Latest News July 2024

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Does an employee get a discount if they buy into your practice?

The valuation of veterinary practices is currently a very busy space, but the nature of the work has changed over the last four years. Four years ago, walk in, walk out sales were fairly common, where the business owner sells everything and walks away. However, in the current market employees buying into the practice is making up over 50% of the valuation requests. From a sustainability perspective succession planning in the veterinary industry of this nature makes sense to us. We believe that the wellness and care decision making in the industry needs to stay in the hands of people who actually care about pets. There is no better way to maintain the culture and quality of a well run practice than doing it this way.

One of the more common questions we have from an employee buyer is: “Because I have worked at this business for a few years, should I be getting a discount for my efforts?”. Generally the belief amongst quite a few employee buyers is that they feel quite a strong entitlement to some sort of discount, this is often fueled by third party coaches who know nothing about the commerciality of buying and selling businesses, but are determined to appease their client and prove their value by negotiating down a significant transaction. Unfortunately the inevitable end result of this poor advice is: 1) a sale that never eventuates 2) a business owner who does not sell and 3) a potential young entrepreneur who never realises their full wealth potential and remains an employee.

So lets get some clarity on this somewhat contentious topic using some real numbers and facts. The general answer is that an employee has absolutely no entitlement to a discount when buying. We know this because we perform between one and two veterinary business valuations a week, making us the accounting firm with the greatest exposure to buying and selling of veterinary practices in Australia – even with this volume of transactions, it is extremely rare that there is a discount applied to an employee buyer.

But that is the general answer, the very few situations that would override this are:

• If the seller/employer has promised a discounted buy in to a team member during the period of employment so as to entice them to stay longer.
• AFTER the valuation is performed, the seller decides to discount the sale to their team for the simple reason that they want to do it – and we have seen this a few times, but it is entirely driven by the seller.

Other than small variations to the above situations, these are the only 2 situations where an employee discount effectively happens.

From both a buyer and sellers perspective there are clear take home messages:

If you are a seller: If you are one of the few that promise your team a discounted buy in, you should honour that. Whether that was a verbal or written promise makes no difference, because the end result of loss of trust between you and your team will have significant financial ramifications. But if you have not made any promises (which is the case for most sellers), then you should feel no pressure or obligation to discount.

If you are an employee wanting to buy: We would advise that you ask any promises made by your employer with regards to discounts in purchasing the practice be written down rather than verbal. This will clarify any confusion when the time comes for the sale, often a few years later. 

On a completely commercial basis, when an experienced veterinary valuer values a business, the main factor that they look at is the ability of an individual buyer being able to purchase that business at the stated price AND be able to service their loans AND still have residual profits afterwards. This puts the buyer in a better financial position than when they were an employee and also means that banks are likely to loan the money for the purchase. So if you are buying into a good practice that has been accurately valued, no discount should be required, you will be better off. Essentially you being prepared to take this leap and risk is your first test of whether you are truly “business owner material”.

Veterinary economic health tracker continues to show small improvements

Continued monitoring of the veterinary economy shows that there are small improvements as per the chart below showing our update for May:

If we consider the 2 most important pet owner driven factors, unique pets seen and number of invoices generated then the last few months have continued to be positive, as reported in our newsletter last month.

The red line shows the number of invoices generated, and this has been positive (above zero) for 5 months now. The number of unique animals (blue line) has been showing some growth also but remains fractionally negative when compared to the same months last year. So compared to times like August 2022, which seemed to be the low point of the economy, things are looking a bit brighter.

However the fact that numbers of invoices are positive, but unique animals are still slightly negative, shows that this is in a delicate balance. It may all depend on what happens to interest rates in the next few months, with an increase in interest rates possibly reversing the current positivity.

Dog Tales – don’t ignore the introvert

You all know me Strudel the daschund, I’m loud with a big personality so you can’t miss me! However it’s come to my attention that as much as we ignore the more introverted ones they actually often contribute more to the pack than us loud ones. This is Beckham, and I have noticed that he is really good at going to the coffee shop and being a good dog. He’s quietly getting on with his training, and he is way more advanced than I was at 7 months! Don’t tell mom and dad, it’s easy for me to outshine him with my big personality so they don’t notice him and how good he is. But it got me thinking about the work pack – do you have those team members who quietly just do a great job and go unnoticed whilst us loud mouths make a show of everything we do?

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Latest News June 2024

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Don’t forget it’s nearly the end of the year!

We are very close to 30 June and the end of the financial year. There maybe a few things to think about and possibly take action on:

• Are you going to pay the staff superannuation pre 30 June to claim as a deduction this year? 
• Are you thinking of buying equipment under $20k, and would it be better as  a tax deduction this year or next?
• Have you loaned money from the business, and if so have you spoken to your accountant how this will be paid back?
• Have you decided how any profits in a trust will be distributed?
• Remember to check payroll and do the finalisation declaration for payroll by 14 July

Are we about to see a turnaround in the veterinary economy?

