July 16, 2025 • 48 mins
Ken Kaufman reveals how accrual accounting gives dentists the same financial clarity and growth advantage as big DSOs and how AccruDent makes it accessible to every practice.
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Episode Transcript
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Regan Robertson (00:03):
Doctor, if you're a dental entrepreneur and if you're
listening to this podcast, you most likelyare, you're probably looking to grow
and you might be following the adviceof some well-meaning CPAs who tell you
to stick with cash-based accounting.
But what if there was onething, in fact, that very thing
holding you back from securingfinancing and scaling your vision?
(00:25):
Today's guest, Ken Kaufman, isthe CFO and Co-founder of Crot,
and he's here to explain why.
Switching to accrualbased accounting, I know.
Hang in with me.
This is gonna be a good hour.
Isn't just smart, it is essential.
Ken helps emerging DSOs grouppractices and dentist gain the
financial clarity and credibilitythey need to grow with confidence.
(00:47):
Ken Kaufman, I met you in Salt Lake City.
It was my first introduction andfrom the word go, your passion comes
through loud and clear, and I'mthrilled to have you on the podcast.
Welcome.
Ken Kaufman (00:57):
Thank you, Reagan.
I'm thrilled to be here.
Regan Robertson (01:01):
So this is a great mashup, listeners, because you've
got me the very creative, think ofthe uh, yeah, the creative butterfly
floating around in this conversation.
And then you have the security, thestructure, the discipline of finance,
and actually that's one of the bestmarriages in business because when
strong structures are in place andsystems are in place, the creatives
of the world really are free to, um.
(01:24):
Freedom is the word.
They can create and feel reallybeautiful knowing that they're well held.
And I see that a lot in business, Ken.
Uh, when, when the structure's inplace, everything else can flow.
And dentists to me, I don't know aboutyou, but they're like a combination
of engineer and artist and Right.
Do you kind of agree with me there?
Ken Kaufman (01:44):
Yeah.
Uh, they're, they're manufacturinglike, like literally they.
They're, they're building and they'remanufacturing things and fixing things
that, you know, a lot of times, if Iput it in the context of construction,
they're, they're literally like doingconstruction, but it's on people's teeth.
Rather than, and, and you're going to,and you're bringing them to you, rather
(02:05):
than going to that big job site wherethat construction project is occurring.
Regan Robertson (02:09):
Yeah, and when I, you know, when I think about accounting and
how we show up and, and whether we docash based accounting or accrual based
accounting, there's so many things goingon in any given day that it can be, you
know how I do it as a leader anyway.
I mean, I. Think about what, what'sinviting risk into my thought process?
And I tend to eliminatethose risks quickly, or I
deprioritize them and I move on.
(02:29):
And a big narrative right now indentistry is, you know, we're taught
this is how to, to run well ifwe're taught how to run a practice.
But when we get to that point, uh,you know, why, why move away from.
Cash accounting, especially ifdentists are being advised above and
all by their CPAs to stick with it.
So bust that myth for me.
One, are CPAs doing what I think they'redoing and, and recommending cash-based
(02:53):
accounting as the the prevailing theme?
And if so, what's the hidden downsideof that advice that you've seen?
Ken Kaufman (03:00):
Sure.
So.
The difference between cash basisand account and, and cash basis and,
excuse me, uh, cash basis and accrualaccounting is that one of them is
accurate and the other one is not.
In terms of actual performance.
And one of the ways that I like toshare, help Dennis understand this is.
(03:26):
Regularly when I engage with dentists,they will tell me, Hey Ken, my collections
this month was more than my production.
Yeah.
And then the next month they say,well, my production was lower
this month than my collections.
And they go back andforth and back and forth.
Accrual accounting actually unpacksthat so you can actually see
and understand what's going on.
(03:46):
So it's not about when cash is comingin and out of your bank account,
now it's actually what work are youaccomplishing during that period of time?
And.
What is that worth in terms of theability to ultimately collect it over
time and that, that's the biggestpiece of the puzzle and it's really
(04:07):
hard to pull together and do, becausecash basis accounting is easy.
And the reason why is because you canjust look at like what's literally coming
into the bank and you can put that inand say, here it is, here's, here's
the financial statement, and this iseverything that happened in the practice.
Um, that gives a very, uh.
I, I, I would say unfair viewof what's actually occurring
(04:31):
inside of the dental practice.
It has nothing to do with yourperformance, has nothing to do with
when cash is showing up, because thecash is dependent on did your RCM
person actually process correctly?
Have you filed claims correctly?
Have you, uh, you know,adjudicated claims?
Have you gone through the whole process?
All of that is just a big ball of messthat ultimately you're handed cash
(04:52):
basis financials and they are lumpy.
Meaning one month you might have collecteda lot more than normal or on average,
'cause maybe there was an insurancecompany that had held back on some
payments or whatever, some period of time.
So you're like, well, look, I'm awesome.
Look, my revenue went up likethis, and then the next month,
then it comes cratering down again.
And so it just gives.
(05:12):
It gives an inaccurate picture of what'sactually really happening in terms of the
value you're creating for your patients.
Regan Robertson (05:19):
There is a, uh, foundational question that I
didn't even ask you right up front.
How do you define cash accounting and howdo you find define accrual accounting?
Ken Kaufman (05:27):
Sure.
Uh, cash basis accounting isliterally a. The money that's coming
in and out of your bank account.
And, and then it's ultimately saying,and, and this is the way like QuickBooks
and a lot of these, uh, and zeroand these softwares, they generally
are just capturing what are all thetransactions that are happening.
And then you can codify them andsay, well, this is a supply and
this is, uh, labor cost and thisis payroll, and so on and so forth.
(05:53):
Um, the cash basis accounting is that.
Accrual actually looks at notwhat's coming in into the bank
in and outta the bank account.
It looks at what productiondid you actually create
during that period of time?
Let's say during a month, uh, aperiod of time that's one month long.
You can see what actually you did andwhat you actually accomplished versus
(06:18):
what's happening with the cash goingback and forth, uh, in the practice.
Regan Robertson (06:24):
So understanding the difference between the cashflow model and
the accrual, I've gone through this myselfand understood it, and it is a little bit
scary thinking about, okay, this isn'twhat I like physically, tangibly have
my hands on necessarily right away, butthis is gonna create longevity for me.
Can you give me some examples thatare, listeners can say, oh, okay.
I know exactly what you're talking about.
(06:46):
Like, they get to the end of the monthand they're looking at their, their
p and l or their, their cash, what?
Gimme some examples so that theycan feel this tangible and inaction.
Ken Kaufman (06:54):
Sure.
The easiest one I can give I, I'm gonnastart with a construction analogy and
then I'll come back to dentistry, but.
My very first CFO job, I was so excited.
I I, and by the way, I got that gig.
I was way too young,way too inexperienced.
And here, here I am.
And I walked into and, andmy goal was with my career.
(07:16):
I wanted to be an executive.
I wanted to be an executive team.
I wanted to be giving.
Or be, be part of building agrowing company and organization.
And I just, I knew I was passionateabout it and, and wanted that to happen.
I walked into my very first executiveteam meeting and I'm like, yes, I'm here.
I finally made it.
I did, jumped through all thehoops I had to, and I sat down and
(07:41):
the most amazing thing happened.
These six executives sitting around thetable had a 30 minute argument about
why the financial statements were wrong.
Wait a minute.
We're a construction company, butwe bought up all these supplies,
but we haven't used them yet, and sothat's why our expenses are too high.
And then they jump over andsay, well, wait a minute.
Like this one contract over here.
(08:03):
They, they haven't paid us on time,and so that's why in the financials,
this is wrong and this is wrong.
And so they're going through allof this debate back and forth,
and I'm the new guy in the room.
I don't know what I, I, I don'tknow what I don't know except that.
I kind of as, as the 30 minutes sortof wound down, I raised my hand.
I said, Hey, did you guys know there'sa way to actually solve so that we
(08:26):
don't actually argue about the financialstatement, but it's actually accurate and
right from the very beginning, so thenwe can actually have a great discussion
and figure out how to grow and build and,and, uh, do what we want to in terms of.
Building out the company.
And it was, it was fascinating.
I had, at that point, I hadnever done an accrual conversion.
I only understood it.
Um, I only understood it, uh,just in, in my mind, right?
(08:51):
In
Regan Robertson (08:51):
theory, theory, not application.
Ken Kaufman (08:53):
Thank you.
And so then I, I went down thisjourney and that was the very first
company that I, uh, turned to accrual.
And guess what?
The debate stopped.
Because we had truth in front of us.
And if they say the truth will set youfree, it sets you free then to figure
out how to continue to build and growand make your business more successful.
Regan Robertson (09:15):
I love this, Ken.
I can, I can apply it justfrom a home instance, right?
Like in a snapshot because, well, okay,so my husband came to me this week and
he said, by the way, just so you know,uh, you're gonna see like a $900 Amazon.
Fee come, like charge come through.
But, but you know, it waslike, it was like hands up.
And he explained to me thathe went through all of our
(09:36):
recurring subscriptions, right?
Everything that we typically do was AmazonPrime Day, which there's drama around
that, whatever he went through and hecompared it to what he had been spending,
and he selected those items and pre.
You know, got 'em ordered so thatwe would save money in the long run.
I think because of you and others likeyou that have helped guide my financial
journey, it's an easy discussion.
(09:57):
But if you look at it fromthat blinders on, short list,
that's nine, that's 900 bucks.
Just, you know, where, how does that,how does that space out over time?
How do you make good forecastingand, and financial decisions that
take down some of that argument?
So there was no argument whatsoever.
It was, oh, how smart are you?
Let's.
Let's move forward with that.
So let's translate
Ken Kaufman (10:17):
this.
And interesting is, yeah.
'cause when you have thatsituation, right, you have
this one time expense mm-hmm.
That is gonna get spread out over time.
And that, that's wherelumpiness can occur.
'cause you're like, well wait a minute.
What?
What happened?
And why is this here?
Why is this there?
And so what.
Literally you do is you say,okay, well how long of a period of
time should this amount be, this$900 be spread out and let's say
(10:40):
it's nine months to make it easy.
And then you say, okay, then our, inour accrual, what we'll do is, is we
will book the full amount and thenwe will amortize it over those nine
months so that it, it is released.
That nine, you know, the $90 or whateverit is every month until you get to,
uh, where, where it's done and it'sover and it spreads it out, and all of
(11:03):
a sudden you don't have this big, hugelumpiness in your financial statements.
It's smoothed out.
Because that's what truthand reality actually is.
