The arithmetic
What a generic chart of accounts actually hides
This is the part that sounds like bookkeeping pedantry until you see it in pounds. The default
Xero setup posts money as it arrives. A dental associate's income does not arrive the way it is
earned, so the default setup quietly reports the wrong business.
Illustrative example. An associate's monthly schedule shows
£9,400 of gross UDA and private income. The practice deducts 50% lab on private
work (£780), a 45% practice share of the private element, and
£1,050 of superannuation. The bank receives £4,300. Left to the
bank feed, Xero records turnover of £4,300 and no costs at all. Recorded properly, turnover is
£9,400, lab is £780, the practice share is a cost line you can actually negotiate against, and
superannuation sits in its own account ready for the year-end reconciliation. Same money, same
tax — but only one version tells you your lab percentage, and only one produces a pensionable
earnings figure without a rebuild.
For a practice the same failure scales. If plan income lands as a single monthly BACS receipt
from the plan provider, net of their administration fee, your private mix is understated and your
fee income is understated by the fee — which flatters every ratio that has fee income as its
denominator. A practice billing £900,000 that under-records £14,000 of plan administration is not
materially wrong on profit; it is materially wrong on the
benchmarks you are about to make decisions from, and
on the EBITDA a buyer will normalise when you sell.
None of this needs you to do anything differently. It needs the file set up once, by someone
who has seen a hundred dental schedules, and then left alone. That is what the Gold Partner badge
is worth in practice: not a discount, a setup that does not have to be undone.
Payroll feeds the same file, so the staff cost line is
live rather than annual.