There is the possibility now that the veterinary industry has experienced 3-4 months of positive growth after more than 12 months of shrinking! But it’s early days and we need to watch this space. Note also that we are commenting only on the status of the veterinary industry, not the economy as a whole which seems to be in a different position.

To keep it simple we will look predominantly at the number of unique pets visiting our pool of practices and the number of invoices generated rather than all the KPI’s.

The number of pets visiting practices is the most important way of assessing whether consumers are still engaged in veterinary services as well as in the previous years. The number of invoices reflects the fact that pets may be visiting more often and more services are being delivered. Generally the 2 numbers correlate quite closely.

When compared to the identical months (Jan-Apr) of 2023, 2024 looks like this for the number of unique patients and invoices:

Unique Patients:

• Jan 2024 growth = -0.1%
• Feb 2024 growth = 1.1%
• Mar 2024 growth = -8.6% 
• Apr 2024 growth = 7.9%

Averaged over the 4 months Jan-Apr 2024  = 0.075%

Averaged over the same period a year ago = -2.97% (negative)

So whist a 0.075% growth in unique patients is nothing to have a party about, it is the first positive average we have seen for some time, in spite of the very volatile March and April which was a result of the different timings of Easter in the 2023 and 2024 years.

Invoice numbers:

• Jan 2024 growth = 4.7%
• Feb 2024 growth = 5.2%
• Mar 2024 growth = -6.7% 
• Apr 2024 growth = 13.8%

Averaged over 4 months Jan-Apr 2024 = 4.25%

Averaged over the same period a year ago = -4.7% (negative)

Invoice numbers show a marked improvement over the same periods.

So it appears the veterinary market is settling into a new period of normal, for now at least. However it wouldn’t take much to reverse these positive effects and probably any changes such as an interest rate increase would could send it into the negatives again. 

Also a word of warning about how we collect our data – we only use data that is validated and clean, which means it is very bias towards the customers with whom we work ‘hands on’. This also creates a bias towards more proactive practices that are very aware of their financial performance and customer trends. It is very possible that the rest of the industry may not look quite as healthy. However, the trend we are measuring is across a very similar pool of practices over the last 24 months, so the improving trend is likely to reflect the industry in general.

Has your lender requested a letter from your accountant?

In the process of finance applications, we are often requested by your lenders to provide a letter to help support your application. Whilst this has been a common occurrence previously, it is important to note the kind of information we, as your accountants, are allowed to provide. Recently the lenders have been requesting information not previously requested which we can not provide.

To support your credit application, as your accountants, we are only able to provide the following details:

• Your gross taxable income
• Principal sources of income
• Years your tax returns have been lodged, and 
• Confirmation if your accounts have been audited.

Although we are frequently asked, we cannot provide information that we cannot factually verify. If we do, it will be a breach of our professional obligations. These types of information are, but not limited to:

• Estimate or validate your future income or expenses
• If you business is solvent and will remain solvent
• Your ability to service a loan

Further, we cannot provide any assessment, assurance or guarantees that you have the ability to make the repayments should your loan (whatever type it may be) be approved. We have been guided by our professional body that this determination should be made by the lender and we are not allowed to do it. So expect that we will decline providing certain types of accountant letters to your lender if the request is outside the scope described above.

Dog Tales – Maybe the ATO needs a watchdog?

Dad recently hosted a web masterclass on cybersecurity which was very well received because it has become a worrisome problem for a lot of business owners. Part of this event included a part on how to protect your digital identity with the Australian government app called MyGovID.  

Co-incidentally, in the few days that followed, Dad’s iPhone died, so it was time to get a new one. And with this, the whole setup process of the new phone was implemented whilst thinking about how easily the various parts could be hacked.

One of the most surprising things how weak the identification process is when you confirm your identity on the MyGovID app! The requirement for ‘standard strength’ identity simply requires you to enter 2 documents that are not necessarily that private – 1)your drivers license number and 2)your Medicare number. It also asks your birthdate, but that is already on your drivers license anyway. And once you have ‘standard identity’ you can then proceed to lodge your  tax returns online. There is absolutely no photographic or video validation of the human making the application which is used in other apps, for example the Truro car sharing app, nor is there photographic validation of the document itself, you simply type in the numbers.

The reason that this is a big deal is that once you can lodge your tax returns, then you can ask for fraudulent tax refunds. And this is exactly what we are seeing happening these days. In fact Dad thought about how often you hand over these documents to an unknown stranger – he had to get a new phone charger too from JB Hi-Fi and they had a good look at his drivers license when he went to the click and collect counter – it would take nothing other than a hidden camera under the counter to make a copy of it. We simply do not treat these as private documents.

With recent hacks of Medibank, Optus and a number of motor car dealers and car rental businesses, it is clear that the validation documents required are compromised. It is also clear why hackers targeted these businesses.

Our suggestion is that the ATO and other government bodies get a watchdog rather than rely too heavily on outdated technology to keep the humans honest! Our noses cannot be deceived as easily at the app, however the implementation may be tricky!  