Regan Robertson (11:11):
It's just, I think this translation is so beautiful.
Uh, let's move it into what type ofhidden opportunities exist that would,
that accrual accounting helps youbenefit from that, that doctors might
not even know is a possibility for them.
So what, what is out there thatjust grinds your gears and you're
like, if you only knew the.
Ken Kaufman (11:33):
Number one benefit that comes when you put accrual accounting in place
is that your information is now accurate.
Now you might say, ah, who cares?
It's just a small dentalpractice or a small dental group.
And why does that matter?
It matters because the more accurateyour information is, the more
(11:55):
accurate you can forecast the future.
That's it.
That is the number one benefit thatcomes when you're on accrual, because
then what can happen is I can thentake your financial information and
I can turn it into a forecast thattells you over the next 13 weeks
what's gonna happen to your cash flow.
(12:15):
That's power, that's understanding.
Um, I, I can give you an example.
Um, there's a client that.
I've been working with for quite a whileand we are in the process of getting to
accuracy and then getting to a state,uh, um, uh, a cash forecast model.
He has been in the dental industryfor 20 years and he has always
(12:37):
had to guess when it's time to dodistributions and different things.
And he's just been guessing at, am Igonna have enough cash to cover this?
And what about this, and what about that?
And so the, the power of accrualaccounting in and of itself, it gives you.
Total accuracy.
And with that accuracy, it then gives youthe ability to project into the future.
And the further you go andthe more validated those
(12:59):
assumptions are, guess what?
The more valuable your company is overtime, your enterprise value increases
every month that you are doing accrualaccounting and, and then you are.
Building and growing your planto build and grow your dental
group or your dental practice.
It's um, it's a little bit nuanced there.
(13:19):
And there are a lot of financialframeworks that we layer in when
we help, uh, businesses that areready to kind of make this shift.
But it's, um, again.
I go back to the, I'm in thatexecutive team meeting and the
debate is gone, and all we do is wego to Truth and Truth sets us free.
(13:40):
It, it allows us and empowers usto grow, even if the truth is hard.
Even if we don't like what it says, atleast we will know what it is so that
we can fix it, change it, and grow.
And I, I've know, I know a lot ofpeople in the dental, dental industry.
I've been here a long time.
I've been here.
More than two decades, and I've not, I'venever come across a doctor that's dumb.
They're all super smart.
(14:01):
I've never come across leadersand executives that are dumb.
They're all super smart.
You give them the right information,they will be able to build and grow
whatever business you put in front of 'em.
Regan Robertson (14:13):
Wow.
When you, I, I have two questions.
One, I wanna know about these frameworks,so I'm gonna ask you about that.
But first, uh.
When I think of being able to forecast,I think about being able to make more
in, you know, better informed decisions.
And also having a runway to know whenI can activate some of those decisions.
So it might be expanding the practice,it might be adding another location,
(14:34):
it might be bringing on associate.
What are some of the different,uh, growth plans that you've seen
dentists who benefit from thisaccrual model have taken advantage of?
Ken Kaufman (14:46):
Yeah, I can.
Share one, and I think you, Reagan,you might actually be, uh, familiar
with this group, but this is a groupthat was built, has been in the
process for many, many years, buildingout a group of dental practices.
They got themselves to nine, uh, dentalpractices and, and I don't remember,
(15:06):
20 million in revenue somewhere.
30, 20 to 30 million in revenue.
Super impressive.
And they had done a, they'ddone a great job and.
They, however, were hitting this, uh, wallwhere they needed to borrow more money
in order for them to grow 'cause theywanted to grow past that nine locations.
(15:27):
They had some, uh, lots of great ideasabout how to do things, and they had
successfully grown through acquisition,buying practices and retaining doctors.
And the, the, a really, reallygood model, good clean operators.
Everything but the banksaid, Hey, guess what?
Your financial statementsare on cash basis.
And we know that that means that yourfinancial statements are wrong and
(15:51):
we're going to require you to switchto accrual so that we can actually see
what's happening and get confidence thatwe can actual actually borrow, uh, you,
we can give you more money, uh, so thatyou can take on these other acquisitions.
So it's interesting, right?
The banks even know we can't,they, they cannot trust.
Cash basis accounting because it's wrong.
Regan Robertson (16:10):
Wait, pause, wait.
When you say wrong, I love this.
Help me define what's wrong.
Is it because they've got outstanding, uh,you know, outstanding revenue that should
be coming in and that's not reflected?
Ken Kaufman (16:22):
Um, so there are several pieces of the puzzle there.
Yes.
But on, on the, um, revenuerecognition side of it, what we're
really getting at here is whatprocedures have been completed.
But have not yet been paid for.
Regan Robertson (16:41):
There we go.
Okay.
So I wanted to be crystal clearabout why something, you know, why
they, why banks would, because banksdon't operate on a lot of emotion.
It is really factual.
It is very analytical.
And so when I, you know, putting thatdefinition to me as a, as, as you
know, somebody who makes decisions,understanding what the, the bank's view
(17:02):
of right and wrong is, is important.
Ken Kaufman (17:04):
You know, and besides, besides the accounts receivable
and, and you know, that piece ofit, the other part is the expenses.
And in, uh, the world ofaccounting, we have something
called the matching principle.
And that is the matching principle is whenyou generate revenue, the costs associated
with being able to generate that revenueneed to be lined up in the same period.
(17:26):
So that Right.
The, the supplies that are used.
The labor that's, that's used, thedoctor pay, that's, that's, you know,
given to the doctor because they'rethe clinician and, and doing all
the work on the patients, the, the,the, um, hygienist, all of that.
This, this matching principle bringseverything together so that now I
can look at any period of time andI have got true, accurate views of
(17:51):
what happened during that month.
And then if I wanted to, I couldfigure out what didn't happen
that month that I needed as well.
That's usually not what, where peoplewanna focus, but I, I, I can say to
you, this is exactly true and right.
Um, and there's, there's just theselevers that you pull that move,
that convert from cash to accrual.
(18:12):
You're there.
And guess what?
Your banks are gonna trust you.
They, they, they view youthrough the tiny little keyhole
of your financial statements.
And if they're on cash basis, youcan get away with it for a while.
If you're a new associate andyou're getting a Bank of America
loan, they, they don't care.
They know that you're not gonnabe, uh, you're, you're not gonna
be anywhere near accrual ca uh,uh, accrual, um, accounting yet.
(18:36):
But as you grow, and if youhave those types of aspirations,
it's absolutely mandatory.
Regan Robertson (18:42):
I wanna switch gears a little bit, uh, and, and ask
you about the emotional toll thatyou have seen with dentists, uh,
especially as they are continuingto operate in, in the cash mindset.
And they're not, they're not,um, you know, they're not
embracing accrual yet, and.
What happens when they get hit withthose sup, you know, financial surprises,
(19:03):
liabilities, and forecasting challengesSince you've worked intimately with
so many practices, I'm curious,there's gotta be some patterns that
have popped up with you, um, over theyears and that transformation that's
occurred once it finally happens.
Ken Kaufman (19:19):
Yeah, this is a great question and we could
probably take days to unpack this.
Um, money is a really interesting thing.
It, it drives emotions that are sointense and sometimes really weird.
Um, and, and so.
(19:39):
The relationship that a dentist has withtheir dental practice and with look,
understanding the financial elements ofthat and how it works, uh, often there's
identity that's wrapped up in it and I'm,well, I'm, I'm a bad person because I
had a bad month and, you know, or I hada, a really bad, or I had a, a procedure
(20:00):
that just went really bad with a patientand it's gonna cost me some money to.
To get this figured out andstraightened out, and I feel
horrible about what's happened.
And so like all, all through all ofthese things, money plays a part in the
emotional toll for I made a mistake.
Um, or I, you know, I, I havean employee who stole from me.
(20:22):
Like, we have so many different.
Um, uh, pieces of the puzzle here.
Money e evokes emotion.
Um, and often it can be verynegative and frustrating.
And so what I generally find is,is dentists that feel like they're
getting beat up, they actuallyretreat and they don't wanna talk
about their financial statements.
They don't wanna talk about why theyshould be on a cruel because they've
(20:45):
been kind of beat down over time.
As they've had some victories, butthen they feel like they've had
a lot more losses than victories,although sometimes they don't.
We all struggle to, to put com tocompartmentalize those properly is
probably the right way for me to say it.
Um, but again.
Like I said, I've nevermet a dentist that's dumb.
(21:06):
They're all very super smartpeople and, and extremely capable.
Um, yet sometimes there's thisemotional toll that just eats at us
and eats at us to where, I don't know.
I mean, we, we've seen people just leavedentistry because it's stressful and,
and, um, everything that goes with it.
So I hope that.
Started to kind of answer that question.
I think there's a lot of depth into it.
Regan Robertson (21:27):
It does, and what's really interesting is that the
leaders that I have the honor ofinterviewing, they usually look at
things from a systemic point of view.
So they're never reallyinterested in the surface.
They wanna go right to theroot of whatever is going on.
And um, we just had Allison Laieras a one of our podcast guests, and
the one big takeaway that I got froman incredible hour with her was.
(21:50):
What is your money wound and, andwhat is that story telling you?
And, and she asked one questionand it was, uh, you know, what
is your first memory with money?
Then she just sort oflet it go from there.
And I, it's fascinating to me becausewhen we talk about the banks and
we talk about the non emotions,emotion is always at the heart.
(22:10):
There's, you can't separate the two.
But having systems in place and aguide to help us release some of that,
um, uh, frozen moments, if you will.
Like you said, doctors will either runaway or they will avoid or they will just.
Straight up freeze.
I think that's so common becausethe thought, like, to me, switching
(22:30):
something as intimate as, asdoing cash accounting would, would
make me a little feel daunting ornervous if I've not done it before.
And so trust is, is absolutely critical.
I want you to tell meabout these frameworks.
I'm a frameworks girl.
I love frameworks.
They're, you know, it's repeatable,it's scalable, it tells me it's proven.
What are some of theseframeworks that you've developed?
Ken Kaufman (22:51):
I'm, I've gotta make sure that I, uh, 'cause you're, you're gonna,
you're gonna, um, you're gonna make surethat I give you every single one of 'em.
So I'm gonna pull it up right now.
It's actually right.
And here, here's my truth for everybody.
I can't even ever remember all ofthem 'cause there's a lot of them.
And, uh, so I actually have tohave to go to my own website, um,
(23:12):
in order to, uh, pull them all up.
Regan Robertson (23:15):
You can plug that right now.
acronym.com.
