How do I calculate my target?
Add monthly payroll, rent, supplies, lab fees, software, insurance and debt payments. Adjust for days in AR and seasonal dips.
Practice software shows days in AR and insurance aging. Longer insurance aging means a larger target.
What raises or lowers the need?
More PPO patients and slower payers raise it; more fee-for-service, membership patients and same-day collection lower it.
Growth, such as adding an associate or operatory, raises the need temporarily until new production pays.
Two dental-specific items often get missed in the calculation. The first is the lab bill timing described on our lab-bill guide: a busy restorative month leaves a large statement due before insurance pays. The second is equipment: handpieces, sensors and compressors fail without warning, and a few thousand dollars for a repair is easier when it comes from a cushion. Adding a modest equipment line to the target protects the schedule as well as the bank balance.
Revisit the target twice a year, and any time you add a provider, an operatory or a large PPO. Each change shifts both the cost base and the timing of collections, and the right cushion moves with it. Practices that write the number down and compare it to actual cash every quarter rarely get caught short.
How do I build working capital over time?
Collect patient portions at the time of service, submit claims daily, follow up on aging claims weekly, and set aside a share of monthly collections.
Funding can bridge until those habits build the cushion, but the habits are what keep it.
| Line | Source | Your figure |
|---|---|---|
| Monthly expenses | P&L | — |
| Insurance aging | Practice software | — |
| Seasonal dip | Monthly history | — |
| Target cushion | Calculated | — |
Worked example: a group practice short of target
A three-dentist group averaging $210,000 in monthly deposits sets a target of one and a half months of expenses and finds itself about $45,000 short after adding an associate. Using an illustrative factor rate of 1.20, $45,000 would mean $54,000 repaid over roughly 6 months: 26 weekly payments of about $2,077.
That works out to about $9,000 a month, or 4.3% of the $210,000 this business deposits monthly, and the total cost of the money is $9,000. As the associate’s production grows, the cushion rebuilds from collections.
For comparison, repaying the same $54,000 over 4 months would lift the monthly outlay to about $13,500, or 6.4% of deposits, and whether the faster payoff is worth that bigger payment depends on how steady your slow months are.
| Average monthly deposits | $210,000 |
|---|---|
| Amount funded | $45,000 |
| Factor rate (illustrative) | 1.20 |
| Total repaid | $54,000 |
| Cost of the funding | $9,000 |
| Term | about 6 months |
| Weekly payment (26 payments) | $2,077 |
| Payments as a share of deposits | 4.3% |
Who this fits
Usually a fit
- Practices below their working capital target
- Groups adding associates
- Owners improving collections
When an office may want to wait
- Practices already well capitalized
- Offices without collections plans
- Startups without deposits
What you’ll typically need
- Recent business bank statements
- AR and aging reports
- Practice details
Frequently asked questions
Is one month of expenses enough?
It depends on payer mix and seasonality; use your own data.
Should cash be in a separate account?
Many practices keep reserves separate.
Can funding build reserves?
It can bridge while collections build them.
What credit score do I need to fund a dental reserve shortfall?
For a dental reserve shortfall, owners with scores from 500 can be considered because recent deposits carry the most weight, and stronger credit usually earns a lower cost and a larger offer.
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Updated October 6, 2026