For those of you who did not attend the cybersecurity masterclass, here is a link to the recording: https://aplaccountants.info/course/latest-web-masterclasses

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Latest News May 2024

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MyGov – Avoid your identity getting hacked on the government app and your phone

Some of you may scratch your heads and ask ‘what on earth is the My Gov app’?

It’s an app that gives customers a simple, secure and convenient way to connect with government, predominantly with services like Medicare and the ATO. Essentially it verifies your identity and then gives you access to these 2 very important government departments.

Many people actually do not like doing this and find it invasive to their personal privacy, however it seems that if you do not register your identity with this app then you are opening yourself up to identity theft! We will explain why and what we have seen happen to clients as an accounting firm.

Recently we have had clients who have had illegal tax refunds submitted to the ATO because a tax refund was requested via the MyGov app. In these instances the clients had never set themselves up on the MyGov app, this means that the hacker had been able to set the app up by supplying the correct identity checks required.

Unfortunately, the identity verification documents of many Australians have been compromised. The Optus hack of last year left the identities of 300,000 Australians compromised. And Optus has not been the only institution that has been hacked for this information. Other institutions including Medibank, Motor Car Rentals and a number of universities are included in the hacks on this website:
https://www.webberinsurance.com.au/data-breaches-list
Many of these places include all documents that are required for your identity checks such as:

• Medicare cards
• Drivers licenses
• Passports

So whilst it’s easy to assume that a tax refund fraud comes from a breach directly at the ATO, its actually more likely that it has occurred due to the fact that the documents commonly used to verify your identity have been stolen from somewhere else. And when looking at the vast number of breaches in the last 2 years alone, it would be prudent to work under the assumption that your proof of identity documents are compromised.

So lets come back to the MyGov app – something that understandably not everyone wants to have on their phone! The problem here is that by NOT having it, any hacker that has accessed your documents can create an account on your behalf. On the other hand if you have already downloaded it and confirmed your own identity, then a hacker cannot create a duplicate account for the same person. In this way, the government has sadly and inadvertently found a way to force us to use the app. So our advice to you now is that you need to register yourselves with MyGov and go through the identity checks so that your legitimate account blocks a hacker from doing it on your behalf.

Further to this, the account with MyGov requires additional security with the options of using an authenticator app, a text message or security questions. Once these are set up, the only way a hacker can get into your account is if they get their hands on your mobile phone (with exception of the security questions). We strongly advise that you do NOT use the option of security questions as the answers to these may also be available to hackers or they may be easy to guess.

But can a hacker get their hands on your phone? Yes this has happened as far as we know with mobile phone repair shops or where mobile phones get stolen or left behind on restaurant tables. Never hand your phone over to anyone! In spite of all these measures we have had clients lives turned completely upside down when they have left their mobiles at a phone repair shop. Somehow, access to their phones either intentionally or unintentionally by the phone repair shop compromised everything that was secured in their personal and business lives. Not only did they have illegal tax refunds lodged, but access was also granted to bank accounts, emails and anything else that had a password and 2 factor authentication. Our current suggestion is that if your mobile phone breaks, do not have it repaired – it contains the keys to your kingdom, so just pay the extra dollars and buy a new one.

What about if you lose or drop your mobile phone? There is a lot you can do about this by simply setting the screen to lock reasonably quicky if the phone is not in use. Once locked the phone cannot easily be opened by anyone in a hurry. Also have a “find my phone” app running on your phone which allows you to find its location and also completely erase all info on the phone remotely thus allowing you to render it useless if you can’t find it. Most phones have this app readily available.

Lastly, do not allow notifications to show up on a locked phone screen! This is a setting that allows people to view a summary of incoming text messages on a locked phone and is done for convenience. However, it also allows the viewing of SMS authentication codes on a locked phone, thus allowing a thief to view some of your 2 factor passwords. On most phones you can turn this feature off and suffer a small inconvenience in the interest of security.

Are you at risk from Cybercrime? Join us on this web masterclass to find out what you need to do.

Wednesday 8 May, Midday Brisbane https://us02web.zoom.us/webinar/register/WN_DWlM64tQSH26VdGt1e9PuQ

This will contain very specific examples relating to the veterinary industry with practical tips and no nerd talk.

There are more and more incidents of cybercrime and the cost can be significant. Whilst we are seeing a lot of activity in other professions to upskill businesses in this space, there seems to be very little offered to the veterinary industry.

Join us on this web masterclass to find out where you may be vulnerable to cyber crime and how to prevent it.

https://us02web.zoom.us/webinar/register/WN_DWlM64tQSH26VdGt1e9PuQ

Have you taken money from the business bank account?

It is a common misconception that cash sitting in the company is your money. But regrettably, it is not. Your company is treated as a separate legal person to you. This means that money earnt by the company belongs to the company. Every time you take company funds, there are tax consequences.  

If you have taken out cash from your company and have not reported them as wages or dividend payments, they become director’s loans, or as the ATO calls it, Division 7A (or Div7a) loans. Div7a  loans refer to loans between the company and its related parties. As per tax rules, the loan term is 7 years or if secured by a registered mortgage, 25 years. Interest and minimum repayments are also required to be calculated. If you don’t want to transfer cash back to the company, repayments are made by way of dividends to shareholders (usually). These dividends are then included in your tax return and taxed at your marginal rate.