Ken Kaufman (23:20):
It's good
Regan Robertson (23:21):
to know you're using your own website.
That's a great sign.
Ken Kaufman (23:24):
I may be the only one, but you know, so when we
talk about the, the frameworks.
It starts with consolidated andconsolidating financial statements,
and that means we're not just lookingat one independent practice, we're
actually putting it all together sowe can see what's happening overall.
(23:46):
So like the big DSOsobviously do a lot of this.
Um, a single practice wouldn't do this,but once you get to a second practice,
you would want to be able to look at eachpractice, but then also look at what does
it look like on a consolidated basis.
So that's one of them.
Uh, the second frameworkthat we focus on, Reagan, is.
(24:06):
Cash and I'll, I'll tell you rightnow, most of the dentists that are
listening and, and group owners and,and, and everything, they generally
look at two financial statementsevery month from their bookkeeper or
whoever's doing all that for them.
Income statement and balance sheet.
Regan Robertson (24:28):
Okay.
Ken Kaufman (24:28):
Did you know that there's a third one?
Regan Robertson (24:31):
Is one of those, the p and l.
Ken Kaufman (24:34):
P and l and income statement are the same.
Regan Robertson (24:36):
Okay.
Okay, good.
Okay.
What's the third one?
Ken Kaufman (24:39):
Statement of cash flow and the, and, and here's the, and,
and everybody forgets about this one.
Mm-hmm.
That's most important.
And the reason why, and, and infact, if you said, okay, Ken,
you can pick one of three incomestatement, balance sheet statement
of cash flow, which would you take?
I would take the statement of cashflow every time, and here's why.
(25:01):
That statement of cashflow tellsme one thing that I care about.
Is my business generatingcash or is it consuming cash?
Regan Robertson (25:11):
Oh, heck yes.
Oh, you can, you can see like that.
Ken Kaufman (25:17):
It's right there.
And then you can go one layer down.
It's, it's called free cash flow,and it's where we take, um, all,
everything that's generated fromoperations, all the, um, yeah, so it's
all, it's cash from operations minus.
Um, CapEx.
Mm-hmm.
And when you run that formula, uh,tell right there, that's everything
(25:41):
you need to know about If you are,if you've got a great business or
if you've got a sinking business.
That's, that's it.
So
Regan Robertson (25:48):
I, oh, I love simplicity.
And you're, you're not kidding at all.
I, I know.
I know what that looks like.
And it is.
It is.
And you know what, it's very vulnerable.
It lets you know definitivelyimmediately, and, and so there is
some steps to take to getting to thatpoint, but you must, that's to me, you
just captured for me what truth is.
(26:09):
How are we doing?
One statement that could tell us that and,um, you know, then we can go from there.
Ken Kaufman (26:15):
It's interesting, like even like QuickBooks and some of
these things, a lot of those financialsoftware, they really are not fully
equipped, especially to handle, uh,a consolidation where you've got
multiple dental practices put together.
Um, they really struggled to, to push outa, a good clean statement of cash flow.
Um, and it's funny, but.
(26:36):
My team, when we're doing accrualconversions and we're putting the
statement of cash flow in place,um, we have the most problem
with the statement of cash flow.
Uh, and we have to do a bunch of manualwork usually because everybody's developed
so much around the income statementand the balance sheet that the, the
statement of cash flow is, um, dismissed.
Um, and we have, we alot of work, our clients.
(26:59):
We tell them they need to know thisinformation and then we gotta make
sure we get them the information right.
So it's, uh, it's an interesting process.
So that's, that's the cashflow one.
The next one is what we callbenchmarking, um, and ranking file.
And this is when you have multiplepractices, you put them literally
side by side for every line itemof activity and you compare.
(27:22):
Yourself, not to the outside world.
You compare yourself to each other.
And the reason why is 'cause nowyou'll find the ones that are doing
well in certain areas, the ones thatare not doing well in other areas.
And then guess what?
You tell the practice manager who's reallygood at this to go over to that one.
And you can grow your dental practiceso successfully by never looking at
benchmarking stats from anybody else.
(27:44):
But you just look at and you makea friendly competition amongst
your dental practices and yourproviders and everything else to
create really amazing outcomes.
And so like I've dentists allthe time like, Hey, what, how,
what's the benchmark for this?
What's the benchmark for that?
I'm like, I don't know.
Like it matters what's going on in yourpractice and how you guys do things.
Why would you compare yourself tosome other person who's running
(28:07):
a completely different model?
Regan Robertson (28:09):
Right.
Those, uh, so any otherframeworks you wanna share?
Ken Kaufman (28:15):
There's like 20 of them.
Regan Robertson (28:16):
Okay.
We will, so we'll say, go to the websiteand you go through all of the frameworks,
but it does give a really good flavorto what people can, can really expect.
And I'm wondering, uh, if youcould take us through well.
Take us through the process, but I'm,I'm curious, what sort of agreements
do you put in place with doctors whoare, I call it, well, Bruce Baird
(28:38):
calls it handling objection before,it's the objection, which I've sort of
taken and run with throughout my life.
But what kind of agreements do you makealong the way to help a dentist feel, um,
safe for something that really is honestlyquite simple, but can feel like it's not?
Ken Kaufman (28:52):
Yeah, it's, it's a hundred percent about education.
Regan Robertson (28:55):
Mm-hmm.
Ken Kaufman (28:55):
Again.
There's no dumb doctors in the room.
They're all smart.
Um, but they haven't gotteneducation in these areas.
So it's, it's about framing it theright way and it's about educating
them so that they can actually lookat it and look, look at this financial
information and actually start to gainintuition around it and, and start to.
(29:21):
It, it, it's a muscle thatjust hasn't been exercised yet.
And so as you exercise it, you're gonnaget better and better at understanding it.
And the, it's the funnest thing when wehave a client that really doesn't have any
confidence around finance to months later.
Um, and they're, they're, they'reliterally calling me before
I've even had a chance to lookat the financial statement.
(29:43):
And they're telling me this and asking mequestions about that, that that's magic.
Regan Robertson (29:49):
I was gonna ask you about the mindset of the doctor that switches.
So the practices that switch, um,do you feel like it's, it's not just
freeing for them from the forecast,but do, do the, does physiologically,
like almost, do they feel like theyhave more opportunity and, and more
space to think about what's possible?
Ken Kaufman (30:09):
Absolutely.
Again, because now.
Uh, accuracy solves for all of it.
As soon as you know that it's accurate andright, you can trust it and you can make
decisions based on it and know that you'recoming from a, a place of total truth.
Regan Robertson (30:24):
Have you seen any, uh, any crazy, uh, good but good, but like
some really off the wall kind of changesthat have come about, like, wow, I was
going down this path, I put this inplace, and now I see new opportunities
that I never would've thought before.
Ken Kaufman (30:39):
Yeah.
Um.
So, so many of them I, I think.
Honestly, it's where, where thebiggest bang for the buck comes is
when you have a bank that actuallyvalues that and needs that to happen.
Um mm-hmm.
In order for you to continue tobuild and grow your business.
That's usually like where,where we get a lot of real.
(31:03):
Real bang for the buck, so tospeak, and, and there's massive,
massive value that comes to them.
Um, and then there are some more subtleones where all of a sudden now when
they're looking at something, theyknow that they're not allowed to argue
about it anymore, about it being right.
That's, that's not allowed in theconversation because we're now at a
(31:23):
place where we know we have accuracy.
And so that means that we're looking attruth and we need to absorb the truth
and allow the truth to set us free.
I.
Regan Robertson (31:33):
How do, how do CPAs tend to react to, to
this recommendation to switch?
Ken Kaufman (31:38):
Super frustrated.
Regan Robertson (31:40):
Why?
Tell me about that.
I just, 'cause it doesn't makesense to me, obviously, 'cause I'm
not in the financial world, but Idon't get why they wouldn't say,
this is amazing and a great idea.
Ken Kaufman (31:48):
So I. There's probably two main reasons.
One is it's super hard to do I'll, andI'll come back to that in a second.
The second one is that when a tax CPAhas a client, what they want is they
want that client to be able to give themreally clean financial information every
(32:10):
year so that they can go and do taxes.
Regan Robertson (32:12):
Mm-hmm.
Ken Kaufman (32:13):
When you convert a dental practice or a group to.
Accrual that messes them up.
And the reason why it messes them up isbecause they generally are gonna file your
taxes and, and I'm not a tax advisor here.
I'm not gonna give tax advice.
I'm gonna tell you just what I knowfrom the hundreds and hundreds of
(32:34):
conversations and CPAs that I'veinteracted with over the years.
They want to file your taxes on a cashbasis, because a lot of times that's
more advantageous from a tax perspective,but if your books are being done on an
accrual basis, there's a conversion thathas to happen where you have to say,
(32:56):
oh, well this is what the accrual is.
We now need to adjust it to become,uh, tax basis or a cash basis so
that the taxes can be organizedand done and paid based on that.
And so
Regan Robertson (33:10):
that makes sense.
That totally tracks.
Ken Kaufman (33:12):
So it's a little, it's a little bit of extra work and effort.
Um, it's called an.
Reagan, I'm, I'm a nerd about this,but it's called an M1 adjustment.
And when you put me in a room witha CPA and they're complaining about
it, all I will do is say, Hey, howabout every year we'll go ahead and
do an M1 adjustment for you on this.
Um, and then that should makethe tax return very easy.
(33:34):
That's,
Regan Robertson (33:35):
and what did they say?
Ken Kaufman (33:37):
They say, oh, okay.
Yeah, that's fine.
Regan Robertson (33:39):
So you offered to do the M1 for them.
You offer to do the adjustmentand then they don't have to do it.
Yep.
So really what's truly frustratingthem is just more work for them.
No, they're trying to, I, so they'reserving themselves as opposed to
really thinking about the longevityof the group and the practice
and the doctor's ultimate goals.
Ken Kaufman (33:57):
Yeah.
Yeah.
And I think the other, not
Regan Robertson (34:00):
to knock you guys, not to knock you CPAs,
I'm just trying to understand.
Ken Kaufman (34:03):
Well, no, they, they've got a, they've got a
very hard job, very diff job.
And you know, with the clients we workwith, we're good friends with those CPAs.
'cause we, there's, there's a lot of backand forth in, in making sure it all goes.
The, the other part though,that I said to come back to is.
When it comes to accrual, and I saidit's hard, what it requires you to do
(34:23):
is reach into the practice managementsoftware and pull out information
and data that is very nuanced.
It's hard to do.
Mm-hmm.
It's hard and it's hard to.
To get right.
