What is the dental outlook and how can the immediate asset write-off unlock future cashflow?

As we prepare to close the books on what has been a record breaking financial year for many dental practices, it is a great time to review and plan for success in 2024 and beyond.

1 The digitalisation of dentistry is going to keep accelerating and enhancing the quality and speed of treatement we offer patients

2 The unprecedent unlimited asset write-off incentive available as a result of the economy coming to a halt during COVID-19 ends on 30 June and is unlikely to be seen again.

For the majority of practices, the 2023 financial year has delivered exceptionally strong results. Pacific Smiles for example recently reported same centre patient fee growth of 15.5% year to date. This is reflective of a boom period in dentistry and the present weakening being seen in certain patient demographics needs to be viewed with perspective. The comparable figures from the previous corresponding months are going to be hard to beat in the months ahead but that was to be expected.

The complete deductibility of assets purchased by 30 June provides a one-off opportunity to reinvest some of the strong profits generated in the 2023 Financial year to setup a growth platform for the coming years. That is not to say that the immediate deductibility means all asset purchases are a good idea. However assets such as intraoral scanners, CBCT and other small equipment that will help you generate greater revenue and earnings warrant strong consideration.

In the short term, the weak consumer confidence and cost of living pressures will adversely impact consumer spending and dentistry is not immune from this. For practices that are more impacted by this, it is even more important to ensure conversion and fee generation per patient is optimised. This necessitates implementation of a treatment workflow that makes it easy and clear for patients to make choices about their oral care.

Returning to the two certainties we have right now being (i) the immediate asset write off is ending on 30 June and; (ii) digitisation of dentistry is at the “fork in the road moment”. With hundreds of years of cumulative experience within the MoreDent team in dentistry, accounting, finance, radiography, dental technology, marketing and more, we are equipped to help you assess your options. We will help you to develop a strategy to ensure that the equipment is cash generative after repayments from day one. For many of our equipment packages, the payback period is as little as 6 to 12 months particularly when you factor in the tax refund of ~one third of the purchase price.

Increasingly, adoption of technology will be the decisive factor in growth and profitability of dental practices. If you have not yet, we highly recommend viewing our digital dentistry patient survey CPD webinar. It highlighted that 95% of patients prefer digital dentistry and 66% would consider switching to a dentist that uses digital technology.