Treating animals is your primary goal as a veterinarian, but understanding your financial situation is equally important. Several specialty-specific financial complexities need to be monitored, from purchasing and operating equipment to managing stockpiles of essential medications and supplies and handling tax returns and spending. This is where bookkeeping for veterinarians comes in, all the features we will discuss in this blog.
Key benefits of maintaining accurate records in the veterinary area
As of early 2023, 52,682 services operate in the American veterinary sector. Generating revenue in such competitive conditions is crucial. The fragile balance between optimal pet treatment and managing costs requires a clear financial understanding. Successful financial management allows your practice the following benefits:
- Economic benefits: Accurately recording all operations lets you define areas where you may increase operational efficiency and cut expenditures without compromising the quality of care.
- Making rational decisions: Using the data obtained from accounting, you can formulate optimal pricing tactics and carry out strategic planning.
- Consistent operations: Creating accurate and transparent business documents simplifies many aspects of running your practice, including precise inventory management, enhancing day-to-day performance.
- Tax compliance: Correct bookkeeping guarantees your financial records are current and compliant with tax standards, decreasing the risk of tax filing mistakes and fines. Moreover, it simplifies the preparation of tax returns, ensuring they are accurate and submitted on time.
These insights help you decide about adding new services and investing in modern techniques. Maintaining ongoing accounting allows you to respond instantly to the latest market trends, ensuring the long-term prosperity of your clinic.
The main parts of veterinary bookkeeping
To balance quality animal care with financial management, you must accurately understand your financial situation. From purchasing medicines to paying salaries to sourcing veterinary experts, every activity contributes to the prosperity of the clinic. Sound veterinary practice management includes the following procedures:
Learn the basics
A veterinarian should understand key accounting principles. Learn more about revenue, expenditures, and obligations and familiarize yourself with essential documents like the balance sheet or profit and loss statement.
Determine the optimal accounting method
Consider whether you should use the cash or accrual method of accounting. The first option involves tracking profits and spending as the amount in your bank account changes. The accrual system records financial transactions as they occur, regardless of when funds arrive or leave the account. The accrual structure gives a more exact picture of your clinic’s economic situation.
Regularly track revenue and expenditures
Consistently document your primary sources of income, including veterinary service payments, medication purchases, and funds received from other sources. Ensure business expense tracking, including rent, utilities, equipment maintenance, and staff payroll. Categorize each transaction to make it easier to create financial statements.
Working with medical equipment
Tracking expenditures on medical equipment ensures cost-effective pet care without sacrificing quality. It includes constantly monitoring the level of inventory of the most critical veterinary goods and drugs, negotiating prices with suppliers, and adding a modern inventory control system to avoid excess or shortage of products.
Payroll management
Your clinic probably employs people dedicated to their work and with extensive animal care experience, so you must provide them with fair remuneration. Payroll management includes the correct calculation and timely payment of wages, control of employee benefits, including health insurance and pension funds, compliance with labor norms, and constant motivation of specialists.
Proper resource allocation
If you can keep inventory at optimal levels, it decreases waste and ensures that critical materials are always on hand. You need to study usage trends, forecast changes in demand for medical equipment and medicines, and find reliable suppliers to reorder products and minimize excess inventory.
Cash flow tracking
Timely invoicing and payment receipt guarantee a stable cash flow to maintain smooth operations. This includes sending timely invoices, monitoring late payments, adopting accounts receivable algorithms, and creating a reserve fund.
Active interaction with suppliers
Establishing good relationships with partners will provide favorable cooperation terms, discounts, and stable access to basic goods. Regularly discuss agreements, analyze work effectiveness with counterparties, and research experimental purchasing schemes to ensure effective interaction.
Recruiting a certified public accountant (CPA)
If working with funds becomes tedious or time-consuming, consider recruiting a CPA for veterinarians. They ensure accuracy and transparency of your documents and assist you in staying within the legal framework.
Some tips about accounting in the veterinary industry
Maintaining accounting transactions is not an easy task. You must keep health records, analyze documents, and be meticulous with numbers. We have collected several recommendations that will help you manage your bookkeeping for veterinarians as efficiently as possible:
- Create a system: Without a detailed structure, important details can go unnoticed. People often put emails and paper bills aside and forget about them. Create procedures, protocols, and schedules to handle financial records to avoid errors.
- Divide personal and work money: Separate accounts simplify dealing with taxes and monitoring earnings and spending. Moreover, in the case of an audit, the separate records will simplify this process.
- Keep your receipts: Having access to the receipts from previous purchases can speed up your accounting. If you make business-related purchases, keep all payment documents in one place, no matter how cheap.
- Automate accounting processes: Automation of accounting is the optimal solution to increase the system’s efficiency. While it’s unlikely that AI-backed software will completely replace standard accounting techniques soon, they speed up many processes and make organization easier.
Regularly reconcile your accounts to avoid discrepancies. Keeping abreast of industry-specific accounting practices can also provide a considerable edge in managing your finances effectively.
Why should you outsource veterinary bookkeeping?
In recent years, more and more veterinary clinics have delegated financial work to specialists from third-party companies. The fact is that veterinary bookkeeping outsourcing provides many benefits, including:
- Ability to work without stress: An ineffective accounting department may cause errors and irregularities in financial activities. Impacting your books, tax returns, and other sides of your job, leading to significant stress.
- Expertise and accuracy: Outsourcing to professional bookkeepers ensures accuracy and compliance with financial regulations. These experts are well-versed in the specific needs of veterinary practices, reducing the risk of mistakes and ensuring your financial records are always up-to-date and accurate.
- Access to modern digital tools: By outsourcing your business activities, you don’t have to buy a separate application. Outsourcing companies have all the necessary systems to carry out the relevant activities.
Internal veterinarian accounting involves a lot of spending, including recruiting, studying, workplace arrangements, etc. Outsourcing bookkeeping reduces these organizational costs, improving financial performance.
Final words
Bookkeeping for veterinarians is necessary if you want to manage your practice effectively. It is essential to keep accurate records of all business operations, including expenditures, equipment costs, payroll, and invoicing. Accurate record keeping allows you to plan the growth of your business while ensuring tax compliance and transparent data.
Professional financial services from BooksTime will help you simplify your bookkeeping tasks, minimize the risk of errors, and save working hours. Our experts will help with activities such as transaction recording, account reconciliation, paperwork, and more so you can provide the best care to your animal patients.