For example, I may need to go and say,Hey, I need a balance sheet as of this
date, um, so that I can, and, and I needa, a production report as of this date.
(34:44):
And sometimes these practicemanagement softwares don't save
information and things get lost and,and it's, and it's hard to find.
And so the thing that we'redoing at Accruent is we're
actually cracking the code in.
All of the practice managementsoftwares where we're going
in, we, we do a data schema.
We pull everything togetherso that, because my goal is to
(35:06):
democratize accrual accounting.
Everybody should have it.
And right now there are some mythsout there that it's way too expensive,
it's too hard, it's complicated.
It messes up your taxes,so on and so forth.
Those are, those are some of the knocks.
And so all, all we're doing is, iswe're one by one, eliminating them
completely so that we, because wewant to build a platform here that the
(35:27):
entire industry can benefit from AccrualCounty, not just, not just a few who.
You know, listen to this podcast andsay, Hey, I, that sounds like a good
idea because everybody needs it.
Everybody needs it.
Regan Robertson (35:39):
So typically, has it been, uh, a sort of a gate kept, uh,
way to do business because of cost?
Has, has accrual accounting inthe past been something that
has been cost prohibitive?
Ken Kaufman (35:51):
Yeah.
Um, the, the answer to that is yes.
Mm-hmm.
I've, I heard of, and I, I, I'll getthe information here wrong, just because
I heard it kind of on a secondhandbasis, but there was a group that
really wanted to convert to accrual.
They're fairly large, and the biggerit is, the more complicated, you know,
that's just how things work in dental.
(36:12):
And I believe that they spent a hundredthousand dollars with a group that
was helping them convert to accrualand never actually got it done.
Regan Robertson (36:22):
Oh,
Ken Kaufman (36:22):
no.
And so.
That was.
That was the tip of the iceberg for me.
When I heard that story, I said,there's no, that is so wrong and bad.
We're, we're at a place now where we canbasically, we haven't cracked the code
on all the PMSs yet 'cause we're sort ofworking our way through based on client
needs and, and those sorts of things.
We didn't start with withthat completely done.
(36:45):
Um, but we're at a point where.
Depending on the PMS that you're on,you can get accrual accounting for
really close to what bookkeeping costs.
It's not, it's not inordinately expensive.
Regan Robertson (36:57):
Okay.
What I love about what you just said,and you know, you hit my hearts.
Uh, if you're listening right nowand you don't know who Ken is, the
little background secret is Kenhas been the CFO for some enormous
organizations within dentistry.
And, uh, I love nothing more than tofind out what people who have been
massively successful do and thenbring it back to small businesses.
(37:20):
And when you saiddemocratize, you obviously.
Captured in one word.
I think what you're trying to do and maybewhy you're, uh, how you're driven and why
you're driven so passionately forward,there is nothing greater than saying, we
know how the big dogs do it, and you cando it too, and you're making it available.
So Ken, walk me through likethe 1, 2, 3 step process.
(37:42):
How, how does someone begin totake those steps to put this
into play in their own practice?
Ken Kaufman (37:49):
Here's the thing.
In this instance, the doctors andpeople running the, the practices
and the business, um, they'reworthless to us because everything
we need is already in the PMS.
And so we, this isliterally a done for you.
We show up, we do everything,we put it in place.
There's a series of journal entriesthat have to get put into the
(38:11):
books, and if it's QuickBooks orwhatever, and we're working with
the PMS, and literally this is.
Here's how much time we need.
It'll be done on this date, andit's done and it's in place.
And I'll tell you this, right?
One, one thing that we do, uh, thatI learned early on, I, I made this
mistake with one of our first clients.
We fixed it for them.
(38:31):
But what we do is, is we actuallygo back 12 months and we do the
accrual starting 12 months ago.
And the reason why is so that then todaywhen you're comparing your financial
performance today to prior year, it's all.
Equal and you don't havethe conversion messing up or
creating issues, and so that.
(38:53):
That's, that's how we do it.
We show up, we go 12 months back.
We bring everything, anything upcurrent that needs to be current.
And then, uh, it, it's done.
And, and their financial statementsare just now in that format.
And then every month there are someadjusting entries that need to be
done, some reversals and some newAR balances and things like that.
We do that.
We work with their team.
(39:14):
If you've got a bookkeeper,we've show 'em how to do it.
Sometimes we give them theentries and they put 'em in.
Sometimes we put 'em in what,just whatever makes sense to do.
Um, and then.
And yeah, like I said it, the doctors arereally worthless to us in the process.
But then what happens is nowwe've empowered them because now
they've got truth and with truth.
(39:34):
Now we can go take on the world,go take on our growth initiatives
and feel confident we're not gonnarun outta cash in the process.
Regan Robertson (39:41):
Well, and what I love about that so much is it's not that, that
so much, maybe that they're worthless,but I mean, they don't have to, they
don't have to do heavy weight lifting.
That you have the information andyou've said the word hard a little
bit ago, and, um, that it can becomplex and it can be, can be hard.
I think the word hard is very relative.
For example, if I was to performa, uh, a crown, of course for me
(40:03):
that would be impossible becauseI have no experience behind it.
And I formally, I like soap.
Everything.
I have believed that if you're runningfrom a place of passion and you are
dedicated to that passion, you canhelp make things easier for others.
And with your frameworks, with thesoftware, with your, like all of
the thoughtfulness put into this,I can see it being easy and not
(40:26):
difficult or complex for the doctor.
It sounds like you can come rightalongside them, uh, and and make that
change your reality so that they can grow.
Ken Kaufman (40:35):
Yeah, that's right.
You said that much better.
I don't mean your, I don't mean thatthey're worthless, but just in this one
tiny little thing, they should be becausethey're great clinicians and they need to,
they need to be Exactly, they should be
Regan Robertson (40:46):
worthless in certain areas because I would be
worthless in certain areas though.
I, I, I like that a lot.
Uh, this has been an amazingconversation with you, Ken Convers.
Uh, I love, I love what you're doing.
I absolutely, uh, love that.
There's this possibility that, thatdidn't previously always exist, or if it
was, it was a lot harder to, to come by.
Uh, are there any questions or pointsof note before we close this out that
(41:11):
doctors should write down and they,you know, if they're considering
this, uh, or if they, if they'rewondering, is this the right fit for me?
What would you, what wouldyou have them reflect on?
Ken Kaufman (41:21):
So I think that in addition, we have.
An interesting opportunity here whereif somebody's listening to this and they
say, Hey, I, I might be interested inthis, or I want to take a look at this,
and accrual accounting sounds reallycompelling, or, I've been thinking about
this for years because I've, I've beenpreaching this from various pulpits
for years and, uh, so some, uh, havemaybe are just tired of me altogether.
(41:46):
Talking about it, but I think, um, ifyou feel at all inclined, we'd be happy
to have a brief, very brief conversationand say, Hey, here's, here's what it is.
Here's how it works.
Um, and, uh, we want to try toultimately help this whole industry
get there, whatever that means, and howwhatever we have to do, um, to do that.
I think for doctors specifically.
(42:10):
What we need is, we need you to trustthat there is a right way to do this,
and there's a best way to do this.
And if you allow for thatto come into your life, it's
gonna make your life better.
Um, in, in many ways, yourbankers will love you.
Your spouses will love you.
No, they already love you,but you know what I'm saying?
(42:30):
Like all of a sudden.
You, you become bankable.
You become, there's just so manybenefits, uh, that, that, that come to it.
If, if you're thinking about it, um,you know, come check out our website.
There's a lot of information there.
We've got, in fact, we'veeven put the whole formula in.
If you want to do a cruel yourself,it's right there in a blog post.
(42:50):
Journal entry by journal entry.
Here's how you do it.
So like, it's that, that's ourcommitment to try to democratize.
Regan Robertson (42:57):
Why do you care so much about the democratization of this?
What drives you?
Ken Kaufman (43:05):
Number one, because everybody says it can't be done.
And I'm, uh, I'm a, I'm a little bit of a,I'm an zag when everybody else is zigging.
Um, and.
I actually think thatthe industry itself is.
(43:25):
Has played the ignorancecard for way too long.
Um, and there are a lot of thingsin dental that frustrate us.
In fact, I think I've told you thisvery again, but I'm, I'm working
on launching a podcast, um, andit's gonna be 100% about, um.
The truth tellers in dentistry.
And we're gonna, we're gonna beunpacking the stuff that nobody talks
(43:46):
about, but needs to be talked about.
And this is one of 'em I, like, thereare bookkeepers and accountants, they
know better, but they're not practicingwhat they, what, what's being preached
and what the best practices are.
And so, and again, I hate tocall the entire industry out.
Please don't blackball me.
I'm, I'm just trying todo the right thing here.
(44:08):
But, uh, yeah, we're, we're on amission because it's being done wrong.
It's been done for so long thateverybody thinks it's the right way
to do it, and we've gotta break.
We've gotta break that.
Regan Robertson (44:19):
Hitting autopilot because something is good enough
has never sat well with me.
And I remember one, one organization I,I, I left many, many, many, many years
ago, and it was, but it was a, it wasa moment in time where I had a core
values alignment discussion before Ieven knew what the term core value was.
But, uh, but we had the leader stand andexplain that good enough is good enough.
(44:43):
We don't need to waste any more time orresources on anything just to get it out.
And I remember thinking, it's not you.
You can't hit autopilot.
There's people you know impacted by this.
And although I couldn't articulateit at the time, Ken, I can certainly
articulate it now, that that is oneof those pivotal moments in life where
you take a stand and you define what.
(45:06):
Meaningful to you and not everybody,uh, you know, is the same.
People have different corevalues, and that's perfectly okay.
Mm-hmm.
I think today's conversationhelped us uncover some of your
core values and, uh, give somegreat education to our listeners.
Thank you, Ken, for allyou do in dentistry and for
being on the podcast today.
Ken Kaufman (45:25):
Of course.
Reagan, you are an amazing interviewer.
Thank you so much.
It's been an absolute pleasure to be here.
Um, I hope I didn't chaseany of your listeners away.
Um, but it's, it's, it's been great.
Thank you so much for the opportunity.
Regan Robertson (45:37):
You are so welcome.
What is your website again?
How do you spell that out and how doyou want people to get ahold of you?
Ken Kaufman (45:44):
So, um, we named the company Accruent.
For accrual accounting.
Regan Robertson (45:50):
Very clever.
Ken Kaufman (45:51):
No, it's a big, big shocker there, right?
Um, it's A-C-C-R-U-D-E-N t.comaccruent, just like it sounds.
Regan Robertson (45:59):
Excellent.
