Launching Dental Practice Finance
Opportunities and challenges facing the dental sector
We interviewed Seb Miles, Managing Director (Healthcare) and he explains why Woodsford TradeBridge has launched a dental practice finance solution and how it will support the sector.
Why has Woodsford TradeBridge launched a dental practice finance solution?
We’ve looked to extend our product offering for pharmacy into other healthcare sectors and have started by moving into dentistry. We can leverage off their future cashflow, and an understanding of their payment cycle, to provide them with a flexible and discretionary working capital facility to meet the needs of that business.
How has COVID-19 impacted dental practices?
It has been a really challenging time for dental practices. Some that rely more heavily on the private revenue have effectively seen income just stop overnight. Those that have a greater proportion of NHS revenue have continued to receive payments under their contract, but there is in an expectation that a proportion of that may be recovered.
Dentistry has been seen as a very secure sector but has really been quite adversely affected by the pandemic. Our solution provides the flexibility those businesses are likely to need over the next 12-18 months. We are a funder that is willing to take the long view on both the business and the sector as a whole.
How will dental practices handle pent-up demand as a result of COVID-19?
Dental practices are running at a significantly lower capacity than they were before the pandemic, which has impacted their revenue. They have also had to invest in their practices to make sure they are as COVID secure as possible.
What our facilities can provide those businesses with is the flexibility to deploy capital where they need to, when they need to. It also opens them up to opportunities that may become available further down the line for that business.
What solution does Woodsford TradeBridge offer dental practices?
One of the challenges will be making the decision between getting more debt into the business versus having the flexibility of a solution that you can use when you need.
We would advocate a flexible solution that provides a quantum of funding as and when they need it, as opposed to indebting the business when it might not be necessary. It’s a dilemma that a lot of dental practices will be facing at the moment. “Do I go and get a loan for an amount larger than I may need, or need presently, indebting the business unnecessarily” or “do I seek a solution that provides a level of quantum, but more importantly the flexibility, that the business needs now to mitigate the risks, or the loss in revenue, or impacts on cash flow in the short term, but impacts on the business in the long term”
How does Woodsford TradeBridge arrive at its funding limits for dental practices?
We look to align this offering to the dental sector similarly to how we do for pharmacy businesses. It will be predicated on the surety of the cash flow of that dental practice, particularly with regards to the NHS revenue. The NHS contract will get paid in monthly instalments and we’re effectively leveraging off the surety of that contract, to provide them with an advance on what they would otherwise receive. Therefore, they are then able to deploy that capital as the business requires.
What information is required to issue funding to a dental practice?
Naturally, as a funder we will want to understand how the business is performing. We will look at the financial information, annual accounts and bank statements but will also want to understand the objectives and aspirations of the business. We will make a credit assessment based upon both our understanding of the sector but also the aspirations of the practice.
For more information on a working capital facility for your dental practice, get in touch with one of our experts.