Fix the Data Before You Fix the Practice

In this episode of FlightPlan: Quick Consults, a panel featuring the CEO of VetBooks, a CPA, and a veterinary operations leader discusses common sources of inaccuracy in veterinary P&Ls—from misclassified expenses and incorrectly coded services and inventory to using the wrong accounting method. They explain how these issues can quietly undermine decision-making.

The conversation also explores where practices should start when cleaning up their financials, including building a clean monthly income statement, aligning systems with the VMG/AAHA chart of accounts, and clearly defining the purpose behind the work. Because before you fix the practice, you have to fix the data.

Host: Brenda Tassava Medina, CVPM, CVJ, MVLCE

Panelists:

• Martin Traub-Werner, CEO at VetBooks
• Shona Andryszak, LVT, CCFP, SHRM-CP, Director of Support at Encore Vet Group
• Beth Scott, CPA, Partner at Katz, Sapper & Miller

Resources Discussed:

• VMG AAHA Chart of Accounts - https://www.myvmg.com/knowledge-center/aaha-vmg-chart-of-accounts/

Thanks for listening!

Website: https://encorevet.com/

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Transcript

SPEAKER_03 0:10

Welcome aboard. You're listening to Flight Plan Quick Consult, your go-to podcast for veterinary insights that are fast, focused, and designed to elevate your practice. I'm your host, Brenda Tassima Medina from Encore Veterinary Consulting. Whether you're between appointments or heading into a strategy session, we've got takeoff ready tips, tools, and takeaways to keep your team soaring. So buckle up and let's take off to explore fixing the data before you fix the practice. Today's panel includes Martin Traub Warner, Beth Scott, and Shauna Andresak. Martin, tell our listeners a little bit about yourself.

SPEAKER_00 0:45

Thanks, Brenda. I'm a lifelong entrepreneur. I fell into the veterinary industry almost 15 years ago. I uh managed to found and started a company called Vet Success. And uh during that time, I uh followed the threads of a passion project uh around uh bringing financial control and financial clarity to veterinary practices. Uh started a company called Vet Books. We do bookkeeping is the output, but financial control is what we actually uh deliver to practices to help practice owners sleep better at night. And um having a lot of fun doing that, working with independent veterinary practices and helping with their financial controls.

SPEAKER_03 1:31

Thanks, Martin. Next up is Beth Scott.

SPEAKER_01 1:35

I'm Beth Scott. I am with KSM Business Um Advisors. We are based out of Indianapolis, Indiana. We have been very intricately involved in doing data benchmarking in the veterinary industry, specifically with veterinary management groups, working with practices to help them file their taxes. Not the part that I love the most, but part of what I do. Um so filing their taxes, but then also just trying to find ways for practices to dive into their numbers, find opportunities, and be able to turn those opportunities into fruition by changes, change management, things within the practice in order to increase bottom line, which ultimately will help and hopefully increase their value.

SPEAKER_03 2:18

Awesome. Thank you so much for being here, Beth. And not to be missed, Shauna and Razak.

SPEAKER_02 2:25

Thanks, Brenda. Um, I've been in the veterinary world field since um, gosh, 2001. So over 20 plus years experience. I've dabbled as a licensed veterinary technician, as a practice manager, and even taught veterinary technology to help bring up the new generation of technicians and veterinary support personnel.

SPEAKER_03 2:47

Awesome. Well, thank you all for being here today. I'm gonna jump right into the first question and I'm gonna direct it to you, Beth, first. Um, so our listeners would like to know what are the most common sources of inaccuracy in veterinary PLs and how do they undermine leadership decision making?

SPEAKER_01 3:07

Yeah, so uh for me, uh the most the most common things that I see is um not using the right chart of accounts in order to classify your income, classify your expenses. So when you're starting to try to dive into things and understand where the opportunities are, it's like trying to find a needle in a haystack because you don't really know where to start. So having that foundation in place is really important to make sure that you have things in the right spot, that we are looking at things from an apples to apples comparison when we're looking at benchmarks is really important. And then I think also in conjunction with that, surrounding yourself with the right people. So, with that being said, a veterinary-specific bookkeeper, uh, such as what Martin and his company do as well, I think is really, really important because you have someone that truly understands the why behind getting this intricate with your chart of accounts. You need someone that understands that. So you're not getting the pushback on a regular basis. Like, I don't understand why we're doing this, like this just complicates things more. But it's not about the complication, it's about the clarity that you get from having the financials in the right space. So having someone like Martin and VetBooks on your side that understands the reasoning behind it are super important to make sure you get all those things in the right place so that someone else can come in and say, all right, let's now figure out where your opportunities are and where we can make a difference.

SPEAKER_03 4:38

Awesome. Thank you. I think she queued you up, Martin. Would you like to answer the question?

SPEAKER_00 4:44

Oh, you dinner, Beth. Yeah, I Beth, maybe I can't remember if it was you or another industry, uh another industry leader who recently uh told me that they like to start their uh conversations by asking who's got their PL uh or their income statement uh ordered but in alphabetical order. Was that you?

unknown 5:05

Yeah, that was not me.