Well, thank you so much Ken and thank youlisteners for tuning into another episode
of Everyday Practices Dental Podcasts.
Doctor, if you're a dental entrepreneur and if you're
listening to this podcast, you most likelyare, you're probably looking to grow
and you might be following the adviceof some well-meaning CPAs who tell you
to stick with cash-based accounting.
But what if there was onething, in fact, that very thing
holding you back from securingfinancing and scaling your vision?
(00:25):
Today's guest, Ken Kaufman, isthe CFO and Co-founder of Crot,
and he's here to explain why.
Switching to accrualbased accounting, I know.
Hang in with me.
This is gonna be a good hour.
Isn't just smart, it is essential.
Ken helps emerging DSOs grouppractices and dentist gain the
financial clarity and credibilitythey need to grow with confidence.
(00:47):
Ken Kaufman, I met you in Salt Lake City.
It was my first introduction andfrom the word go, your passion comes
through loud and clear, and I'mthrilled to have you on the podcast.
Welcome.
Ken Kaufman (00:57):
Thank you, Reagan.
I'm thrilled to be here.
Regan Robertson (01:01):
So this is a great mashup, listeners, because you've
got me the very creative, think ofthe uh, yeah, the creative butterfly
floating around in this conversation.
And then you have the security, thestructure, the discipline of finance,
and actually that's one of the bestmarriages in business because when
strong structures are in place andsystems are in place, the creatives
of the world really are free to, um.
(01:24):
Freedom is the word.
They can create and feel reallybeautiful knowing that they're well held.
And I see that a lot in business, Ken.
Uh, when, when the structure's inplace, everything else can flow.
And dentists to me, I don't know aboutyou, but they're like a combination
of engineer and artist and Right.
Do you kind of agree with me there?
Ken Kaufman (01:44):
Yeah.
Uh, they're, they're manufacturinglike, like literally they.
They're, they're building and they'remanufacturing things and fixing things
that, you know, a lot of times, if Iput it in the context of construction,
they're, they're literally like doingconstruction, but it's on people's teeth.
Rather than, and, and you're going to,and you're bringing them to you, rather
(02:05):
than going to that big job site wherethat construction project is occurring.
Regan Robertson (02:09):
Yeah, and when I, you know, when I think about accounting and
how we show up and, and whether we docash based accounting or accrual based
accounting, there's so many things goingon in any given day that it can be, you
know how I do it as a leader anyway.
I mean, I. Think about what, what'sinviting risk into my thought process?
And I tend to eliminatethose risks quickly, or I
deprioritize them and I move on.
(02:29):
And a big narrative right now indentistry is, you know, we're taught
this is how to, to run well ifwe're taught how to run a practice.
But when we get to that point, uh,you know, why, why move away from.
Cash accounting, especially ifdentists are being advised above and
all by their CPAs to stick with it.
So bust that myth for me.
One, are CPAs doing what I think they'redoing and, and recommending cash-based
(02:53):
accounting as the the prevailing theme?
And if so, what's the hidden downsideof that advice that you've seen?
Ken Kaufman (03:00):
Sure.
So.
The difference between cash basisand account and, and cash basis and,
excuse me, uh, cash basis and accrualaccounting is that one of them is
accurate and the other one is not.
In terms of actual performance.
And one of the ways that I like toshare, help Dennis understand this is.
(03:26):
Regularly when I engage with dentists,they will tell me, Hey Ken, my collections
this month was more than my production.
Yeah.
And then the next month they say,well, my production was lower
this month than my collections.
And they go back andforth and back and forth.
Accrual accounting actually unpacksthat so you can actually see
and understand what's going on.
(03:46):
So it's not about when cash is comingin and out of your bank account,
now it's actually what work are youaccomplishing during that period of time?
And.
What is that worth in terms of theability to ultimately collect it over
time and that, that's the biggestpiece of the puzzle and it's really
(04:07):
hard to pull together and do, becausecash basis accounting is easy.
And the reason why is because you canjust look at like what's literally coming
into the bank and you can put that inand say, here it is, here's, here's
the financial statement, and this iseverything that happened in the practice.
Um, that gives a very, uh.
I, I, I would say unfair viewof what's actually occurring
(04:31):
inside of the dental practice.
It has nothing to do with yourperformance, has nothing to do with
when cash is showing up, because thecash is dependent on did your RCM
person actually process correctly?
Have you filed claims correctly?
Have you, uh, you know,adjudicated claims?
Have you gone through the whole process?
All of that is just a big ball of messthat ultimately you're handed cash
(04:52):
basis financials and they are lumpy.
Meaning one month you might have collecteda lot more than normal or on average,
'cause maybe there was an insurancecompany that had held back on some
payments or whatever, some period of time.
So you're like, well, look, I'm awesome.
Look, my revenue went up likethis, and then the next month,
then it comes cratering down again.
And so it just gives.
(05:12):
It gives an inaccurate picture of what'sactually really happening in terms of the
value you're creating for your patients.
Regan Robertson (05:19):
There is a, uh, foundational question that I
didn't even ask you right up front.
How do you define cash accounting and howdo you find define accrual accounting?
Ken Kaufman (05:27):
Sure.
Uh, cash basis accounting isliterally a. The money that's coming
in and out of your bank account.
And, and then it's ultimately saying,and, and this is the way like QuickBooks
and a lot of these, uh, and zeroand these softwares, they generally
are just capturing what are all thetransactions that are happening.
And then you can codify them andsay, well, this is a supply and
this is, uh, labor cost and thisis payroll, and so on and so forth.
(05:53):
Um, the cash basis accounting is that.
Accrual actually looks at notwhat's coming in into the bank
in and outta the bank account.
It looks at what productiondid you actually create
during that period of time?
Let's say during a month, uh, aperiod of time that's one month long.
You can see what actually you did andwhat you actually accomplished versus
(06:18):
what's happening with the cash goingback and forth, uh, in the practice.
Regan Robertson (06:24):
So understanding the difference between the cashflow model and
the accrual, I've gone through this myselfand understood it, and it is a little bit
scary thinking about, okay, this isn'twhat I like physically, tangibly have
my hands on necessarily right away, butthis is gonna create longevity for me.
Can you give me some examples thatare, listeners can say, oh, okay.
I know exactly what you're talking about.
(06:46):
Like, they get to the end of the monthand they're looking at their, their
p and l or their, their cash, what?
Gimme some examples so that theycan feel this tangible and inaction.
Ken Kaufman (06:54):
Sure.
The easiest one I can give I, I'm gonnastart with a construction analogy and
then I'll come back to dentistry, but.
My very first CFO job, I was so excited.
I I, and by the way, I got that gig.
I was way too young,way too inexperienced.
And here, here I am.
And I walked into and, andmy goal was with my career.
(07:16):
I wanted to be an executive.
I wanted to be an executive team.
I wanted to be giving.
Or be, be part of building agrowing company and organization.
And I just, I knew I was passionateabout it and, and wanted that to happen.
I walked into my very first executiveteam meeting and I'm like, yes, I'm here.
I finally made it.
I did, jumped through all thehoops I had to, and I sat down and
(07:41):
the most amazing thing happened.
These six executives sitting around thetable had a 30 minute argument about
why the financial statements were wrong.
Wait a minute.
We're a construction company, butwe bought up all these supplies,
but we haven't used them yet, and sothat's why our expenses are too high.
And then they jump over andsay, well, wait a minute.
Like this one contract over here.
(08:03):
They, they haven't paid us on time,and so that's why in the financials,
this is wrong and this is wrong.
And so they're going through allof this debate back and forth,
and I'm the new guy in the room.
I don't know what I, I, I don'tknow what I don't know except that.
I kind of as, as the 30 minutes sortof wound down, I raised my hand.
I said, Hey, did you guys know there'sa way to actually solve so that we
(08:26):
don't actually argue about the financialstatement, but it's actually accurate and
right from the very beginning, so thenwe can actually have a great discussion
and figure out how to grow and build and,and, uh, do what we want to in terms of.
Building out the company.
And it was, it was fascinating.
I had, at that point, I hadnever done an accrual conversion.
I only understood it.
Um, I only understood it, uh,just in, in my mind, right?
(08:51):
In
Regan Robertson (08:51):
theory, theory, not application.
Ken Kaufman (08:53):
Thank you.
And so then I, I went down thisjourney and that was the very first
company that I, uh, turned to accrual.
And guess what?
The debate stopped.
Because we had truth in front of us.
And if they say the truth will set youfree, it sets you free then to figure
out how to continue to build and growand make your business more successful.
Regan Robertson (09:15):
I love this, Ken.
I can, I can apply it justfrom a home instance, right?
Like in a snapshot because, well, okay,so my husband came to me this week and
he said, by the way, just so you know,uh, you're gonna see like a $900 Amazon.
Fee come, like charge come through.
But, but you know, it waslike, it was like hands up.
And he explained to me thathe went through all of our
(09:36):
recurring subscriptions, right?
Everything that we typically do was AmazonPrime Day, which there's drama around
that, whatever he went through and hecompared it to what he had been spending,
and he selected those items and pre.
You know, got 'em ordered so thatwe would save money in the long run.
I think because of you and others likeyou that have helped guide my financial
journey, it's an easy discussion.
(09:57):
But if you look at it fromthat blinders on, short list,
that's nine, that's 900 bucks.
Just, you know, where, how does that,how does that space out over time?
How do you make good forecastingand, and financial decisions that
take down some of that argument?
So there was no argument whatsoever.
It was, oh, how smart are you?
Let's.
Let's move forward with that.
So let's translate
Ken Kaufman (10:17):
this.
And interesting is, yeah.
'cause when you have thatsituation, right, you have
this one time expense mm-hmm.
That is gonna get spread out over time.
And that, that's wherelumpiness can occur.
'cause you're like, well wait a minute.
What?
What happened?
And why is this here?
Why is this there?
And so what.
Literally you do is you say,okay, well how long of a period of
time should this amount be, this$900 be spread out and let's say
(10:40):
it's nine months to make it easy.
And then you say, okay, then our, inour accrual, what we'll do is, is we
will book the full amount and thenwe will amortize it over those nine
months so that it, it is released.
That nine, you know, the $90 or whateverit is every month until you get to,
uh, where, where it's done and it'sover and it spreads it out, and all of
(11:03):
a sudden you don't have this big, hugelumpiness in your financial statements.
It's smoothed out.
Because that's what truthand reality actually is.
Regan Robertson (11:11):
It's just, I think this translation is so beautiful.
