Conducting a “health check” of your practice finances is a good starting point on which the future growth and success of your practice can be planned, managed and implemented. With the ever-changing economy and nature of veterinary practice, it is vital that the financials of your practice are monitored and continue to move with the times.
Current issues your practice may face
The issues currently faced by veterinary practices are wide-ranging and may include cash flow and balance sheet concerns, ownership of assets, investment in technology and the recent increase in energy prices.
Veterinary practice financials
Directors and practice managers must understand the practice financials, including the cash flow and balance sheet. One of the key guides for doing so is your practice’s short-, medium- and long-term goals, which will highlight areas of concern as well as areas for potential growth.
Understanding the customer
Another aspect to consider is the voice of the customer. Your pricing strategies, marketing campaigns and the overall service offered by your practice need to meet the requirements of existing and potential clients. Retention of customers is more important than ever with the influx of PE-backed corporates into the market, making it increasingly difficult for private practices to compete with their prices and product offering.
Retention of customers is more important than ever with the influx of PE-backed corporates into the market
According to a recent Office of National Statistics report (2021), veterinary costs and pet-related spending (such as pet food and medicine) are considered non-discretionary. This is good news for veterinary practices in the face of a cost-of-living crisis, but there can be no complacency, and as ever, the importance of retaining and winning new customers is key.
Managing creditors and debtors
The management of creditors and debtors will still be required to ensure the financial stability and success of your practice. Developing a strong line of open communication with stakeholders of the practice, including lenders, debtors, HM Revenue and Customs, and your employees, will be needed to resolve any issues facing the practice quickly.
Developing a strong line of open communication with stakeholders of the practice […] will be needed to resolve any issues facing the practice quickly
There are options available to practices struggling with this, for example invoice factoring, which facilitates a release of cash from practice debtors through the purchase of outstanding invoices.
Investments – premises and technology
Investments into premises and machinery are likely to be some of your practice’s largest purchases and ongoing overheads. In recent years, technological advancements have assisted practitioners in developing their practice offering; however, this comes at a significant cost.
Sale and lease back of the practice premises and/or its assets is an option for businesses that need an injection of cash. It ensures the practice does not lose its service offering or identity while bolstering the levels of cash within the practice. Embracing technology can widen product offering and improve value to the client, thus improving client retention, but a review of the assets currently held by the practice is a great method of identifying any machinery or equipment that is rarely used and could be sold or leased back.
A major issue currently facing everyone is the rising cost of energy, but an investment in greener energy practices can assist in practice in reducing these costs. Practice-wide initiatives, starting with a review of utility bills from the last 24 months, can highlight areas where costs could be reduced. Examples of these initiatives include investing in solar energy or LED sensor lighting and implementing heating and water cuts where possible.
A major issue currently facing everyone is the rising cost of energy, but an investment in greener energy practices can assist in practice in reducing these costs
Royal College of Veterinary Surgeons standards
RCVS standards are in place to ensure that veterinary practices have and maintain the highest standards. Despite there being no strict guidance from the RCVS surrounding practice finances, there is a duty for veterinary professionals not to allow financial and commercial situations to affect their impartiality or drive any decisions regarding patients in their care. It is, therefore, key that all financial implications of veterinary work are communicated to clients and employees and recorded in consent forms and records.
There is a duty for veterinary professionals not to allow financial and commercial situations to affect their impartiality or drive any decisions regarding patients in their care
How to deal with any financial issues faced
If your veterinary practice does start to experience financial distress, open lines of communication will be key in resolving any issues. Professionals such as legal advisors should be engaged quickly to assist in deciding the next best steps.