Aggregate Data is Critical.

When it comes to truly understanding a dental practice’s profitability, relying on aggregate data—the total sum of income and expenses over a set period—isn’t just helpful, it’s essential. Without it, your numbers can be skewed by timing issues that make the practice look more or less profitable than it actually is.

In dentistry, income is often delayed. Insurance reimbursements can take weeks to process, and patient payments may be spread out over several visits or payment plans. This means that the revenue generated from procedures performed in a given week or month might not actually be collected until much later. If you only look at income for a single short period, you may miss the true connection between the work completed and the money received.

Expenses work the opposite way. Many costs—such as dental supplies, rent, and equipment—are paid for up front but are used over time. A large supply order in one month might support procedures for several months afterward.

This mismatch between when revenue is collected and when expenses are incurred makes it difficult to assess profitability without looking at the bigger picture.

This is where the concepts of cash behavior and accrual behavior come into play. Cash reflects when money actually moves in or out of your bank account, while accrual tracks when income is earned and expenses are incurred, regardless of payment timing. By using aggregate data and aligning the review period with your practice’s average days in accounts receivable, you smooth out these timing differences and get a far more accurate representation of your true profitability.

The takeaway is simple: aggregate data reveals the real story. It helps you make smarter decisions about operations, fee structures, and purchases because it’s based on your practice’s actual financial performance—not a distorted snapshot.