Uh, let's move it into what type ofhidden opportunities exist that would,
that accrual accounting helps youbenefit from that, that doctors might
not even know is a possibility for them.
So what, what is out there thatjust grinds your gears and you're
like, if you only knew the.
Ken Kaufman (11:33):
Number one benefit that comes when you put accrual accounting in place
is that your information is now accurate.
Now you might say, ah, who cares?
It's just a small dentalpractice or a small dental group.
And why does that matter?
It matters because the more accurateyour information is, the more
(11:55):
accurate you can forecast the future.
That's it.
That is the number one benefit thatcomes when you're on accrual, because
then what can happen is I can thentake your financial information and
I can turn it into a forecast thattells you over the next 13 weeks
what's gonna happen to your cash flow.
(12:15):
That's power, that's understanding.
Um, I, I can give you an example.
Um, there's a client that.
I've been working with for quite a whileand we are in the process of getting to
accuracy and then getting to a state,uh, um, uh, a cash forecast model.
He has been in the dental industryfor 20 years and he has always
(12:37):
had to guess when it's time to dodistributions and different things.
And he's just been guessing at, am Igonna have enough cash to cover this?
And what about this, and what about that?
And so the, the power of accrualaccounting in and of itself, it gives you.
Total accuracy.
And with that accuracy, it then gives youthe ability to project into the future.
And the further you go andthe more validated those
(12:59):
assumptions are, guess what?
The more valuable your company is overtime, your enterprise value increases
every month that you are doing accrualaccounting and, and then you are.
Building and growing your planto build and grow your dental
group or your dental practice.
It's um, it's a little bit nuanced there.
(13:19):
And there are a lot of financialframeworks that we layer in when
we help, uh, businesses that areready to kind of make this shift.
But it's, um, again.
I go back to the, I'm in thatexecutive team meeting and the
debate is gone, and all we do is wego to Truth and Truth sets us free.
(13:40):
It, it allows us and empowers usto grow, even if the truth is hard.
Even if we don't like what it says, atleast we will know what it is so that
we can fix it, change it, and grow.
And I, I've know, I know a lot ofpeople in the dental, dental industry.
I've been here a long time.
I've been here.
More than two decades, and I've not, I'venever come across a doctor that's dumb.
They're all super smart.
(14:01):
I've never come across leadersand executives that are dumb.
They're all super smart.
You give them the right information,they will be able to build and grow
whatever business you put in front of 'em.
Regan Robertson (14:13):
Wow.
When you, I, I have two questions.
One, I wanna know about these frameworks,so I'm gonna ask you about that.
But first, uh.
When I think of being able to forecast,I think about being able to make more
in, you know, better informed decisions.
And also having a runway to know whenI can activate some of those decisions.
So it might be expanding the practice,it might be adding another location,
(14:34):
it might be bringing on associate.
What are some of the different,uh, growth plans that you've seen
dentists who benefit from thisaccrual model have taken advantage of?
Ken Kaufman (14:46):
Yeah, I can.
Share one, and I think you, Reagan,you might actually be, uh, familiar
with this group, but this is a groupthat was built, has been in the
process for many, many years, buildingout a group of dental practices.
They got themselves to nine, uh, dentalpractices and, and I don't remember,
(15:06):
20 million in revenue somewhere.
30, 20 to 30 million in revenue.
Super impressive.
And they had done a, they'ddone a great job and.
They, however, were hitting this, uh, wallwhere they needed to borrow more money
in order for them to grow 'cause theywanted to grow past that nine locations.
(15:27):
They had some, uh, lots of great ideasabout how to do things, and they had
successfully grown through acquisition,buying practices and retaining doctors.
And the, the, a really, reallygood model, good clean operators.
Everything but the banksaid, Hey, guess what?
Your financial statementsare on cash basis.
And we know that that means that yourfinancial statements are wrong and
(15:51):
we're going to require you to switchto accrual so that we can actually see
what's happening and get confidence thatwe can actual actually borrow, uh, you,
we can give you more money, uh, so thatyou can take on these other acquisitions.
So it's interesting, right?
The banks even know we can't,they, they cannot trust.
Cash basis accounting because it's wrong.
Regan Robertson (16:10):
Wait, pause, wait.
When you say wrong, I love this.
Help me define what's wrong.
Is it because they've got outstanding, uh,you know, outstanding revenue that should
be coming in and that's not reflected?
Ken Kaufman (16:22):
Um, so there are several pieces of the puzzle there.
Yes.
But on, on the, um, revenuerecognition side of it, what we're
really getting at here is whatprocedures have been completed.
But have not yet been paid for.
Regan Robertson (16:41):
There we go.
Okay.
So I wanted to be crystal clearabout why something, you know, why
they, why banks would, because banksdon't operate on a lot of emotion.
It is really factual.
It is very analytical.
And so when I, you know, putting thatdefinition to me as a, as, as you
know, somebody who makes decisions,understanding what the, the bank's view
(17:02):
of right and wrong is, is important.
Ken Kaufman (17:04):
You know, and besides, besides the accounts receivable
and, and you know, that piece ofit, the other part is the expenses.
And in, uh, the world ofaccounting, we have something
called the matching principle.
And that is the matching principle is whenyou generate revenue, the costs associated
with being able to generate that revenueneed to be lined up in the same period.
(17:26):
So that Right.
The, the supplies that are used.
The labor that's, that's used, thedoctor pay, that's, that's, you know,
given to the doctor because they'rethe clinician and, and doing all
the work on the patients, the, the,the, um, hygienist, all of that.
This, this matching principle bringseverything together so that now I
can look at any period of time andI have got true, accurate views of
(17:51):
what happened during that month.
And then if I wanted to, I couldfigure out what didn't happen
that month that I needed as well.
That's usually not what, where peoplewanna focus, but I, I, I can say to
you, this is exactly true and right.
Um, and there's, there's just theselevers that you pull that move,
that convert from cash to accrual.
(18:12):
You're there.
And guess what?
Your banks are gonna trust you.
They, they, they view youthrough the tiny little keyhole
of your financial statements.
And if they're on cash basis, youcan get away with it for a while.
If you're a new associate andyou're getting a Bank of America
loan, they, they don't care.
They know that you're not gonnabe, uh, you're, you're not gonna
be anywhere near accrual ca uh,uh, accrual, um, accounting yet.
(18:36):
But as you grow, and if youhave those types of aspirations,
it's absolutely mandatory.
Regan Robertson (18:42):
I wanna switch gears a little bit, uh, and, and ask
you about the emotional toll thatyou have seen with dentists, uh,
especially as they are continuingto operate in, in the cash mindset.
And they're not, they're not,um, you know, they're not
embracing accrual yet, and.
What happens when they get hit withthose sup, you know, financial surprises,
(19:03):
liabilities, and forecasting challengesSince you've worked intimately with
so many practices, I'm curious,there's gotta be some patterns that
have popped up with you, um, over theyears and that transformation that's
occurred once it finally happens.
Ken Kaufman (19:19):
Yeah, this is a great question and we could
probably take days to unpack this.
Um, money is a really interesting thing.
It, it drives emotions that are sointense and sometimes really weird.
Um, and, and so.
(19:39):
The relationship that a dentist has withtheir dental practice and with look,
understanding the financial elements ofthat and how it works, uh, often there's
identity that's wrapped up in it and I'm,well, I'm, I'm a bad person because I
had a bad month and, you know, or I hada, a really bad, or I had a, a procedure
(20:00):
that just went really bad with a patientand it's gonna cost me some money to.
To get this figured out andstraightened out, and I feel
horrible about what's happened.
And so like all, all through all ofthese things, money plays a part in the
emotional toll for I made a mistake.
Um, or I, you know, I, I havean employee who stole from me.
(20:22):
Like, we have so many different.
Um, uh, pieces of the puzzle here.
Money e evokes emotion.
Um, and often it can be verynegative and frustrating.
And so what I generally find is,is dentists that feel like they're
getting beat up, they actuallyretreat and they don't wanna talk
about their financial statements.
They don't wanna talk about why theyshould be on a cruel because they've
(20:45):
been kind of beat down over time.
As they've had some victories, butthen they feel like they've had
a lot more losses than victories,although sometimes they don't.
We all struggle to, to put com tocompartmentalize those properly is
probably the right way for me to say it.
Um, but again.
Like I said, I've nevermet a dentist that's dumb.
(21:06):
They're all very super smartpeople and, and extremely capable.
Um, yet sometimes there's thisemotional toll that just eats at us
and eats at us to where, I don't know.
I mean, we, we've seen people just leavedentistry because it's stressful and,
and, um, everything that goes with it.
So I hope that.
Started to kind of answer that question.
I think there's a lot of depth into it.
Regan Robertson (21:27):
It does, and what's really interesting is that the
leaders that I have the honor ofinterviewing, they usually look at
things from a systemic point of view.
So they're never reallyinterested in the surface.
They wanna go right to theroot of whatever is going on.
And um, we just had Allison Laieras a one of our podcast guests, and
the one big takeaway that I got froman incredible hour with her was.
(21:50):
What is your money wound and, andwhat is that story telling you?
And, and she asked one questionand it was, uh, you know, what
is your first memory with money?
Then she just sort oflet it go from there.
And I, it's fascinating to me becausewhen we talk about the banks and
we talk about the non emotions,emotion is always at the heart.
(22:10):
There's, you can't separate the two.
But having systems in place and aguide to help us release some of that,
um, uh, frozen moments, if you will.
Like you said, doctors will either runaway or they will avoid or they will just.
Straight up freeze.
I think that's so common becausethe thought, like, to me, switching
(22:30):
something as intimate as, asdoing cash accounting would, would
make me a little feel daunting ornervous if I've not done it before.
And so trust is, is absolutely critical.
I want you to tell meabout these frameworks.
I'm a frameworks girl.
I love frameworks.
They're, you know, it's repeatable,it's scalable, it tells me it's proven.
What are some of theseframeworks that you've developed?
Ken Kaufman (22:51):
I'm, I've gotta make sure that I, uh, 'cause you're, you're gonna,
you're gonna, um, you're gonna make surethat I give you every single one of 'em.
So I'm gonna pull it up right now.
It's actually right.
And here, here's my truth for everybody.
I can't even ever remember all ofthem 'cause there's a lot of them.
And, uh, so I actually have tohave to go to my own website, um,
(23:12):
in order to, uh, pull them all up.
Regan Robertson (23:15):
You can plug that right now.
acronym.com.
Ken Kaufman (23:20):
It's good
Regan Robertson (23:21):
to know you're using your own website.
That's a great sign.