The ATO has recently shone a spotlight on Div7a loans and several compliance issues that surround this. Consequently, we are taking proactive steps to addressing these issues with you. With Tax Planning season underway, a constant topic of conversation with our tax team during this time will be your Div7a loans. Additionally, we are ensuring that necessary documentation is in place to satisfy Div7a loan requirements. So, watch out for these documents in your emails that require your attention.

Dog Tales!

Timing is everything! If I do a trick and mom doesn’t immediately click and treat me then I’ll stop doing the trick. Fortunately for mom I’m a nice dog and won’t then mug her for her treats even though she should have given me one faster.

The ATO is not a nice dog like me…..if you don’t pay your superannuation in time so that that it actually clears into the employee superfund account by the 28th then the ATO will mug you! And many people get caught out because there are a few days between payment and clearing. Recently somebody was mugged and it was very painful. They had been paying superannuation but the money hadn’t cleared in time – it was 3 or 4 days late for a few quarters in a row. The ATO made them pay extra (superannuation guarantee charge) and they can’t count the superannuation payment as an expense for a tax deduction! It is not uncommon for a small error like this to have an implication of over $100,000 for a medium sized practice! That would mean mom’s entire treat bag emptied by me and she’d have to borrow extra treats just so I got what I deserved…..maybe I should take note for next time she’s a little slow with her treats!

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Latest News April 2024

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Are Veterinary Practices Still Selling?

We have all heard that corporate acquisitions have been low for more than a year now, but does that mean that it will be difficult for you to sell or retire if you own a veterinary practice? And what does it mean if you are currently an employee but you want to get a foot on the ladder of business ownership?

We continue to value more and more veterinary practices each year, the appetite for acquisition still exists  – but you may have to reconsider the way that you achieve this because “walk in walk out” sales are much more rare these days.

A “Walk in walk out” sale occurs when the seller sells their entire business, gets all the money upfront and has no ongoing commitment to carry on working in the business anymore. Traditionally this has been happening quite a lot in the profession until recently. The balance has been tipped by the simple fact that it is extremely rare to find a GOOD practice that values for under $1.2 million. Approximately 1.2 million dollars is also the amount that a specialist veterinary lender will loan to someone who wants to buy a veterinary business. So it’s not the case that younger vets do not want to buy a practice, it has to do with the fact that the traditional form of succession that the profession has been accustomed to is changing because private buyers cannot raise the finance for this type of purchase.

Is this a bad thing? Well it can’t be, because we are dealing with a situation created by the fact that veterinary businesses have become a good investment and are very valuable. It’s good to be working or investing in an industry that has high value. It does however mean that the veterinary profession has to change their mindset about the direction of the profession in the future.

Most of the valuations we are currently doing are for veterinary professionals to buy PART of a practice – in other words they are going into business together with the original owner. This means that the original owner cannot retire immediately, but it does mean that they have ongoing support from an enthusiastic business partner who is actively involved in the business and can roll up their sleeves when things get busy or staff are absent. Note that is is a very different scenario to remaining in the practice for 3 years after a corporate buy out, where the main pain point is that a corporate partner does not roll up their sleeves and do the hard yards when things get busy.

With the increased compliance requirements particularly over staffing and the somewhat unpredictable nature of the labour force these days, we feel that this is a key driver in moving practice owners to sharing their business and responsibilities with more people. Basically, its time to accept that we have to start working together and the one man dictatorship style of business is becoming too hard to sustain.

With this change, we also have to accept that the types of risks we face in these sorts of acquisitions are different. The main new risk being the ongoing relationship between the different owners and this becomes one of the most important things in the business. But another very important risk that the profession has suffered from starts to vanish – and that is the risk of “key person dependency”  which is prevalent in most one-person owned practices these days.

The ongoing relationship between the parties can be mitigated and managed by a few really important things. And with these in place higher returns and profits for sustained periods of time can be achieved:

• With this type of succession, both parties need to be good operators. So if you are selling, make sure your incoming partner brings something great to the table to drive the business forwards. Likewise if you are buying into a practice, make sure you buy into one where the original owner is a great operator and can run the business at high profit margins – you don’t want a passenger.
• Set clear rules around how the relationship will be managed. You need to have this discussion before even contemplating a buy/sell. Sit down together and figure out what the important things will be that could break down the relationship. For example will there be a required minimum number of hours worked for each partner? What will be the wage/hourly rate you agree on for partners?
• Once the above is decided, get it all written in a shareholders/partnership agreement

For those of you who are interested, we have a recording in 4 parts of a very comprehensive webinar series dealing with this. It does take a few hours to go through, but if you are looking at investments of over $1m, its worthwhile to get to up to speed on this type of succession plan:

Simply go to aplaccountants.info and click on ‘Learning Lab’.  You will be prompted to login or sign up.  Please note that it is preferable to use an email address with your business domain. The free ‘Learning Lab’ module contains popular content and may be updated at any time.  Currently, our Learning Lab module contains our four part Succession Planning series from May 2023 (Part 1 – Ultimate exit plan and strategically structuring, Part 2 – Essential tax considerations including Capital Gains Tax, Part 3 – The Ins and Outs of Valuations and Part 4 – Potential problem areas – Sale contracts and shareholder agreements).

