Very few people who go into business enjoy doing their own books. In fact, we suspect you might even hate your financials, and we get it.
A question we like to ask all new clients when we sense their eyes glazing over is when we bring up the subject of their financials is: do you want to be involved in your accounting?
The initial answer is typically ‘no’ and that doing the books is boring or simply too time consuming. You would much rather be working on your business and selling.
However, as the conversation progresses, we often discover that because your passion lies elsewhere, you may not have the time or have been given the support you need to understand your books.
Are you left feeling confused by your financials?
How do you feel every time you sit down in front of QuickBooks to review your books? Do you feel disinterested? Overwhelmed? Uninspired?
When you’re running your veterinary practice, chances are that you usually feel in control. You know your profession inside out and you’ve built up great relationships with your patients and their owners.
When the time comes to work on your books, that control and that comfort may not be there.
You might print out a profit and loss from QuickBooks and have no idea whether it is accurate or even what it is supposed to be telling you. Maybe it is showing a healthy profit, but today you have very little money in your bank account. It feels disjointed and you are not sure whether you should trust it.
Because of this, doing the books on a regular basis can feel like a pointless task.
Once you are in that mindset, it becomes commonplace to hand everything over to your CPA. You may not even review the books before doing this. It can become an annual transaction during tax season. A job that you have decided to ignore and so nothing gets done.
How understanding the basics can help
At Stopp VanHoy, we strongly believe that doing your books should not be an annual, tax season transaction as there is little value in preparing your tax returns once per year.
You want your financials to be an integrated part of your business and something that you update on a regular basis to help you accurately plan ahead of time. Not a department out on its own that fails to communicate efficiently with yourself and any other member of your senior management team.
We don’t expect you’ll find a sudden joy in doing your books and that’s okay. Our role as a CPAs is not to turn you into one of us. However, it is important to have a basic understanding of your financials, so you can see and monitor where your veterinary practice is going.
The goal of your financial information is not to make you feel intimidated or stressed.
The goal of your financial information is to enable you to feel in control and to help you to make sense of all the information that is whizzing around your veterinary practice every day.
We’ve found that while most business owners know roughly what a profit and loss is for, they can be overwhelmed by the amount of information within each report. For example:
- Do you simply look at the profit figure?
- What if it is lower or even higher than you expected?
- Where do you look to find out why?
- What should you be monitoring?
- Do you even care about profits?
Then, having too much information can be as troublesome as not having any. You could panic, change the wrong things or begin to micro-manage your practice.
This is why we work with our clients to create a handful of specific measurements, called metrics, for them to monitor in their practice. We work together to discover what metrics you need to monitor to keep your veterinary practice moving in the right direction – the sort of metrics that you can identify and understand quickly.
Invest the time and have conversations about your books
Has your CPA ever sat down with you and taken the time to explain your financial reports? Have you ever asked your CPA to explain your financial reports to you? This doesn’t need to be an intimidating process. It should be a low stress conversation.
Currently, a trendy word amongst CPAs is ‘proactive’. However, what CPAs say and what CPAs do can be a little disjointed. For this reason, you should not expect your CPA to conclude that you don’t understand your financials and would like, and possibly benefit, from some help. Most will assume that you’re not interested or will purely provide the services that you have engaged them to carry out.
If you believe that is the case with your CPA, then don’t be embarrassed to ask them to explain the reports that they are showing you. A good CPA will be more than happy to help you understand what your numbers mean.
It is standard practice at Stopp VanHoy of us to produce a simple one-page document that will clearly explain what financial information is important for you to monitor. This will assist you in being able to quickly review and identify trends within your veterinary practice.
We also make a point of meeting with any new client once a month, until you feel comfortable with your books and financial reports. Once that stage has been reached, we’ll typically reduce our meetings to once a quarter.
If your current CPA isn’t doing this, then find one that does
If your current CPA doesn’t appear to want to help you to understand your financials, or they try to, but their descriptions end up causing even more confusion, then you may want to consider finding a new CPA.
Good communication is such a vital component of a successful business owner and CPA relationship, and any signs that this is not happening should be addressed.
At StoppVanHoy, we specialize in the veterinary industry which means that we understand your business as well as your financials.
If you would like a taster of how we work, you can download a copy of our free guide “Six Steps to an amazingly profitable veterinary practice” here