One is paid in 22 days. The other in 58. Their reports look identical at the monthly meeting. Their bank accounts do not behave the same way at all — because the second practice is carrying five weeks of completed dentistry on its own balance sheet before the money arrives.

Same ratio. Completely different business.

The adjustment and the deposit are two different events

Here is the objection I hear most, and it’s a fair one: adjusted production already accounts for write-offs, so the comparison is honest.

It is honest. It’s also incomplete.

The adjustment happens inside the software, the moment the claim is coded. The deposit happens at the bank, whenever it happens. Those are two separate events separated by time — and it’s the time in between that determines whether you make payroll comfortably or watch the account on Thursday.

The report reconciles the dollars. It does not reconcile the calendar.

Run this on your own numbers

You don’t need new software for this. You need three numbers you already have.

Total accounts receivable ÷ average monthly collections × 30 = days

That result is roughly how long it takes for a dollar of completed dentistry to become a dollar of usable money. It’s the same collection-velocity math a lender or a buyer runs during diligence, and it’s the number most owners have never calculated for themselves.

Now do the part that matters: run it for three consecutive months and look at the direction.

Forget the benchmark. Watch the trend.

Every article on this subject wants to hand you a target — thirty days is strong, forty-five is acceptable, and so on. Industry data on practice performance is worth reading, and the ADA Health Policy Institute is the place to read it, not a vendor blog.

But a benchmark is somebody else’s practice. Your payer mix, case mix, geography, and treatment sequencing all move that number for reasons that have nothing to do with how well your front desk is performing. Comparing yourself to an average can just as easily reassure you when you shouldn’t be reassured.

Your own trend line can’t do that to you.

If the number is flat or falling while production holds, your systems are working. If it’s climbing while production holds steady, the practice has quietly started financing its patients and its carriers — without ever deciding to.

That’s a decision being made for you. And no report on your desk announces it.

Why this one hides so well

Most cash problems in a practice are visible if you go looking. Supply creep shows up as a percentage. Fee stagnation shows up when you compare this year’s schedule to last year’s. Overhead drift shows up in the P&L.

Slow collections hide because the number covering them up — the collections percentage — is genuinely good news. The system reports success while the money gets further away. There’s no alarm, because by every measure the practice tracks, nothing is wrong.

That’s why it’s worth calculating deliberately rather than waiting for it to announce itself. Anything stuck long enough eventually stops being slow and starts being gone. A ninety-day balance doesn’t send a notification when it crosses from late into never — it just quietly changes categories, and one day it gets written off.

The practical version

Production is what you did. Collections are what came back. Days are how long you waited.

The first number is on every report. The second is on most of them. The third one you have to go get yourself — and it’s the one that determines what actually lands in the account.

The bank deposits collections, not production reports.

Want to know which number your practice should be looking at next?

Start with What’s Next

David Darab, DDS, MBA, CEPA — The Cash Flow Surgeon™ — helps independent dental practice owners find the cash already inside their practice. Cash. Clarity. Control.™

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