Tax planning – It’s that time of year again!

This is the time of year where you need to start planning your 2024 tax. If you have this as part of your package with us then we will be starting to work on this for you. If you don’t then this is the time of year that you need to start forecasting potential profit and tax for 30 June 2024 and decide if you should be contributing more to superannuation, paying staff superannuation before 30 June, buying equipment, paying off loans etc.

Dog Tales – is littermate syndrome the same as key person dependency?

It’s amazing how our lessons in the world of canines can easily be transposed to the human situation – it just goes to show that dogs must have come first and then humans copied them. 

On introduction of 2 new team members in our pack, and them being brother and sister, we were previously oblivious to littermate syndrome, or that it even existed. However it has become clear that Bambi, is the brains of the operation and her brother Beckham is born to follow, not lead.

This has created an interesting situation whereby Beckham is somewhat of a headless chicken without his sister – clearly a situation that is not sustainable in our office.

The solution is somewhat painstaking – separating the ‘brains’ from the ‘followers’ for just enough time to allow them to start thinking on their own without causing too much stress – a very delicate balancing act. The household has been completely adapted to allow this with a number of child-gates and collapsible baby fences to allow this to be done efficiently.

Now does the above situation not ring a bell. Can you have a business that is completely dependant on one person to the extent that that person cannot even take a few weeks holiday without significant breakdown in performance? You certainly can, we see it all the time in some practices where we do the bookkeeping – we can accurately guess the times when the owner is on holiday. 

The solution – not that simple, it requires quite a lot of adaptation for all parties involved. Gradually wean the team off the dependency of the owner and gently force them to make some decisions on their own. If you do it too fast, then there is too much stress and nothing new is learned. If you don’t do it at all, then the business never attains its true potential – it can only grow so much with only one person carrying all the load.

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Latest News March 2024

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Did you know casuals can claim sick leave in Victoria?

It was recently brought to our attention that casuals can claim sick leave in Victoria. Fortunately this will not affect you as business owners, but if one of your employees asks this is a summary of what’s involved:

The employee needs to claim this directly from Service Victoria so you do not need to do anything on your payroll. They need to create an account with Service Victoria. They get paid $23.32 per hour up to 38 hours in 12 months from signing up.

It’s available to veterinary nurses and assistants (not practice managers or veterinarians). They need to be working an average of 7.6 hours or more a week in Victoria. This is a pilot program until 13 March 2025. All the details are here https://www.service.vic.gov.au/services/sick-pay-guarantee/apply/start#eligibility

Do you have access to our learning centre with recordings of our web events?

Just a reminder to all APL clients that have our advisory services – you have FREE access to our full learning centre including our web event recordings! Please reply to this newsletter if you don’t have access so we can send you a login. This includes free access to all our recorded webinars (non-clients make a $5 donation to a worthy cause/charity though our B1G1 portal to watch webinar recordings)

Dog Tales!

Happy Easter from our pack! Yes this is our ‘old’ pack, many of you know that our bestie – 3 legged Lucky – died late last year. Our ‘new’ pack has 2 naughty puppies who we wouldn’t trust around chocolate. It seems like the fostering of 5 puppies to help out shelters over Xmas failed dismally and only resulted in a larger pack. We would also warn you as an accounting pack that this is definitely not an investment with a sound financial return.  Hopefully mom and dad get the newbies trained half as well as us and then next year we can have an updated chocolate photo. Or if they are super fast learners then we can get an updated photo over easter for our April newsletter. Thank you also to some of the local practices who helped us home their 3 sisters, an even larger pack was becoming a reality!

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Latest News February 2024

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Is the veterinary industry passing its health check?

It depends whether passing a health check means that you are healthier than others or if it means that you indeed have nothing wrong with you. If the criteria for passing a health check is the latter of the two, then it means that the veterinary economy does have some problems and that some pro active business management is required to fix the problems.

Every month, with the help of our colleagues at Profitdiagnostix (www.profitdiagnostix.com) we collect a sample of data and compare it to the same month in the previous year, looking at some important parameters – just like you would with a general health check blood test. For both November and December the results showed a similar picture – nothing to panic about, but certainly some things that require attention.

Invoice numbers and animal numbers have decreased (animal numbers by 4.5%) – so the general customer base is shrinking and competition is going to get tougher. What’s more, is that client attrition (loss of clients) is increasing and where clients would last about 4 years at a vet practice historically, now they only last for 3.3 years.

This is the first time since APL Accountants started that we have seen these trends and they are as expected when the global economy is facing a recession. Consumers are deferring their spending on elective things (like vaccinations) because they have less money to spend as a result of high interest rates on their loans. If you look at the Consumer Price Index courtesy of the Australian Bureau of Statistics you can see that inflation in Sept 2022 was the highest it has been since 1990! And this closely reflects the downturn in numbers we have repeatedly been speaking about over the last 12 months in our newsletters.

