What Is Income in Advance in a Dental Practice?
Income in advance refers to money received by a dental practice before the related treatment or service has been delivered.
It represents a liability, not earned revenue, until the treatment is completed. In accounting terms, this is also called Deferred Income under UK GAAP (FRS 102).
Why Does Income in Advance Matter for Dental Practice Owners?
Many dentists confuse cash received with revenue earned. Counting income in advance as profit can:
- Overstate financial performance
- Lead to premature dividend drawings
- Create tax overpayments (profit taxed before it’s earned)
- Distort cash flow planning
Example:
- Patient pays £2,400 Invisalign deposit in January
- Treatment delivered January–June
- Only the portion of work completed in each month can be recognised as revenue
- The balance remains “income in advance” (liability) until earned
What Are Common Examples of Income in Advance in Dentistry?
| Example | Treatment of Income |
| Patient Deposits | Recorded as liability until treatment completed |
| Invisalign/Implant Cases | Payments upfront, recognised across treatment timeline |
| Denplan/Capitation Plans | Monthly payments, recognised as service is delivered |
| NHS Contract Advances | Counted as deferred until UDAs are completed |
How Does DentPulse Handle Income in Advance?
| Feature | Function |
| Revenue Recognition Engine | Automatically separates earned vs unearned income |
| Deferred Income Ledger | Holds patient deposits until treatment completion |
| OWS™ Integration | Prevents unearned income from inflating owner wealth scores |
| PPP™ Overlay | Stops drawings against income that hasn’t been earned |
DentPulse makes revenue recognition automatic, compliant, and safe — removing confusion between collections and production.
DentPulse Tip™
“Cash in the bank ≠ profit in your pocket.
Income in advance is patient money held in trust until you deliver the care.”
Related Glossary Terms
- Deferred Income – accounting liability for prepaid treatment
- Revenue Recognition – recognising income when treatment is delivered
- Accrual Accounting – aligns revenue to service completion
- PTP™ (Profit-to-Pocket) – ensures only earned profit funds drawings
- Treatment Completion Rate – triggers revenue recognition
Glossary Summary Table
| Term | Meaning |
| Income in Advance | Money received before treatment is delivered |
| Purpose | Prevents overstatement of profit and tax |
| DentPulse Advantage | Automates revenue recognition and safeguards owner drawings |
