How to Buy a Dental Practice With Upside-Without Crashing Your Cash Flow

You’ve found the perfect practice: solid turnover, strong staff, a prime location. But buying it could either be your smartest move — or a cash flow disaster waiting to happen.

From what I’ve seen as a Dental CFO inside 67 UK practice transitions, most principals don’t crash because they overpay.

They crash because they misread the cash flow model underneath the practice. And forget: growth doesn’t mean liquidity.

T — TESTIMONIAL / AUTHORITY SIGNAL

In late 2023, I worked with a principal buying a £1.2M practice in Surrey.

On paper, the EBITDA looked strong: £271K. But hidden behind those numbers?

• Staff hours inflated to cover seller holidays
• Deferred equipment maintenance
• £18K of treatment booked but not delivered

Without running our ECFTI™ (Excess Cash Flow To Invest) model, the buyer would’ve stepped into a £6,412/month cash shortfall.

Instead, we built a 13-week forecast, re-sequenced loan and payroll dates, and protected their PPBT™ goal of £7.5K/month. The result? Predictable income from month one.

FAST TAKEAWAY

• Upside only matters if the cash flow model supports it
• Check ECFTI™ before signing any heads of terms
• Protect liquidity first — then fund growth strategically

How do I know if a practice actually has upside?

A dental practice has real upside only if its core income engine creates Excess Cash Flow To Invest (ECFTI™) — not just paper profit.

Most buyers focus on turnover or headline profit. But that doesn’t tell you if there’s actual cash left after essentials. Here’s how I help buyers evaluate true upside:

1. Diagnose Real ECFTI™
   If ECFTI™ is under £5K/month, you’re not buying upside — you’re buying stress.
2. Map Income to Outflow Timing
   Look at when revenue lands vs when fixed costs hit. A practice making £950K with NHS delays or high lab lag may still run dry mid-month.
3. Analyse Owner Dependency
   If the seller’s clinical time drives over 40% of income, your “upside” depends on replacing their effort — not scaling it.

Client Case:
A 3-surgery mixed practice in Kent showed £1.08M turnover. EBITDA was £220K. But ECFTI™? Just £2,187/month. Why? Owner was full-time, lab invoices delayed 60 days, and staff costs had spiked due to locum dependency.

Takeaway: Profit doesn’t equal investable cash. ECFTI™ is your real upside indicator.

How do I avoid cash flow problems after buying?

You avoid cash strain post-acquisition by synchronising income inflows to outflow timing — and building a 13-week rolling forecast before you complete.

Here’s what I advise every buyer:

1. Rebuild the Payment Calendar
   Map when NHS, plan income, private payments land — and sequence them against:

• Salaries (typically 28th)
• PAYE/NIC (22nd)
• Loan repayments (often 7th or 15th)
• Associate pay (1st week of month)

2. Install a Cash Flow Future Pairing (CFFP™) System
   This protects your buffer by pairing future income to future liabilities.
3. Embed a 12-Week Cash Buffer
   Forecast when delays or treatment gaps could hit. Your buffer must absorb these without overdraft stress.

Client Case:
Principal bought a private 2-chair practice in Leeds. Revenue looked stable at £780K. But income from plans landed on the 10th, loans on the 9th, and salaries on the 28th.

Within 60 days, they hit a £8,312 shortfall — because treatment cash lagged bills. We installed a CFFP™ system, moved associate pay to cleared-cash basis, and restored stability within 3 weeks.

Takeaway: Timing beats turnover. Without sequencing your cash calendar, even high-revenue practices can choke.

How do I fund the purchase without running out of breathing space?

You fund a purchase safely by matching deposit and loan strategy to your ECFTI™ — and protecting owner pay via PPBT™ before expansion.

1. Benchmark ECFTI™ vs Funding Requirement
   If the practice produces £5,312 ECFTI™ monthly, you can safely allocate £2,500 to loan servicing — and still retain a buffer.
2. Choose Funding Mix Carefully

• Director’s Loan? Fast but risky.
• Asset Finance? Better for kit, not goodwill.
• Practice Loan? Match terms to income cadence.

3. Anchor Your PPBT™ Target
   Define how much you need per month before tax to maintain personal solvency. Hardcode this into your forecast.

Client Case:
Buyer used £385K deposit from retained earnings to buy a £1.2M private clinic. But post-completion, they deferred personal pay 3 times due to cash surprises. We rebuilt their model with PPBT™ at £8K, automated it inside a CFFP™-linked forecast, and cash pressure dropped instantly.

Takeaway: Don’t stretch for the purchase if it breaks your post-deal liquidity.

Buying smart is just one side of the coin. If you’re considering exit in the next 3 years, read: “How to Sell or Downsize Your Dental Practice — Without Losing Value or Regret”

Before You Expand Further — Revisit How Profit and Cash Truly Interact

Buying a practice is one of the boldest moves a dental principal can make.
It tests everything — your leadership, your team, your funding structure, and above all, your understanding of how profit translates into cash.

Because even a great acquisition on paper can become a financial drain if the timing between income, expenses, and loan repayments isn’t aligned. What looks profitable in projections can still leave you short on liquidity when tax, payroll, or loan interest come due.

That’s why before you scale again — or invest in new chairs, clinicians, or sites — it’s worth going back to the foundation that underpins every financial decision:
the relationship between profit and cash flow.

Next Step: Cash Flow vs Profit: Why Your Dental Practice Bank Balance Doesn’t Match Your Bottom Line
Revisit the fundamentals that determine whether your next deal strengthens your position or silently weakens it — and see how true financial clarity always begins with understanding this core difference.

Your Next Steps

Here are your 3 ways forward:

1. DIY: Use your PMS, Xero/QuickBooks, and cash calendar to build:

• A 13-week forecast
• ECFTI™ calculation
• PPBT™ logic before buying

2. Free Tool: Download our Forecast Starter Pack to build your cash calendar in 20 minutes.
3. Dentpulse: While you can build ECFTI™ manually, Dentpulse automates it in real-time, linking PMS + accounting data to reveal excess cash, protect owner pay, and forecast timing risk. No spreadsheets. No stress.

Summary: Cash Flow Is Your Oxygen Mask

Here’s what I want you to remember:

• Upside without ECFTI™ is a trap.
• Your pay is the first thing to vanish when timing collapses.
• Cash flow isn’t just numbers — it’s your breathing room.

Buying a dental practice should feel like growth — not gasping for air. Install the system first. Then scale with confidence.