We are actually lucky in the Veterinary industry and have the upper hand in 2 areas:

• Other industries are doing worse, and the veterinary industry has historically been more recession proof then most others
• We have very accurate data and tools to monitor the industry in real time – most other industries do not.

What the data does not show however is the variance in individual practice performance – don’t just assume that you are performing in line with the industry statistics because these are just averages. 

Never before have we seen such a broad spread of performance differences across our hands on customer base with whom we have regular meetings. 

Some practices are booming whist others who have been historically strong are declining. 

Only when averaged together does all this variable data come to a slowly declining market of 4.5%.

What this tells us is that something can be done to counteract the decline. Yes, it depends very much on how good your closest competitors are and what actions they are taking – so it means you have to be better than your competitors to win the consumer over in a shrinking market.

Our advice here to you is simple – thanks to our ability to predict the market more than 18 months ago, we were able to put things in place to assist pro active business owners who were staring down a recession.

Firstly you have to establish in light of the high variability in performance whether or not your business is declining – we can give every one of you this information and will be doing so with all our regular clients.
Secondly, if you are a declining practice, then you need to know precisely what your attrition (customer loss) is and start doing something about it that is more proactive and aggressive than your competitors. This is why Profitdiagnostix put resources into delivering direct text messaging campaigns to lost clients AND to monitor the feedback from the pet owners receiving them.

Whilst it may seem unusual for an accounting firm to pro-actively start recommending specific marketing strategies to businesses, the economy has dictated to us that this is one of the key areas where we can assist veterinary practices in these times, and it ticks all the boxes:

• Direct marketing to pre-existing customers is about 10X more effective in terms of cost per customer acquisition/re-activation vs less direct strategies like Google advertising and Facebook advertising.
• Direct marketing strategies allow us to monitor whether or not they are directly resulting in clients being re-invoiced out of your practice management system and charged for specific items vs costs per click and telephone calls which seldom result in an actual invoice and cannot easily be traced back to customer and patient records.
• They allow us to monitor what clients are texting back – for example ‘we are going to XYZ vets down the road because we prefer them’,  ‘we would love to come in but need to save money’ or ‘thanks for reminding us, we forgot’  

So for those of you who are sitting on the fence, we would urge you to contact the team at Profitdiagnostix: https://profitdiagnostix.com/contact/

You may be surprised how easy this is to do and how little it costs vs other types of marketing and also how effective it is – we have seen practices re-activate up to $45,000 of business in 3 months.

Dog Tales – the more the merrier!

It’s not only veterinary practices that feel a recession, rescue centres do too! It seems in the recent months that there are fewer and fewer people opting to be pet parents which is not surprising when money is tight. So when Mom saw that one of the rescue centres she follows was getting too full because fewer people are taking on pets she decided that she would help and become a foster carer. 

First she had to convince Dad who naively agreed to foster a few puppies – little did he know that a day later there would be 5 high energy working fur babies running around the house. Chica and I (Strudel) would then teach them the benefits of behaving like a sausage dog or a Chihuahua (we know these are 2 of any vets favourite breeds – or not). So with a total of 7 delinquent dogs in the house we had a very festive Christmas period.

Needless to say that with homes being hard to find these days – 6 weeks later and only one of the little monsters has exited to their forever home. The others remain and continue to assist in opening and reading all your important ASIC notifications and tax notices that arrive in the post and removing trust deeds from the shelves.

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Latest News December 2023

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http://www.mytaxvet.com.au

Are you concerned about an upcoming recession?

We have noticed a number of clinics are not bringing in as much revenue as they did this time last year. Our industry health tracker has shown a consistent downward trend in number of invoices and number of patients over the past few months. There are two things you can do to counter this trend:

1. Re-activate clients that have not visited you in more than 12 months (easier than getting new clients) Many of you know that Profitdiagnostix now offers a client reactivation package, so make sure to contact them if you need this at support@profitdiagnostix.com
2. Train reception to engage better with clients on the telephone and book them in for a visit. Alison Lambert has recently done a masterclass with us on this subject.

We have run masterclasses on the above and if you didn’t view them then you still have time to do this:
 https://aplaccountants.info/course/latest-web-masterclasses
When you click this link you will be requested to enroll and donate $5 which goes towards creating impacts globally for a better world. This will give you access to the recordings for 14 days.

For our advisory clients – simply login to APL Learning Centre for free access at  aplaccountants.info . Here you will have access to the latest web events and a whole lot more resources.

Tax Instalments may need varying

In light of what we are seeing with decreased revenue, some of you may find that the tax instalments on your BAS are too high. The ATO determines your tax instalment based on your most recently lodged tax return. If you are dropping in revenue and profit then this may be too high for 2024. If we do your bookkeeping then we will be checking this every quarter for you and will vary it if we see that this needs to be done. If you complete your own BAS then make sure to check with your accountant if you think this may be a problem for you. Reducing your tax instalments if business is slowing down helps your cashflow.

