What Is Deferred Income in a Dental Practice?
Deferred Income is money received by a dental practice before the treatment has been delivered.
In accounting terms, it is recorded as a liability under UK GAAP (FRS 102), because the practice has an obligation to provide future services.
In plain terms, deferred income = income in advance — but “deferred” is the technical accounting definition.
Why Does Deferred Income Matter for Dental Practice Owners?
Many principals mistake cash collected for revenue earned. Recording deferred income incorrectly can:
- Inflate profits on paper
- Lead to premature dividend drawings
- Trigger higher Corporation Tax than necessary
- Misrepresent practice performance when applying for finance or selling
Example:
- Patient pays £3,000 for Invisalign upfront in January
- Treatment delivered January–June
- Only the completed portion (say £600 in January) is recognised as revenue
- Remaining £2,400 is deferred income until treatment is delivered
What Are Common Examples of Deferred Income in Dentistry?
| Example | Treatment |
| Private Treatment Deposits | Held as deferred income until work is completed |
| NHS Advances | Recognised only when UDAs are delivered |
| Capitation/Denplan Plans | Monthly fees, recognised as services are provided |
| Orthodontic Cases | Paid upfront but delivered over many months |
How Does DentPulse Handle Deferred Income?
| Feature | Function |
| Revenue Recognition Engine | Splits earned vs. deferred revenue automatically |
| Deferred Income Ledger | Tracks liabilities until treatment is delivered |
| OWS™ Overlay | Prevents inflated wealth scores from prepaid but unearned money |
| PPP™ Integration | Blocks unsafe drawings from unearned income |
DentPulse ensures deferred income is accounted for correctly and automatically — protecting profit accuracy, tax timing, and cash flow planning.
DentPulse Tip™
“Deferred income is not profit — it’s a promise.
Treat it as liability until you’ve earned it.”
Related Glossary Terms
- Income in Advance – the practical equivalent term, patient-facing
- Revenue Recognition – records income when service is delivered
- Accrual Accounting – aligns income with treatment completion
- PTP™ (Profit-to-Pocket) – ensures only earned profit funds drawings
- Treatment Completion Rate – clinical trigger for revenue release
Glossary Summary Table
| Term | Meaning |
| Deferred Income | Cash received for treatments not yet delivered (liability under FRS 102) |
| Purpose | Prevents overstating profit and ensures compliance |
| DentPulse Advantage | Automates separation of earned vs deferred income in real time |
