How does interest-free third-party financing actually cost a dental practice, and why must that cost be priced in?
Because the financing company takes a discount on the back end that the practice absorbs, typically eight to twelve percent of the case fee, in exchange for paying the practice up front. Patients with strong credit scores qualify for the interest-free option. They experience zero interest cost. The practice writes off the eight-to-twelve-percent discount to the financing provider in exchange for immediate payment with no collection risk. Most businesses build in two to two-and-a-half percent for credit card processing as a routine cost. Few dentists build in the much larger third-party financing cost the same way. Dentists who do not understand the structure get angry when patients with poor credit cannot access these products, but the real problem is that the practice has not priced the cost into the case fee in the first place. The fix is to build the potential financing discount into the fee structure for high-credit-score patients, then adjust the in-house discount accordingly if they decline financing. Smart Discounting handles both paths cleanly.
If the answers you are finding here resonate with you, my team and I work with a small group of clients each year. The next step is a complimentary Discovery Consultation and Practice Review with Dr. McAnally.