Dog Tales!

It’s Christmas holidays very soon! Our offices will be closed:

APL Accountants (bookkeeping and advisory services) 22 December – 3 January
James Noble Accountants/MytaxVet (tax services) 21 December – 9 January

Enjoy the festive season and don’t eat too much chocolate as we can’t eat any!

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Latest News November 2023

http://www.aplaccountants.com.au

http://www.mytaxvet.com.au

Join us with Alison Lambert on this web masterclass to improve conversion of phone calls to consultations

Most of you are getting a little quieter than you were. This is partly due to client attrition which we discussed a couple of months ago, and we have a service that will help reactivate these clients. If you need more details on this reply to this newsletter requesting information on it.

It is also partly due to your reception team having learnt the art of deflecting consultations when clients call up as you were too busy over Covid. Now is the time to start working on those phone call skills again and converting calls to consultations.

Many of you are familiar with Alison Lambert and her way with words. Join us for this evening web masterclass and listen to her great advice.

When: 23 November
Time: 6pm Qld, 7pm NSW and Victoria
Register here: https://us02web.zoom.us/webinar/register/WN_dnUzMcufSoq95u3bLiL_XQ

Concerned about a tax or payroll audit?

A couple of clients have approached us as they are unsure about taking out insurance for a tax or payroll audit. We already have you covered! We are finding that many of you don’t know that we have taken out insurance on behalf of all our clients, so you are already covered for the cost of this audit. The cover will pay for the cost of us preparing the necessary paperwork and time to correspond on your behalf. Note it doesn’t cover any fines, fees or surcharges if there has been an error and you are owing money.

Dog Tales!

It’s been a fun month here at the office! Mom and dad took a morning off work (maybe they called in sick?) to sneak us off to an aged care facility. We got to do our dancing routines in front of the most appreciative audience and then we got to greet them all! 

Mom and dad also went away for a few nights for work or so they say. But the amazing thing when they’re away is that Sharon comes in and spends the day with us and gives us lots of special treats and pats.

Looks like November will be a little more boring with lots of quarterly meetings (so no pats or fun time during the day for us) but then it’s December and Christmas holidays.

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Latest News September 2023

http://www.aplaccountants.com.au

http://www.mytaxvet.com.au

There is a 60% chance that you need to get some clients back in the door? Join us 6 September midday!

We have been monitoring client attrition for many years. This is the percentage of clients who visited you 2 years ago and that didn’t come back to see you this year. It was relatively stable at 25% average – this still seems high as it means that 1 in 4 clients that you saw last year you won’t see this year. However the average has now increased to 30%. We were astounded when we were putting together the KPIs for 2023 to see such a large increase. This means that nearly 1 in 3 clients won’t be back to visit you, and that the average client only lasts 3 years with you! This decreases the lifetime client value at veterinary practices by 20%-25% because the time with your business is cut down from 4 years to 3 years.

We were concerned that this was starting to happen many months ago and therefore invested time and money to develop a managed service using profitdiagnostix software to help you to re-activate lost clients using text messages. This has now been in use for a number of clients and we are seeing very positive results. Text messaging is the most reliable way for you to contact these clients and encourage them to visit you again. It also encourages 2 way dialogue and you can get some very interesting feedback from some clients.

If you think this is a potential problem for you (and based on what we are seeing, it will be an issue for about 60% of practices) then join us for our masterclass at midday on the 6th September.

https://us02web.zoom.us/webinar/register/WN_PFQObUkZS9mTiy4nPiuL7g

The best time to act is NOW, don’t wait until it’s too late! We feel very strongly that in the current economic environment, managing your client attrition will be one of the key things you can do to ensure adequate workload and profitability over the next 3-4 years.

In this masterclass we will take you through our industry health tracker, client attrition and a quick way to reactivate disengaged clients.

To register for this event on the 6th September click here:

https://us02web.zoom.us/webinar/register/WN_PFQObUkZS9mTiy4nPiuL7g

How secure is your mobile phone?

A word of warning that what may see impossible is actually possible, do NOT allow anyone access to your mobile phone even if it breaks. A client had their iphone repaired a few months ago which meant that they had to leave it at a repair shop. Now their tax return has been lodged by somebody who received a $9k refund, when they try and change passwords the passwords immediately get reset and any 2 factor authentication on the phone has been accessed.

To duplicate or clone an iphone in particular takes a high level of sophistication. It means the SIM card has to be duplicated and any unique ID on the device needs to be copied. We believe that one of the only ways that this can be done is if someone has hands on access to your phone with its password for some time.

Your mobile phone these days holds the key to your entire life. All your Medicare logins, tax office logins, 2 factor authentication apps, text messages for 2 factor authentication, Facebook profile and emails. Losing this is worse than losing access to a computer or a wallet full of credit cards.

As implausible as this may sound it is true, so don’t let anyone have your phone for any reason! Think very carefully before leaving your phone at a repair shop – it may be better just to scrap the damaged phone and get a new one.

