What Is the Working Capital Cycle in Dentistry?
The Working Capital Cycle (WCC) measures how long it takes a dental practice to convert its current assets (cash, receivables) and current liabilities (payables) into usable cash flow.
In dentistry, it reflects the timing gap between when treatments are delivered, when patients or NHS payments are received, and when suppliers or staff must be paid.
Why Does the Working Capital Cycle Matter for Dental Practice Owners?
A practice can be profitable on paper but still face cash shortages if the working capital cycle is stretched.
- Short Cycle: Faster cash conversion, more liquidity.
- Long Cycle: Cash locked up in receivables, unpaid insurance/NHS claims, or high stock levels.
Example:
- Practice delivers £100,000 treatment in January.
- Patients pay plans monthly (cash in Feb–June).
- Lab bills due in January.
→ Result = negative working capital cycle → cash stress despite profit.
How Is the Working Capital Cycle Calculated?
| Component | Formula | Dental Example |
| DSO (Days Sales Outstanding) | Average days to collect patient/NHS payments | 30 days for plan/NHS, 0 for upfront payments |
| DPO (Days Payable Outstanding) | Average days to pay labs/suppliers | 45 days credit from dental lab |
| Inventory Days | Stockholding period for materials/consumables | 20 days of materials on hand |
WCC = DSO + Inventory Days – DPO
Common Working Capital Challenges in Dentistry
- NHS payments received one month in arrears.
- Patient plans paid monthly, but treatments delivered upfront.
- Associates paid before patient/NHS money is fully collected.
- High material stock tying up cash.
How Does DentPulse Track the Working Capital Cycle?
| Feature | Function |
| Cash Flow Forecasting (CFFP™) | Pairs inflows with outflows in real time |
| Receivables Tracker | Highlights overdue patient/plan/NHS payments |
| Payables Monitoring | Tracks supplier/lab credit terms |
| Buffer Planning (MCBTP™) | Ensures minimum reserves cover cycle gaps |
| PPP™ Overlay | Protects owner drawings from negative cash swings |
DentPulse transforms the working capital cycle from a hidden risk into a clear liquidity metric.
DentPulse Tip™
“Profit means little if cash is stuck in the cycle.
Managing inflows vs outflows is what keeps your practice alive.”
Related Glossary Terms
- Operating Cash Flow – inflows/outflows from daily operations
- Days Sales Outstanding (DSO) – speed of patient/NHS collections
- Days Payable Outstanding (DPO) – supplier credit terms
- Cash Flow Gap – shortfalls caused by cycle timing
- 12-Week Cash Buffer – resilience against working capital delays
Glossary Summary Table
| Term | Meaning |
| Working Capital Cycle | Time it takes to turn receivables/payables into free cash |
| Healthy Range | Short cycle = stronger liquidity |
| DentPulse Advantage | Tracks cycle daily, pairs inflows/outflows, prevents cash stress |