Ken Kaufman (23:24):
I may be the only one, but you know, so when we
talk about the, the frameworks.
It starts with consolidated andconsolidating financial statements,
and that means we're not just lookingat one independent practice, we're
actually putting it all together sowe can see what's happening overall.
(23:46):
So like the big DSOsobviously do a lot of this.
Um, a single practice wouldn't do this,but once you get to a second practice,
you would want to be able to look at eachpractice, but then also look at what does
it look like on a consolidated basis.
So that's one of them.
Uh, the second frameworkthat we focus on, Reagan, is.
(24:06):
Cash and I'll, I'll tell you rightnow, most of the dentists that are
listening and, and group owners and,and, and everything, they generally
look at two financial statementsevery month from their bookkeeper or
whoever's doing all that for them.
Income statement and balance sheet.
Regan Robertson (24:28):
Okay.
Ken Kaufman (24:28):
Did you know that there's a third one?
Regan Robertson (24:31):
Is one of those, the p and l.
Ken Kaufman (24:34):
P and l and income statement are the same.
Regan Robertson (24:36):
Okay.
Okay, good.
Okay.
What's the third one?
Ken Kaufman (24:39):
Statement of cash flow and the, and, and here's the, and,
and everybody forgets about this one.
Mm-hmm.
That's most important.
And the reason why, and, and infact, if you said, okay, Ken,
you can pick one of three incomestatement, balance sheet statement
of cash flow, which would you take?
I would take the statement of cashflow every time, and here's why.
(25:01):
That statement of cashflow tellsme one thing that I care about.
Is my business generatingcash or is it consuming cash?
Regan Robertson (25:11):
Oh, heck yes.
Oh, you can, you can see like that.
Ken Kaufman (25:17):
It's right there.
And then you can go one layer down.
It's, it's called free cash flow,and it's where we take, um, all,
everything that's generated fromoperations, all the, um, yeah, so it's
all, it's cash from operations minus.
Um, CapEx.
Mm-hmm.
And when you run that formula, uh,tell right there, that's everything
(25:41):
you need to know about If you are,if you've got a great business or
if you've got a sinking business.
That's, that's it.
So
Regan Robertson (25:48):
I, oh, I love simplicity.
And you're, you're not kidding at all.
I, I know.
I know what that looks like.
And it is.
It is.
And you know what, it's very vulnerable.
It lets you know definitivelyimmediately, and, and so there is
some steps to take to getting to thatpoint, but you must, that's to me, you
just captured for me what truth is.
(26:09):
How are we doing?
One statement that could tell us that and,um, you know, then we can go from there.
Ken Kaufman (26:15):
It's interesting, like even like QuickBooks and some of
these things, a lot of those financialsoftware, they really are not fully
equipped, especially to handle, uh,a consolidation where you've got
multiple dental practices put together.
Um, they really struggled to, to push outa, a good clean statement of cash flow.
Um, and it's funny, but.
(26:36):
My team, when we're doing accrualconversions and we're putting the
statement of cash flow in place,um, we have the most problem
with the statement of cash flow.
Uh, and we have to do a bunch of manualwork usually because everybody's developed
so much around the income statementand the balance sheet that the, the
statement of cash flow is, um, dismissed.
Um, and we have, we alot of work, our clients.
(26:59):
We tell them they need to know thisinformation and then we gotta make
sure we get them the information right.
So it's, uh, it's an interesting process.
So that's, that's the cashflow one.
The next one is what we callbenchmarking, um, and ranking file.
And this is when you have multiplepractices, you put them literally
side by side for every line itemof activity and you compare.
(27:22):
Yourself, not to the outside world.
You compare yourself to each other.
And the reason why is 'cause nowyou'll find the ones that are doing
well in certain areas, the ones thatare not doing well in other areas.
And then guess what?
You tell the practice manager who's reallygood at this to go over to that one.
And you can grow your dental practiceso successfully by never looking at
benchmarking stats from anybody else.
(27:44):
But you just look at and you makea friendly competition amongst
your dental practices and yourproviders and everything else to
create really amazing outcomes.
And so like I've dentists allthe time like, Hey, what, how,
what's the benchmark for this?
What's the benchmark for that?
I'm like, I don't know.
Like it matters what's going on in yourpractice and how you guys do things.
Why would you compare yourself tosome other person who's running
(28:07):
a completely different model?
Regan Robertson (28:09):
Right.
Those, uh, so any otherframeworks you wanna share?
Ken Kaufman (28:15):
There's like 20 of them.
Regan Robertson (28:16):
Okay.
We will, so we'll say, go to the websiteand you go through all of the frameworks,
but it does give a really good flavorto what people can, can really expect.
And I'm wondering, uh, if youcould take us through well.
Take us through the process, but I'm,I'm curious, what sort of agreements
do you put in place with doctors whoare, I call it, well, Bruce Baird
(28:38):
calls it handling objection before,it's the objection, which I've sort of
taken and run with throughout my life.
But what kind of agreements do you makealong the way to help a dentist feel, um,
safe for something that really is honestlyquite simple, but can feel like it's not?
Ken Kaufman (28:52):
Yeah, it's, it's a hundred percent about education.
Regan Robertson (28:55):
Mm-hmm.
Ken Kaufman (28:55):
Again.
There's no dumb doctors in the room.
They're all smart.
Um, but they haven't gotteneducation in these areas.
So it's, it's about framing it theright way and it's about educating
them so that they can actually lookat it and look, look at this financial
information and actually start to gainintuition around it and, and start to.
(29:21):
It, it, it's a muscle thatjust hasn't been exercised yet.
And so as you exercise it, you're gonnaget better and better at understanding it.
And the, it's the funnest thing when wehave a client that really doesn't have any
confidence around finance to months later.
Um, and they're, they're, they'reliterally calling me before
I've even had a chance to lookat the financial statement.
(29:43):
And they're telling me this and asking mequestions about that, that that's magic.
Regan Robertson (29:49):
I was gonna ask you about the mindset of the doctor that switches.
So the practices that switch, um,do you feel like it's, it's not just
freeing for them from the forecast,but do, do the, does physiologically,
like almost, do they feel like theyhave more opportunity and, and more
space to think about what's possible?
Ken Kaufman (30:09):
Absolutely.
Again, because now.
Uh, accuracy solves for all of it.
As soon as you know that it's accurate andright, you can trust it and you can make
decisions based on it and know that you'recoming from a, a place of total truth.
Regan Robertson (30:24):
Have you seen any, uh, any crazy, uh, good but good, but like
some really off the wall kind of changesthat have come about, like, wow, I was
going down this path, I put this inplace, and now I see new opportunities
that I never would've thought before.
Ken Kaufman (30:39):
Yeah.
Um.
So, so many of them I, I think.
Honestly, it's where, where thebiggest bang for the buck comes is
when you have a bank that actuallyvalues that and needs that to happen.
Um mm-hmm.
In order for you to continue tobuild and grow your business.
That's usually like where,where we get a lot of real.
(31:03):
Real bang for the buck, so tospeak, and, and there's massive,
massive value that comes to them.
Um, and then there are some more subtleones where all of a sudden now when
they're looking at something, theyknow that they're not allowed to argue
about it anymore, about it being right.
That's, that's not allowed in theconversation because we're now at a
(31:23):
place where we know we have accuracy.
And so that means that we're looking attruth and we need to absorb the truth
and allow the truth to set us free.
I.
Regan Robertson (31:33):
How do, how do CPAs tend to react to, to
this recommendation to switch?
Ken Kaufman (31:38):
Super frustrated.
Regan Robertson (31:40):
Why?
Tell me about that.
I just, 'cause it doesn't makesense to me, obviously, 'cause I'm
not in the financial world, but Idon't get why they wouldn't say,
this is amazing and a great idea.
Ken Kaufman (31:48):
So I. There's probably two main reasons.
One is it's super hard to do I'll, andI'll come back to that in a second.
The second one is that when a tax CPAhas a client, what they want is they
want that client to be able to give themreally clean financial information every
(32:10):
year so that they can go and do taxes.
Regan Robertson (32:12):
Mm-hmm.
Ken Kaufman (32:13):
When you convert a dental practice or a group to.
Accrual that messes them up.
And the reason why it messes them up isbecause they generally are gonna file your
taxes and, and I'm not a tax advisor here.
I'm not gonna give tax advice.
I'm gonna tell you just what I knowfrom the hundreds and hundreds of
(32:34):
conversations and CPAs that I'veinteracted with over the years.
They want to file your taxes on a cashbasis, because a lot of times that's
more advantageous from a tax perspective,but if your books are being done on an
accrual basis, there's a conversion thathas to happen where you have to say,
(32:56):
oh, well this is what the accrual is.
We now need to adjust it to become,uh, tax basis or a cash basis so
that the taxes can be organizedand done and paid based on that.
And so
Regan Robertson (33:10):
that makes sense.
That totally tracks.
Ken Kaufman (33:12):
So it's a little, it's a little bit of extra work and effort.
Um, it's called an.
Reagan, I'm, I'm a nerd about this,but it's called an M1 adjustment.
And when you put me in a room witha CPA and they're complaining about
it, all I will do is say, Hey, howabout every year we'll go ahead and
do an M1 adjustment for you on this.
Um, and then that should makethe tax return very easy.
(33:34):
That's,
Regan Robertson (33:35):
and what did they say?
Ken Kaufman (33:37):
They say, oh, okay.
Yeah, that's fine.
Regan Robertson (33:39):
So you offered to do the M1 for them.
You offer to do the adjustmentand then they don't have to do it.
Yep.
So really what's truly frustratingthem is just more work for them.
No, they're trying to, I, so they'reserving themselves as opposed to
really thinking about the longevityof the group and the practice
and the doctor's ultimate goals.
Ken Kaufman (33:57):
Yeah.
Yeah.
And I think the other, not
Regan Robertson (34:00):
to knock you guys, not to knock you CPAs,
I'm just trying to understand.
Ken Kaufman (34:03):
Well, no, they, they've got a, they've got a
very hard job, very diff job.
And you know, with the clients we workwith, we're good friends with those CPAs.
'cause we, there's, there's a lot of backand forth in, in making sure it all goes.
The, the other part though,that I said to come back to is.
When it comes to accrual, and I saidit's hard, what it requires you to do
(34:23):
is reach into the practice managementsoftware and pull out information
and data that is very nuanced.
It's hard to do.
Mm-hmm.
It's hard and it's hard to.
To get right.
For example, I may need to go and say,Hey, I need a balance sheet as of this
date, um, so that I can, and, and I needa, a production report as of this date.
