Mark your calendars to utilize finance reports

When you first started your veterinary practice, you kept close tabs on its financial health. You probably wrote the checks yourself, drove the deposits to the bank, and could tell anyone who asked exactly what your bank balance was on a daily basis. Then the practice started to grow and you got busier. Maybe you hired a bookkeeper or a practice manager to handle the finances. So are you still in touch with your practice's bottom line? What about your reminder system—how effective is it? How many dental cleanings did your practice perform last month? Are you in touch with what your clients think about your practice? Would you know if a team member were embezzling from you?

Getty Images

It's not hard to get the answers to these questions. Just look at a few reports regularly. On the next pages are the must-see list of reports and procedures you should think about daily, monthly, and at least annually to stay in the know about your practice's current state and its future promise.

Part of every working day should involve a few minutes spent looking at that day's important numbers. These include:

1. Transactions. Who paid for what, and how much? One of the most important reports a practice owner looks at daily is the itemized audit trail. This sheet—generated by your veterinary software—lists every single transaction entered in the computer that day. Clients' names, services and products invoiced, amounts charged, and if and how they were paid for are all included.

Mark Opperman, CVPM

Negative transactions are a red flag. If a client didn't pay for services or if there was a void or a refund, it'll show up on the itemized audit trail. Say a receptionist created a negative invoice and removed that money from the cash drawer. The cash register would balance at the end of the day, but the negative transaction would appear on the itemized audit trail. And that would be your signal to investigate—to question and verify whether the negative transaction was valid. After all, you're the one on the hook financially.

2. Nonstandard fees. The fee exception report is a crucial barometer of internal compliance. It lists every charge that's more or less than the standard fee in the computer and shows you when other doctors or team members aren't complying with the fee schedule.

3. Delayed payments. You should look at the accounts receivable report daily. Has it increased or decreased from yesterday? Were the charges today authorized or not? Accounts receivable can get out of hand quickly. Keep your eye on it.

4. The end-of-day report. Don't leave this to your bookkeeper or practice manager. Ultimately, it's your responsibility to prevent embezzlement and verify what money changed hands that day. Create accountability every step of the way at the end of the day with a process like the following:

The bottom line

At the end of the day the receptionist counts the cash drawer back to the base amount the hospital started with. He or she then runs the report that shows the day's cash, checks, and charges. If all is correct, he or she then completes the end-of-day report and gives the deposit to the practice manager, bookkeeper, or practice owner. If the totals aren't correct, the receptionist tries to find the error. If the mistake isn't found, the receptionist still counts the cash drawer back to its base amount but also notes on the deposit how much it's over or under. The deposit is then taken to the bank, and the bank receipt is attached to the end-of-day report along with the credit card transaction report.

The total on the bank receipt along with the credit card transaction report should equal the end-of-day report total. If everything is OK, the practice owner initials the report and returns it to the bookkeeper so it can be filed away. If things don't match up, the practice owner must investigate.

If you want a deeper list of daily reports, check with your veterinary software provider. If you're feeling ambitious, there are many more reports you can print out and review each day to make sure your practice is in great financial shape.

Every month

The end-of-month reports are good snapshots of your practice's overall financial health. At a minimum, you'll want to look at:

• sales reports by department

• doctor production reports

• inventory sales reports

• list of aged accounts receivable

• list of held or unsent invoices.

But these reports only represent income. You also need to keep an eye on expenses with these reports:

1. Money going out. At the end of the month, make sure your bookkeeper or practice manager prints a financial report of your bank balance and checks that have been written. You may want to confirm that balance with the bank.

2. Money you owe. Watch your accounts payable. If your invoices are being entered into a software program, you should be able to get a report of this. If not, the invoices will need to be totaled by hand. You don't want to be surprised by a bunch of money you owe.

3. Bank statement. Ask your bank to send the bank statement to your home every month. When it arrives, review the checks or the electronic copies of the checks, make sure you know the vendor that was paid, and verify your signature. When you've finished, hand this off to your bookkeeper or practice manager so he or she can reconcile the books.

4. Nonfinancial initiatives. If you're concerned about client compliance or marketing efforts, add some nonfinancial numbers to your reports. How effective were your reminders? How many hits did your Web site receive that month? How many radiographs were performed? Every practice owner has different information needs, but they all need to know what's going on.

Every year

It doesn't have to be daily. It doesn't have to be monthly. But at least once a year, check in with your team members and your clients.

1. Human resources. Look at how long your employees have been working for you, what they're paid, and what benefits they receive. If team members have quit, find out why—conduct exit interviews with departing employees. You'll learn things team members would never tell you otherwise.

2. Client satisfaction. What do your clients think about you and your practice? Successful businesses keep in touch with their client base. Ask them regularly. Here are some methods:

• Send a client questionnaire with a self-addressed, stamped envelope to every new client. Or send surveys out periodically to everyone your practice sees on a particular day. You'll likely get a 40 percent or 50 percent response rate, and you'll hear about the good and the bad.

• Hire a Web company to send e-mail questionnaires to your clients to solicit feedback.

• Test out your practice. Hire a telephone shopper to call the front desk or a mystery shopper to determine the effectiveness of your customer service.

Don't assume all is well with your client service. By the time you find out it is not, it may be too late.

You've grown your practice, and you may be delegating duties to other doctors, a bookkeeper, or a practice manager. But you're still the owner, and no one has as much riding on your practice's continued success as you. Build in feedback controls now so you'll have time to react to changes and make corrections. In medicine, knowledge can be your most powerful tool. In business, it is too.

Mark Opperman, CVPM, is a Veterinary Economics Editorial Advisory Board member and owner of VMC Inc. in Evergreen, Colo. He's speaking at CVC West Oct. 31 in San Diego. Visit thecvc.com for details.