Home > How a Fractional CFO Helps Dental Practices Scale Without Losing Profitability

How a Fractional CFO Helps Dental Practices Scale Without Losing Profitability

Growing from one dental location to three should multiply your income. For many owners, it doesn’t work out that way. Revenue climbs while profit margins shrink, overhead creeps upward, and financial clarity evaporates into confusing spreadsheets across multiple entities. This pattern has a name: profitable stagnation. Your practices are busy, but you’re working harder for less take-home income than with a single location. When this happens, many owners start looking at whether a fractional cfo dental solution might help them regain control.

When You Need CFO-Level Financial Guidance

Most single-location practices get by with a good accountant and practice management software. The complexity demanding CFO-level thinking arrives when you cross certain thresholds. Multiple locations create the first layer of complexity. Without consolidated reporting showing performance across your portfolio, you can’t tell which locations are actually profitable. According to the American Dental Association, the average general practitioner earned $207,980 in 2024, but these figures don’t reveal how multi-location owners fare when overhead isn’t properly allocated. Rapid expansion brings its own challenges. When you’re adding locations faster than your infrastructure can support, collections lag, vendor relationships become inconsistent, and your chart of accounts becomes unmanageable. Cash flow unpredictability often surfaces as the symptom that finally prompts owners to seek help. When you can’t confidently answer whether you’ll have enough cash to meet payroll next month across all locations, you’ve outgrown basic financial management. The ADA reports that GP incomes have decreased in recent years due to growing expenses and decreasing revenue. This squeeze makes margin protection during growth even more critical.

How Fractional CFOs Differ From Your Accountant

Your accountant handles historical financial data. They record transactions, reconcile accounts, prepare tax returns, and ensure compliance. This backward-looking work is essential, but it doesn’t help you make better decisions about the future. A fractional CFO focuses on forward-looking financial strategy. Should you add that fourth location? Can you afford to bring on a specialist? What will your cash position look like six months from now? These questions require analysis beyond what happened last quarter. According to industry analysis, healthy dental practices achieve profit margins of 40% or higher, keeping overhead below 60% of gross revenue. A fractional CFO actively manages toward these benchmarks rather than simply reporting what the numbers were.

What Fractional CFO Services Include

The engagement starts with a 60 to 90-day diagnostic phase. The CFO examines your systems, processes, and financial performance across all locations, looking for where money is leaking and what gaps exist in your financial infrastructure. Once complete, the relationship shifts to ongoing strategic oversight with typically twice-monthly meetings. One focuses on controller-level review of the previous month’s results. The second operates at the CFO level with forecasting, long-term planning, and strategic decisions. The fractional model provides access to sophisticated financial analysis that most practices can’t justify with a full-time hire. Data from 2024 shows overhead is rising about 5% annually, making proactive expense management increasingly important. Key deliverables include consolidated financial reporting across all entities, location-level profitability analysis, rolling cash flow forecasts, and benchmarking against industry standards.

When the Investment Makes Financial Sense

Fractional CFO services aren’t appropriate for every practice. The investment makes sense when your operation’s financial complexity exceeds your ability to manage it effectively. Revenue threshold matters. Most fractional CFO firms focus on practices generating at least $2 million annually. Below this, the cost often exceeds the benefit they can deliver through improved margins. Growth trajectory should factor into your decision. Practices in active expansion benefit most because the cost of poor financial decisions during growth can be substantial. Buying the wrong practice or growing faster than your infrastructure can support carries significant downside risk that CFO-level analysis helps mitigate. The ADA notes that reimbursement rates continue falling behind inflation and practice expenses, creating a “fiscal squeeze” on practices. In this environment, having someone focused on protecting margins through strategic financial management becomes increasingly valuable. Time availability matters too. If you’re spending 15 hours weekly managing finances, that’s clinical time you’re not getting paid for. The opportunity cost of doing CFO-level work yourself often exceeds the cost of having it done.

What to Expect During the Relationship

The first 60 to 90 days feel intensive. Your fractional CFO needs substantial information, including financial statements, tax returns, bank statements, loan documents, and access to your practice management system. This discovery often reveals problems you didn’t know existed, like insurance contracts costing money rather than making it, locations that appear profitable but are actually subsidized by others, or vendor relationships where you’re paying well above market rates. Once in the ongoing phase, good fractional CFOs come to meetings with specific recommendations. They might propose dropping certain insurance plans, adjusting fee schedules, or changing staffing models at underperforming locations. Your role matters as much as the CFO’s expertise. You need to provide timely information, be honest about challenges, and actually implement the strategic decisions you agree on together. Implementation represents the gap where many engagements fail to deliver value.

Common Outcomes From CFO Partnerships

Improved financial visibility often represents the most immediate benefit. Within 90 days, most practices gain clear insight into which locations and service lines are actually profitable. Margin protection or improvement typically follows. According to research on dental practice overhead, practices should target overhead at 60-65% of collections or less. CFOs help identify specific categories where expenses exceed benchmarks and develop action plans to bring them back in line. Cash flow predictability improves as forecasting becomes more sophisticated. Instead of wondering whether you’ll have enough cash next month, you work from 90-day and 12-month rolling forecasts. Many practices report improved profitability despite not dramatically changing operations. CFO oversight identifies small inefficiencies that compound across multiple locations. Fixing vendor pricing here, adjusting staffing ratios there, adds up to meaningful margin improvement.

How CFO Services Support Your Existing Team

A fractional CFO enhances rather than replaces your existing team. Your bookkeeper continues handling day-to-day transaction processing. Your tax accountant remains responsible for tax preparation and compliance. The fractional CFO works closely with your CPA to ensure tax planning aligns with the overall business strategy. The CFO serves as the translator between your financial team and operational team, synthesizing it all into actionable business intelligence.

The Economics of Fractional Versus Full-Time

A full-time CFO with dental experience commands $150,000 to $250,000 in annual compensation plus benefits, totaling $180,000 to $300,000. Even large multi-location practices rarely need 40 hours of CFO-level work every week. Fractional CFO services typically cost $3,000 to $8,000 per month. At the high end, you’re investing $96,000 annually for senior-level financial expertise without benefits, payroll taxes, or full-time commitment. The economics shift once you’re running 8 to 10 locations generating $15 million-plus annually. Until you reach that threshold, fractional services deliver better economic value with flexibility to scale up or down as needs change.

Questions to Ask When Evaluating Providers

Ask about their specific experience with dental practices. General business CFOs don’t understand insurance contract dynamics, production per clinical hour, how hygiene departments impact profitability, or specific overhead benchmarks that matter in dentistry. Get clear on pricing structure and what’s included. Is it a flat monthly fee or does it vary? What happens if you need additional support? Are there setup fees? Request references from practices at similar stages and size to yours.

Final Considerations

Your financial infrastructure needs to meet minimum standards before engaging a CFO. If your bookkeeping is months behind and you don’t have basic financial statements, address those problems first. Be honest about your willingness to implement recommendations. CFO services work when practice owners act on insights and strategies. The analysis only matters if it leads to action. The right fractional CFO relationship can help you navigate the financial complexity that comes with growth without sacrificing profitability. For practices at that inflection point where financial management has become overwhelming, the investment often pays for itself through better decisions and protected margins. Ready to strengthen your practice’s financial infrastructure? Connect with Duckett Ladd’s team to discuss whether fractional CFO services align with your growth goals.

PRACTICE FIT ASSESSMENT QUIZ

See if we're the right match

TAKE THE QUIZ