What Is Interest Expense in a Dental Practice?
Interest Expense refers to the cost of borrowing money — paid to lenders for loans, overdrafts, asset finance, or equipment leases. It’s the price of using someone else’s capital to fund business activity.
In your accounts, interest is a non-operating expense that reduces profit before tax.
In your bank account, it’s a real outflow that affects cash flow and drawings.
Why Interest Expense Matters for Dental Practice Owners
Many practice owners focus on loan repayments, but overlook how much is being lost to interest every month — which can:
- Reduce your tax bill (if structured properly)
- Eat into profit margins
- Create compounding cash flow strain
- Signal over-reliance on debt for growth
Example:
You pay £2,100/month on an equipment loan:
- £1,700 is capital
- £400 is interest
→ The £400 doesn’t reduce your debt — it’s gone permanently
If you have 3–4 loans across chairs, scanners, and refurbishments, that adds up fast.
Common Sources of Interest Expense in Dental Practices
| Source | Example |
| Bank Loans | For practice purchase or expansion |
| Equipment Finance | CBCT, CAD/CAM, IT systems |
| Overdraft | Ongoing cash flow buffer |
| Bounce Back Loans | Legacy COVID borrowing |
| HP/Lease Plans | Chairs, cabinetry, compressors |
DentPulse tracks all of these — separating capital vs. interest automatically.
How DentPulse Monitors and Manages Interest Expense
| Feature | Function |
| DebtIQ Module | Tracks every loan, its balance, interest rate, and total cost |
| CFFP™ Engine | Forecasts interest payments and maps them to cash flow |
| PPP™ Impact | Ensures owner drawings are safe after interest deductions |
| Scenario Planner | Tests whether early repayment improves net cash or tax efficiency |
| Interest Ratio Alerts | Flags if interest cost is disproportionately high vs. net profit |
DentPulse gives you visibility over what you’re paying to borrow — and whether it’s still worth it.
DentPulse Tip™
Repaying debt is good.
But knowing what you’re repaying — and why — is essential.Track interest monthly.
Challenge loan terms annually.
And always forecast before taking on new finance.
Related Glossary Terms
- Debt Service Coverage Ratio – Measures ability to cover debt payments with profit
- CFFP™ – Cash Flow Future Pairing – Aligns loan outflows with income
- ECFTI™ – Excess Cash Flow to Invest – Should not be used until interest is covered
- Loan Principal – The repayable part of the loan (excluding interest)
- PTP™ – Profit-to-Pocket™ – Ensures safe drawings after debt and tax
Glossary Summary Table
| Term | Meaning |
| Interest Expense | The cost of borrowing money from banks, lenders, or leasing companies |
| Financial Impact | Reduces profit, drains cash, but may reduce tax |
| Common Sources | Bank loans, equipment finance, overdrafts |
| DentPulse Advantage | Tracks interest vs. capital, flags overexposure, supports smarter debt planning |
