An overview of personal finances and practice finances for dentists.

1. Understanding Your Finances
IUSD Lunch & Learn: D1 – D4
Presented by:
Amber Banks, Consultant – Veros Dental
Aaron Irwin, VP – PNC Healthcare Banking
Kevin Patrick, VP – PNC Healthcare Banking
March 21, 2012

2. Personal Finances
Presented by:
Amber Banks, Consultant
Veros Dental

3. Personal Finances
Main areas to consider
Budgeting
Income
Risk management
Expenses
Debt

4. Budgeting / Planning
No right or wrong way
Detailed budget
Understand your monthly “inflows” and
“outflows” and where you are currently
Track your transactions
Ability to make better buying decisions
Monitor & track where you stand
Help you understand employment options
Make goals! (saving, retirement, new house, debt repayment)

5. Budgeting Tools
QuickBooks®/Quicken®
Excel
Handwritten
Mint.com
Filing system – calendar with expenses or folder
system

6. Income
Understand your income!
Single or dual income (Can you afford to go from a dual to
single income?)
Source of income – risk associated (commissions, % of
production, stability of employer)
Secondary source of income (spouse, part time job)
Time commitment (non-compete, ability to “walk away,” does it
fit in your schedule?)

7. Considering Your Income…
Consider your income when putting your budget together
What can you afford? What “lifestyle changes” can be made?
Contemplate career options and decisions
What do you need to make?
Prioritize your personal goals and objectives
What do you want to pay off first?
What risk level can you tolerate?
Start-up/acquisition/associateship

8. Risk Management
Protect your current and future income
Associateship contracts/LLC
Insurance needs
Disability
Life
Auto
Malpractice
Homeowners/Rent
Health

9. Expenses
Understand your expenses!
Identify your fixed and variable costs (what can you control)
Understand your current costs (what costs can be cut, if any?)
Emergency fund (3-6 months of living expenses, 6 months long-term)
Buy vs. Lease – Auto
Buy vs. Rent – Home
Savings goals
College savings
Marriage/Children
Taxes!

10. Debt
Good debt vs. bad debt
Credit cards
Student loan debt
Debt to buy or start your practice
Credit scores

11. Practice Finances
Presented by:
Amber Banks, Consultant
Veros Dental

12. Practice Finances
Budgeting/Goal Setting/Break-Even Point
Bookkeeping/Accounting
Banking
Taxes

13. Budgeting/Goal Setting/
Break-Even Point
Understand practice fixed and variable expenses
Understand how to meet collection goals
Set goals!
Collection income, expenses & marketing
Measure the goals regularly!
Know what you have to do daily
Update goals as situations change
Make plans to achieve your goals!

15. Bookkeeping & Accounting
Bookkeeping Accounting
Paying bills Using bookkeeping data to
create statements
Making deposits Real time data
Recording all activity Understand the reports
Assists in making timely
decisions
Measures performance over a
time period
Compare to industry averages

16. Taxes!
Largest expense you will incur
Basics – pay taxes on your “wages” and practice
“profits”
Laws change frequently
Be proactive!
Weigh tax savings and cash flow
“It costs money to save money”

17. Items to Consider…
Spend an hour and put together a personal and
practice budget
Monitor and stay on top of your budget!
Review your risks
Review your debt situation
Set your personal and professional goals and your
plan
Surround yourself with dental specific advisors

18. Financing
Presented by:
Aaron Irwin, Vice President
Kevin Patrick, Vice President
PNC Healthcare Banking

19. Topics to Cover
PNC Advantage for Healthcare
Understanding the make-up of a good credit score
Your personal credit report
Is it a good time to borrow?

20. Special Financing for Dentists
Practice Acquisitions Commercial Real Estate
Practice Start-Ups Purchases
Partner Buy-Ins Operating Line of Credit
Refinance of Existing
Practice Debts
Equipment

21. What is a Credit Score?
A credit score is a numerical score which credit
reporting agencies assign to you. Lenders use these
scores to measure “risk.”
Commonly referred to as a FICO Score
Determines the interest rate you pay for home
mortgages, auto loans, credit cards, etc.
Lenders use these scores to help determine if you are
a good “risk” or not, then approve or decline your
application.

22. The Reporting Agencies “BIG 3”
Equifax – Beacon Score
Experian – Fair Isaac Score
Transunion – Empirica Score

23. What Do They Mean?
720 and above: Excellent credit, likely eligible to receive a
lender’s most favorable rates.
675 to 719: Once it dips below 720, you may no longer be
approved for the lender’s best rate, but you should have
little difficulty finding a good loan.
620 to 674: With a below-average credit score, your
options will be reduced and you’ll pay a premium on your
loan – perhaps as much as 2% more than borrowers with
excellent credit.
Below 620: Below 620 put you in the category of a “sub-
prime” borrower.
Obtained from LendingTree.Com

24. What Affects My Credit Score?
Positives Negatives
Paying your bills on time Late or missed payments –
typically has to be >30 days late
Using 25% or less of your before they get reported
available credit
Using more than 80% of your
Steady employment total amount available
Bankruptcy
Periods of unemployment
Too many request for new lines
of credit

25. Main Factors That Affect
Your Credit Score
Payment history
Outstanding debts
Length of time you have been
building credit
Number of inquiries

26. Credit Reports
Individuals can receive one free credit report on an
annual basis. Many sites provide this information but
may try to advertise other products for a fee.
AnnualCreditReport.com
Takes you to each of the three reporting agency
websites
Provides a complimentary credit report

27. Is it a Good Time to Borrow?
Let’s take a look at interest rates from a historical perspective and compare to
how this affects financing projects.
The cost of borrowing: The Prime Rate example
The Prime Rate is defined by The Wall Street Journal as “The base rate on
corporate loans posted by at least 75% of the nation’s 30 largest banks.”
Interesting Note: Some banks may have a different “prime rate” than
what is reported in The Wall Street Journal. Other banks may have floors
or ceilings on variable rate, prime based lending.
Primerate.net

28. Prime Rate 2007-2011
2008 2009 2010 2011
January 6.50 3.25 3.25 3.25
April 5.25 3.25 3.25 3.25
July 5.00 3.25 3.25 3.25
October 4.50 3.25 3.25 3.25

29. Cost of Capital and the Affects on
Project Financing
A typical example for equipment financing
$100,000 5 year July 2010 @ 3.25% $1,808
January 2008 @6.50% $1,991
January 2007 @8.25% $2,039
On a $100,000 project, there is a $13,860 difference in the total cost of financing due
to interest rate fluctuations between January 2007 – July 2010.
$40,000 4 year July 2010 @3.25% $891
January 2008 @6.50% $951
January 2007 @8.25% $984
On a $40,000 project, there is a $4,464 difference in the total cost of financing
due to interest rate fluctuations between January 2007 – July 2010.

31. Contact Information
Veros Dental PNC Healthcare Banking
Amber C. Banks Aaron J. Irwin Kevin Patrick
Business Consulting Manager Vice President Vice President
Veros Dental PNC Bank PNC Bank
(317) 452-4580, ext. 762 (317) 267-8845 (260) 461-7173
amber@verosdental.com
Aaron.Irwin@pnc.com Kevin.e.patrick@pnc.com
About Veros Dental…
Practice consulting, start-up and PNC Healthcare Banking…
acquisition assistance, tax, accounting PNC understands the complexity of the dental industry,
and financial planning services. and knows a generic approach to banking services isn’t
the right solution for your unique financial challenges.
Our healthcare bankers can deliver specialized experience
and customized solutions.