APL Accounting News August 2019
APL ACCOUNTANTS LATEST NEWS
Remember to register for our web event here: https://zoom.us/webinar/register/WN_xmh2JvuHT0eHvVbIorJ2lw
This is for all of you attending an annual workshop this year that has not attended at least two workshops before. In this web event we will explain your annual reports and it is essential to understand these before attending a workshop! If you can’t make the event live then register so you receive a recording.
Date Wed 21 August
Time Midday Qld
Registration – https://zoom.us/webinar/register/WN_xmh2JvuHT0eHvVbIorJ2lw
Your Price list vs ‘True Pricing’
Traditionally, veterinary prices have been benchmarked by looking at a list of individual fees and deciding whether they are high or low compared to national averages
For example you could look at your consult fee and if it’s $5 below the national average then you could assume that increasing it by $5 will improve the financial performance of your business without the risk of customers feeling that you are overcharging.
The same concept can, and has been applied to numerous fees in the veterinary industry through a number of surveys that are conducted periodically. This has been done for fees for vaccinations, repeat consultations, radiography services, dentistry and many other common services in the industry, and at APL Accountants we maintain a list of such fees every year.
However it has been very apparent that for a lot of our customers, looking at a fee on it’s own is not enough. Taking the example of the consultation fee – in many cases a practice will increase their consultation fee but see no tangible improvement in business profitability. At APL Accountants, this year we are ready to address this issue, and we call it ‘True Pricing’. This is a concept that when combined with the traditional benchmarking of single fees will help practices identify significant revenue loss.
So how does ‘True Pricing’ work and what does it mean?
In terms of meaning, simple logic dictates that a single price on a list is irrelevant when compared to the total invoice value consisting of many items that is charged and paid for when a customer leaves the building.
The concept is simple, let’s look at the consultation fee again and not look only at the consultation fee, but what else has been done during the consultation. If we are able to look at the total invoice value of every invoice where a primary consultation was performed (rather than just a single item), then we would have a better idea whether or not the practice is promoting additional wellness products and preventatives during their consultations. So this would include the consultation price plus preventatives, blood tests, cytology samples and any other diagnostics.
Not surprisingly, a practice with a consultation fee that is below average but that has a higher promotion of diagnostics can easily have the total invoice value higher than a practice that has a higher consultation fee but poor diagnostic service promotion. In this case we would say that the ‘True Price’ of a consultation is higher where more service promotion is consistently applied.
Likewise a practice with very high fees on their price list but a severe missed billing problem will also have a lower total invoice value – a lower ‘True Price’.
So this year, thanks to Profitdiagnostix, we are able to perform this analysis precisely on all our customers AND also have benchmark values for total invoice values as well as single fees.
What’s more, in the future we will likely be performing this analysis on each vet in the practice! Inconsistent billing is a very common problem even within practices where there can be a huge variance between clinicians in their ‘True Pricing’, and it is an issue that costs the industry millions of dollars in lost revenue every year.
In summary, one of the things to look forward to in ‘True Pricing’ is that we will be reporting on:
Primary Consultation fee price, Primary consultation total invoice value and then comparing both of these to a national average.
The same analysis is also currently being applied to:
Repeat consultations, vaccinations, radiography procedures, desexings, dentistry.
As we speak, this analysis is identifying lost revenue in a large number of practices so it will be one of the key topics of discussion at our annual workshops.
Practices that are already clients of APL Accountants and have Profitdiagnsotix will get this for free, but if you are not a customer, you can attend our workshops for a fee:
- Sydney 27 August
- Brisbane 6 September – This event will be streamed LIVE for remote practices if you don’t want to travel
- Melbourne 29 October
If you are interested, reply to this email.
We look forward to seeing you there
We have a new friend in the office. A big welcome to Bill Eastgate who has joined us in the office to help with Profitdiagnostix.
Bill who has managed a veterinary practice for a number of years has joined the dogs in the office and has a very similar job description to us doggies:
- We crunch doggie treats while Bill crunches numbers in Profitdiagnostix.
- We come running to customers, tails wagging when they offer us a treat, and Bill runs to web meetings with customers when they offer him a Profitdiagnostix problem to solve.
- We go to doggie school twice a week to learn tricks, Bill has been going to ‘Vet Business University’ and learnt all the APL Accountants tricks of the trade.
Note also that Vet Business University is available at a very reasonable price for all vets to learn the ‘tricks of the trade’ – go and have a look at www.vetbusinessuniversity.com
I think us doggies (particularly Strudel the sausage dog) are going to enjoy having Bill around.
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the informations applicability to their particular circumstances. In particular, please note that the APL dogs who often prepare this newsletter do not have opposable thumbs so have to type with their noses.