As a Veterinary Practice Manager, your role is the glue that holds the operational and financial sides of the practice together. While your passion likely lies in creating a well-run and caring environment for staff, clients, and their pets, understanding and managing your practice’s finances is critical to its success.

Here are the key financial topics every Veterinary Practice Manager should focus on to keep their hospital running smoothly and profitably.

  • Revenue Management 
    Revenue is the lifeblood of any practice. As a manager, you should:

    • Monitor revenue trends: Analyze performance by month, season, and year to identify patterns.
    • Understand revenue drivers: Pinpoint services and products that bring in the most income.
    • Set financial goals: Collaborate with leadership to establish realistic monthly and yearly targets.
  • Cost of Goods Sold (COGS) 
    COGS represents the direct costs associated with the products and medications you sell. Managing COGS is essential to maintaining healthy profit margins.

    • Track inventory closely: Know what’s moving and what’s not.
    • Negotiate with suppliers: Build relationships to secure better prices and terms.
    • Prevent shrinkage: Regular audits can identify overuse, theft, or errors.
  • Staff and DVM Labor Costs
    Labor costs are one of the largest expenses for veterinary practices. Focus on:

    • Labor cost benchmarks: Keep total staff and doctor compensation within recommended percentages of revenue (e.g., 20-25% for staff, 18-22% for DVMs).
    • Scheduling efficiency: Avoid over- or under-staffing by analyzing workload and client flow.
    • Production-based compensation: For doctors on production pay, ensure clear communication about goals and how they’re tracked.
  • Financial Reporting and Key Performance Indicators (KPIs).
    Tracking financial data empowers you to make informed decisions.

    • Understand reports: Regularly review profit and loss statements, balance sheets, and cash flow reports.
    • Monitor KPIs: Key metrics include average client transaction (ACT), revenue per doctor hour, and appointment compliance.
    • Monthly meetings: Share financial updates with the leadership team and discuss trends and strategies.
  • Cash Flow Management
    Even profitable practices can face cash flow challenges. Keep your eye on:

    • Accounts receivable: Ensure timely collections on outstanding balances.
    • Payment policies: Implement deposit requirements for procedures or use financing options like CareCredit to maintain steady cash flow.
    • Emergency funds: Maintain a buffer for unexpected expenses like equipment repairs.
  • Theft Prevention and Security
    Unfortunately, theft can occur in any business, including veterinary practices.

    • Separation of duties: Have different staff members handle billing, deposits, and inventory to prevent fraud.
    • Secure inventory: Lock up controlled substances and regularly audit usage.
    • Monitor access: Restrict access to financial systems and inventory management to authorized personnel only.
  • Budgeting and Strategic Planning
    A budget isn’t just numbers—it’s a roadmap for success.

    • Plan annually: Develop a comprehensive budget that accounts for projected revenue, expenses, and growth initiatives.
    • Adjust as needed: Revisit and tweak your budget based on monthly or quarterly performance.
    • Align with goals: Use the budget as a tool to meet strategic objectives, whether it’s expanding services or upgrading equipment.
  • Investing in Technology
    Modern financial tools can simplify your job and improve accuracy.

    • Practice management software: Use systems that integrate scheduling, invoicing, and reporting.
    • Accounting software: Consider tools like QuickBooks to streamline bookkeeping.
    • Data dashboards: Visualize financial performance in real-time for better decision-making.
  • Continuing Education
    Finance in veterinary medicine is a dynamic field, and staying informed is vital.

    • Attend courses: Look for programs tailored to veterinary finance, such as Certified Veterinary Office Manager (CVOM) credentials.
    • Join groups: Connect with peers through organizations like the Veterinary Hospital Managers Association (VHMA).
    • Read industry publications: Stay current on trends and benchmarks.

Final Thoughts
Managing the financial health of your veterinary practice isn’t just about crunching numbers—it’s about ensuring your practice remains sustainable and thriving. By focusing on these key areas, you’ll not only gain a deeper understanding of your hospital’s operations but also play a pivotal role in its long-term success.

Remember, financial acumen doesn’t come overnight. Start with the basics, build your skills, and seek support from trusted advisors and resources. A well-managed practice is one where care for animals and financial stability go hand in hand.

Would you like help diving deeper into one of these areas? Let us know in the comments!