By Veterinary Growth Partners


The practice finances can often feel overwhelming. With so many numbers, it’s hard to know where to start. The reality is that numbers hold the truth... They don’t lie. But you need to know how to read the story they’re telling in order to understand the financial reality of your practice. Here are some tips on how to decode your finances:

• Accounting System: There are two options – cash or accrual. Accrual offers a real-time depiction and suits the vet industry best because in this method, payment is received when services are rendered.
• Chart of Accounts: This is your financial backbone. Align it with industry standards to more easily compare and understand your practice's financial status.
• Benchmarking: This allows you to refer to industry averages derived from collected data, aiding in revenue and expense analysis.

Let's delve into the story behind your Profit and Loss Statement using the READ acronym:

R - Revenue Review:

Compare current revenue trends to previous years and industry benchmarks. Identify growth patterns—A minimum of 10% annual growth is ideal. Identify your revenue centers and compare year over year or against specific goals.

E - Expense Review:

Control spending to maximize your net profit. Visualize expenses as a percentage of revenue— Cost of Goods Sold (COGS), Compensation, and Facility/Admin. Aim for a 20% allocation per category. Separating based on category will help you more easily identify areas to cut back.

A - Adjustments:

In your expense review, you may find that the practice spend was over 20% in one category. Explore that group of expenses more closely to make adjustments in the upcoming quarter or see what may be available to you for a more permanent pricing option (like taking advantage of VGP’s partnerships for rebates or discounts).

D - Drive Change:

Act decisively—utilize a weekly inventory budget, eliminate non-essential products, and review pricing. Monitor progress bi-weekly in leadership meetings. Utilize your VGP Practice Coach to help you identify these opportunities and hold you and the practice accountable with the changes you want to see.

If the practice’s finances are still making you uncomfortable, don’t worry! Lean on the VGP Coaching Team and their expertise. They’ve been where you are and understand the nuances of veterinary finances. You can also take advantage of our financial courses on EdQuest to further help build your confidence. Just remember, you are in charge and the numbers you are seeing are not set in stone. If you want to change your practice’s profitability, you absolutely can and will!