Don’t forget that xero fees are increasing in September

If we pay for your xero subscription we will automatically increase your fees to cover this increase directly from xero. It’s a reminder for you to assess your own prices if you haven’t done this in the last 3 months.

Dog Tales! – Its time to put some lube in those joints

Being a tripod dog with multiple health issues has taught me a lot of things, but in particular I learned that you have to line up some suckers to look after you! When my Mom and Dad to be showed up at the foster home I realised it was now or never and time to line these fools up. And I really lucked out, they also ended up being vets (sort of anyway). 

Not only was I old (and obviously wise), I was also missing a leg and had to hide my other problems away so that they would take me home with them. I ended up having chronic pancreatitis, renal failure, corneal degeneration and deafness as well. No wonder they ended up calling me ‘Lucky’. 

One of the lessons to be learned here is to always do a full clinical examination not only in the consult room but even if you are adopting a pet. But the other exciting thing is because I am getting really stiff on my 3 legs, these patsies are going cough up for treatment for that condition also. With all the new exciting injectable arthritis drugs available now for dogs and cats, it is certainly a great time for us old pets and pet owners. In the old days my renal failure and pancreatitis would have precluded me getting any relief, but now at least there are options.

I hope all of you out there are enthusiastically recommending these treatments, being injectable, it will be difficult for pet owners to get them from anyone else but vets like you. Mom and Dad are certainly going to be benchmarking these treatments over the next few years to see what average and top performing clinics are achieving.

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Latest News August 2023

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Xero price increases

As with most things these days Xero prices are about to increase. For those clients whose xero subscription is on our account we will be increasing your direct debit from September to cover this. The new xero prices can be found here https://www.xero.com/au/pricing-plans/update/

This is a timely reminder to assess your own pricing and check if your fees need to go up.

It’s time to tackle the potential slowdown with client reactivation!

Have you thought of a way that you can safely, ethically and securely maintain your workload and client visits in spite of a looming recession? There are some interesting facts we can tell you about SMS (text message) marketing to your clients. 

About 12 months ago we thought that things may start to slow down, so we assisted the team at Profitdiagnostix software to develop a world first in SMS/Text message marketing that accurately monitors if it is paying for itself, thereby giving customers the opportunity to stop doing it if it is not working. We frequently see huge spends on marketing in businesses but absolutely no direct measurements as to whether they are converting to profit and no assurances on the confidentiality of the data.

As part of our usual accounting bias, we believe that a successful reactivation comprises an invoice (not the click of a link, a website visit or a telephone call) – marketing has to convert to PROFIT to be justifiable. And we worked out a way in which we could do exactly this – for example, if the annual client spend in a clinic is $1,000 and their profitability is 20%, then on average a returning customer will yield  $200 PROFIT to the practice in the next year. So if the practice spends $200 on a re-activation campaign and they re-activate just one client, they have broken even (we like the break even point in marketing to be covered in one year). Too often we have seen marketers focus on the $1,000 top line to justify a campaign, but the reality is that in most practices less than 20% of this is profit, and profit is what counts.

Once we were able to monitor invoices of returning customers, we discovered that this very targeted marketing gives very different results in different practices even if the messages sent are exactly the same and the patients in the list are similar. For example, a boutique (high price) practice with exceptionally good record keeping and reminder systems is less likely to have a high re-activation rate. This is because the customers that leave are just not interested in that level of service, they are a poor fit to the practice. So they have left not because they have forgotten about their pets medical needs, but rather because they are not a good fit – no amount of text messaging will bring them back, nor should the practice want them back if they are not a good fit.

On the other extreme, some very busy practices that have had administrative challenges such as changes of software systems, staff changes or shortages and have possibly dropped the ball on their recalls and reminders – these practices had very high response rates, very high re-activations, but also some confronting feedback with some of the replies to the messages. The feedback is actually useful albeit confronting.

The other consideration is your client attrition rate (what percentage of clients leave the practice each year). If client attrition is above 30% (which Profitdiagnostix can measure for you) then the text messaging will yield better results. The other rule is that even if you are below 30% attrition, but your attrition has increased by more than 5% in a year, you should consider re-activation campaigns – once again Profitdiagnostix can monitor this for you.

APL Accountants have spend a lot of time with the team at Profitdiagnostix building intelligent logic to create text messaging lists for veterinary practices and now is the right time to have your business assessed in light of a looming slowdown.

Contact: support@profitdiagnostix.com 
They will be able to assess your client attrition and whether or not you need to be looking at a reactivation strategy over the next year. 

Dog Tales!

It’s August already – that means time for annual client workshops! We pretend to miss mom and dad this time of year, but actually we are secretly very happy. We are extra spoilt with Sharon the office manager all day and a special pet sitter over night. Sharon in particular has a weakness for giving us special tuna treats if she is exposed to our Jedi like mind controlling powers.

So those of you that haven’t replied remember to book your spot and all paws crossed that there are so many of you that mom and dad have to add an extra night away so we get to party and eat tuna treats longer!

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