(34:44):
And sometimes these practicemanagement softwares don't save
information and things get lost and,and it's, and it's hard to find.
And so the thing that we'redoing at Accruent is we're
actually cracking the code in.
All of the practice managementsoftwares where we're going
in, we, we do a data schema.
We pull everything togetherso that, because my goal is to
(35:06):
democratize accrual accounting.
Everybody should have it.
And right now there are some mythsout there that it's way too expensive,
it's too hard, it's complicated.
It messes up your taxes,so on and so forth.
Those are, those are some of the knocks.
And so all, all we're doing is, iswe're one by one, eliminating them
completely so that we, because wewant to build a platform here that the
(35:27):
entire industry can benefit from AccrualCounty, not just, not just a few who.
You know, listen to this podcast andsay, Hey, I, that sounds like a good
idea because everybody needs it.
Everybody needs it.
Regan Robertson (35:39):
So typically, has it been, uh, a sort of a gate kept, uh,
way to do business because of cost?
Has, has accrual accounting inthe past been something that
has been cost prohibitive?
Ken Kaufman (35:51):
Yeah.
Um, the, the answer to that is yes.
Mm-hmm.
I've, I heard of, and I, I, I'll getthe information here wrong, just because
I heard it kind of on a secondhandbasis, but there was a group that
really wanted to convert to accrual.
They're fairly large, and the biggerit is, the more complicated, you know,
that's just how things work in dental.
(36:12):
And I believe that they spent a hundredthousand dollars with a group that
was helping them convert to accrualand never actually got it done.
Regan Robertson (36:22):
Oh,
Ken Kaufman (36:22):
no.
And so.
That was.
That was the tip of the iceberg for me.
When I heard that story, I said,there's no, that is so wrong and bad.
We're, we're at a place now where we canbasically, we haven't cracked the code
on all the PMSs yet 'cause we're sort ofworking our way through based on client
needs and, and those sorts of things.
We didn't start with withthat completely done.
(36:45):
Um, but we're at a point where.
Depending on the PMS that you're on,you can get accrual accounting for
really close to what bookkeeping costs.
It's not, it's not inordinately expensive.
Regan Robertson (36:57):
Okay.
What I love about what you just said,and you know, you hit my hearts.
Uh, if you're listening right nowand you don't know who Ken is, the
little background secret is Kenhas been the CFO for some enormous
organizations within dentistry.
And, uh, I love nothing more than tofind out what people who have been
massively successful do and thenbring it back to small businesses.
(37:20):
And when you saiddemocratize, you obviously.
Captured in one word.
I think what you're trying to do and maybewhy you're, uh, how you're driven and why
you're driven so passionately forward,there is nothing greater than saying, we
know how the big dogs do it, and you cando it too, and you're making it available.
So Ken, walk me through likethe 1, 2, 3 step process.
(37:42):
How, how does someone begin totake those steps to put this
into play in their own practice?
Ken Kaufman (37:49):
Here's the thing.
In this instance, the doctors andpeople running the, the practices
and the business, um, they'reworthless to us because everything
we need is already in the PMS.
And so we, this isliterally a done for you.
We show up, we do everything,we put it in place.
There's a series of journal entriesthat have to get put into the
(38:11):
books, and if it's QuickBooks orwhatever, and we're working with
the PMS, and literally this is.
Here's how much time we need.
It'll be done on this date, andit's done and it's in place.
And I'll tell you this, right?
One, one thing that we do, uh, thatI learned early on, I, I made this
mistake with one of our first clients.
We fixed it for them.
(38:31):
But what we do is, is we actuallygo back 12 months and we do the
accrual starting 12 months ago.
And the reason why is so that then todaywhen you're comparing your financial
performance today to prior year, it's all.
Equal and you don't havethe conversion messing up or
creating issues, and so that.
(38:53):
That's, that's how we do it.
We show up, we go 12 months back.
We bring everything, anything upcurrent that needs to be current.
And then, uh, it, it's done.
And, and their financial statementsare just now in that format.
And then every month there are someadjusting entries that need to be
done, some reversals and some newAR balances and things like that.
We do that.
We work with their team.
(39:14):
If you've got a bookkeeper,we've show 'em how to do it.
Sometimes we give them theentries and they put 'em in.
Sometimes we put 'em in what,just whatever makes sense to do.
Um, and then.
And yeah, like I said it, the doctors arereally worthless to us in the process.
But then what happens is nowwe've empowered them because now
they've got truth and with truth.
(39:34):
Now we can go take on the world,go take on our growth initiatives
and feel confident we're not gonnarun outta cash in the process.
Regan Robertson (39:41):
Well, and what I love about that so much is it's not that, that
so much, maybe that they're worthless,but I mean, they don't have to, they
don't have to do heavy weight lifting.
That you have the information andyou've said the word hard a little
bit ago, and, um, that it can becomplex and it can be, can be hard.
I think the word hard is very relative.
For example, if I was to performa, uh, a crown, of course for me
(40:03):
that would be impossible becauseI have no experience behind it.
And I formally, I like soap.
Everything.
I have believed that if you're runningfrom a place of passion and you are
dedicated to that passion, you canhelp make things easier for others.
And with your frameworks, with thesoftware, with your, like all of
the thoughtfulness put into this,I can see it being easy and not
(40:26):
difficult or complex for the doctor.
It sounds like you can come rightalongside them, uh, and and make that
change your reality so that they can grow.
Ken Kaufman (40:35):
Yeah, that's right.
You said that much better.
I don't mean your, I don't mean thatthey're worthless, but just in this one
tiny little thing, they should be becausethey're great clinicians and they need to,
they need to be Exactly, they should be
Regan Robertson (40:46):
worthless in certain areas because I would be
worthless in certain areas though.
I, I, I like that a lot.
Uh, this has been an amazingconversation with you, Ken Convers.
Uh, I love, I love what you're doing.
I absolutely, uh, love that.
There's this possibility that, thatdidn't previously always exist, or if it
was, it was a lot harder to, to come by.
Uh, are there any questions or pointsof note before we close this out that
(41:11):
doctors should write down and they,you know, if they're considering
this, uh, or if they, if they'rewondering, is this the right fit for me?
What would you, what wouldyou have them reflect on?
Ken Kaufman (41:21):
So I think that in addition, we have.
An interesting opportunity here whereif somebody's listening to this and they
say, Hey, I, I might be interested inthis, or I want to take a look at this,
and accrual accounting sounds reallycompelling, or, I've been thinking about
this for years because I've, I've beenpreaching this from various pulpits
for years and, uh, so some, uh, havemaybe are just tired of me altogether.
(41:46):
Talking about it, but I think, um, ifyou feel at all inclined, we'd be happy
to have a brief, very brief conversationand say, Hey, here's, here's what it is.
Here's how it works.
Um, and, uh, we want to try toultimately help this whole industry
get there, whatever that means, and howwhatever we have to do, um, to do that.
I think for doctors specifically.
(42:10):
What we need is, we need you to trustthat there is a right way to do this,
and there's a best way to do this.
And if you allow for thatto come into your life, it's
gonna make your life better.
Um, in, in many ways, yourbankers will love you.
Your spouses will love you.
No, they already love you,but you know what I'm saying?
(42:30):
Like all of a sudden.
You, you become bankable.
You become, there's just so manybenefits, uh, that, that, that come to it.
If, if you're thinking about it, um,you know, come check out our website.
There's a lot of information there.
We've got, in fact, we'veeven put the whole formula in.
If you want to do a cruel yourself,it's right there in a blog post.
(42:50):
Journal entry by journal entry.
Here's how you do it.
So like, it's that, that's ourcommitment to try to democratize.
Regan Robertson (42:57):
Why do you care so much about the democratization of this?
What drives you?
Ken Kaufman (43:05):
Number one, because everybody says it can't be done.
And I'm, uh, I'm a, I'm a little bit of a,I'm an zag when everybody else is zigging.
Um, and.
I actually think thatthe industry itself is.
(43:25):
Has played the ignorancecard for way too long.
Um, and there are a lot of thingsin dental that frustrate us.
In fact, I think I've told you thisvery again, but I'm, I'm working
on launching a podcast, um, andit's gonna be 100% about, um.
The truth tellers in dentistry.
And we're gonna, we're gonna beunpacking the stuff that nobody talks
(43:46):
about, but needs to be talked about.
And this is one of 'em I, like, thereare bookkeepers and accountants, they
know better, but they're not practicingwhat they, what, what's being preached
and what the best practices are.
And so, and again, I hate tocall the entire industry out.
Please don't blackball me.
I'm, I'm just trying todo the right thing here.
(44:08):
But, uh, yeah, we're, we're on amission because it's being done wrong.
It's been done for so long thateverybody thinks it's the right way
to do it, and we've gotta break.
We've gotta break that.
Regan Robertson (44:19):
Hitting autopilot because something is good enough
has never sat well with me.
And I remember one, one organization I,I, I left many, many, many, many years
ago, and it was, but it was a, it wasa moment in time where I had a core
values alignment discussion before Ieven knew what the term core value was.
But, uh, but we had the leader stand andexplain that good enough is good enough.
(44:43):
We don't need to waste any more time orresources on anything just to get it out.
And I remember thinking, it's not you.
You can't hit autopilot.
There's people you know impacted by this.
And although I couldn't articulateit at the time, Ken, I can certainly
articulate it now, that that is oneof those pivotal moments in life where
you take a stand and you define what.
(45:06):
Meaningful to you and not everybody,uh, you know, is the same.
People have different corevalues, and that's perfectly okay.
Mm-hmm.
I think today's conversationhelped us uncover some of your
core values and, uh, give somegreat education to our listeners.
Thank you, Ken, for allyou do in dentistry and for
being on the podcast today.
Ken Kaufman (45:25):
Of course.
Reagan, you are an amazing interviewer.
Thank you so much.
It's been an absolute pleasure to be here.
Um, I hope I didn't chaseany of your listeners away.
Um, but it's, it's, it's been great.
Thank you so much for the opportunity.
Regan Robertson (45:37):
You are so welcome.
What is your website again?
How do you spell that out and how doyou want people to get ahold of you?
Ken Kaufman (45:44):
So, um, we named the company Accruent.
For accrual accounting.
Regan Robertson (45:50):
Very clever.
Ken Kaufman (45:51):
No, it's a big, big shocker there, right?
Um, it's A-C-C-R-U-D-E-N t.comaccruent, just like it sounds.
Regan Robertson (45:59):
Excellent.
Well, thank you so much Ken and thank youlisteners for tuning into another episode
of Everyday Practices Dental Podcasts.
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