How do you, as a manager, keep your practice’s owner informed about the financial affairs of their practice? Help them keep a finger on the pulse of their hospital with a highly informative monthly summary.
As a veterinary practice manager, one of your responsibilities is to keep your practice owner informed about the financial affairs of your practice. How do you accomplish this? Depending upon how involved your practice owner is, he or she may only be looking at the balance in the checkbook and have no idea of how well you are controlling expenses or other financial areas of the practice.
To help resolve this problem, we have developed a management report that you can use to create a snapshot of the practice’s financial affairs and present to the owner(s) of the practice each month.
As you can see, this report is concise but also covers all the important information your practice owner(s) should know. The report starts off with some of the more important financial indicators, such as total income, number of business days, number of transactions, the average per client transaction, number of new clients and total accounts receivable. This information can serve as a dashboard for your practice; a practice owner can look at this information and get a good overall picture of how the practice is doing. All information is compared to the same month of the previous year and the previous calendar month.
Next, the practice information is broken into income categories. If this management report is set up in an Excel or similar spreadsheet software, then you may be able to import your income into the management report directly from your veterinary practice management software, or you can input the data manually. Not only do you need to report the income but also the percentage of income to the total so you can assess whether your practice is in line with industry benchmarks.
If you maintain a budget for your practice, the next section will note the forecasted income for the month and indicate if the practice reached the forecasted amount and by what percentage your income is over or under for the same month of the previous year.
The management report then goes on to report accounts payable. Too many practice managers and owners are fooled by income and don’t pay attention to accounts payable. Practice income might be going up but so are accounts payable! Our report will show the previous month’s accounts payable balance, current accounts payable incurred during the month less payments made, and the ending balance for the month. Along with this, the report should include the end-of-month checking account balance.
The two expense categories that managers can best control and that will have the biggest impact on the practice’s bottom line are support staff costs and inventory costs. So, it is only natural that the next section of the report states the compensation for all employees by position, including associate doctors and practice owners. Industry benchmarks are included so the practice owner can see how their practice compares to other practices. Inventory or cost of goods is also reported by department. You could, therefore, compare dietary product income to its expense to check that these and other products are not walking out your back door.
The last section of the management report looks at your associate doctors. There is an individual breakdown for each doctor reporting their total income, number of transactions and average income per doctor transaction. This information is also compared to the same month of the previous year and the previous calendar month.
I hope you will use a management report such as this to communicate with your practice owners about the financial affairs of your practice each month. Help keep them informed of how well you – and your practice – are performing.