SPEAKER_00 5:07

I was slow, but I was like, wow, it would never even occur to me that to have it. That might have been me, Martin. Oh, I've had that happen with clients before. It's unbelievable. And and um that's like a surefire way to know that you are uh in need of some help uh is if your income statement is is uh is in alphabetical order. Um so you know I have to agree um uh with Beth that the charter accounts and the reason for it is veterinary practices are wildly complex businesses. I mean, you are not just a general practitioner, you're a pharmacist, you're a surgeon, uh, you're doing all kinds of novel therapies, um, grooming, boarding, and each one of those is an individual profit center unto itself. And so the other thing that I would add is if you're of a size, and I would say, um, well, frankly, any size, but the bigger you get, the more important it becomes uh to do your books with the accrual method, which is not to file your taxes by the accrual method. And Beth and I can have the whole conversation about you know tax filing cash versus accrual, but doing your books with the accrual method to match the expenses with the revenue generation so that you can measure the profitability of each of these particular line items uh in the business. It just gives you a level of um sophistication and uh granularity to be able to manage the complexity of the practice.

SPEAKER_03 6:49

I agree with you 100% on that one because we can't really use the PL as a diagnostic tool from a practice management standpoint unless those things line up in an accrual basis.

SPEAKER_00 7:00

Shauna, oh go ahead. So I was just gonna say you end up having to twit twist yourself into pretzels, right? To try to figure out to figure out like why the numbers are the way they are, unless you're using the accrual method.

SPEAKER_03 7:13

Yeah. Shauna, operationally, um, what do you see as the most common sources of inaccuracy in veterin's and how do they undermine the practice leaders that you work with?

SPEAKER_02 7:24

I see a lot of service and inventory being miscoded. So you don't know what your service and inventory mix is to accurately reflect what you're doing in the hospital. And if that data is flawed, it leads to an overconfidence and underperforming areas. So you might think that you're doing great in payroll, but you're missed, you know, everything's misaligned. Or you might think your cogs are doing great, but in true reality, it's not, just because things aren't coded correctly. And you don't know how to coach up your veterinarians or your support staff if that data doesn't match. So it does, if if the data is not accurate, it really does hurt operationally as well as with high quality patient care, because you don't know if you're treating or streeting, which is a common term, or if you're actually providing the diagnostics to help.

SPEAKER_00 8:13

For those of us who think we know what it means but aren't exactly sure about treating or treating or streeting.

SPEAKER_02 8:18

The perfect example is you have a dog with urine, like a urinary issue come in, instead of performing the urinalysis, the chemistry to make sure all the other organ functions are correct, you just throw antibiotics at it and pray that the problem goes away. So your service and inventory mix becomes skewed at that point.

SPEAKER_03 8:36

Yeah, very fascinating. Um, so next question is if a practice wants to clean up its financials, what are the first steps they should take before making any major changes as far as like fixing the practice? Martin, I'm gonna throw this one at you first.

SPEAKER_00 8:54

Yeah, so uh implicit in the question, and so I'm gonna sort of go a little uh uh sideways for a second. Implicit in the question is that you that you want to clean up your financials, and and to that, it's sort of like you need to know what what like why, right? Like what what is the purpose of cleaning up your financials? And it's funny, I had a conversation just this morning with a practice owner who, you know, there's a broad range of reasons that people are in practice. Some are I just want to do animal health and and I'm less concerned about my financials. Others are only concerned about the financials and went into animal health because it was a financially viable uh uh option. And I think just sort of knowing what why you want to clean up your financials and what you want to get out of your financials, I think is is is super important. And then if you're gonna clean them up, you know, start with a clean income statement. I I balance sheets are important, balance sheets are important, but the action is all in the income statement. It's it really is tells this the financial story of what's happening in the practice. So commit to an uh income statement prepared month at least monthly, um, at least monthly, prepared monthly, uh in a timely, in a timely, in a timely manner, um, so that you can actually make operational decisions with a level of granularity that that that leads to decision making that that that that is effective.

SPEAKER_03 10:31

Okay. Okay, Beth, what are your thoughts on this? You mentioned chart of accounts earlier. Yeah, and I know that you and Martin both actually worked on a project to update the VMG AHA chart of accounts. Um, how does that time and live to tell the tale?

SPEAKER_01 10:46

Yeah, and to tell the tale for sure. I've lived it multiple times now, Martin.

SPEAKER_00 10:51

Yeah, it's true.

SPEAKER_01 10:52

Yeah, so yes, um, I'm glad you said that, Brenda, because we do have a new release coming out of the chart of accounts, which is meant to encompass some of the more um modernized pieces of veterinary medicine that have come about since we initially launched the um chart of accounts. But as Martin said, you're trying to figure out like why you're doing all that, but then the next step is you got to start implementing something. So, what does this new roadmap need to look like? How do I how do I need to classify all that? And luckily, VMG and AAHA were very gracious and allowed this chart of accounts to be released to anyone. So you don't have to be a VMG member, you don't have to be an AAHA member to get access to the chart of accounts. You just have to know where to go to find it. So on I it housed on the AAHA website. If you just Google search um VMG AAA chart of accounts, it should take you right to the AAHA website and give you a plethora of resources that we've put tons of time and effort into to help each practice adopt the VMG AAHA chart of accounts. So you're gonna want to make sure your practice management system is aligned, and and I'm sure Sean I'll have a little bit to say about that, but making sure that you have all those revenues coming into the right spaces inside your practice management system, you're able to tag all those things to the appropriate um chart of accounts. So you want to make sure that's aligned, and then you want to make sure, and 90, probably 99% of veterinary hospitals use QuickBooks, you want to make sure your QuickBooks is aligned so that when you get it all put together and you're putting in all your cash information and you have somebody like Martin helping you out on that side of things, you now have the chart of accounts road mapped out in your financials to be able to utilize all of the revenue and the expense categories to be able to say, where in where in the world do I start looking and where do I start working on first? So adopting that chart of accounts is going to be important. Getting your PEM system aligned is gonna be really important as well.

SPEAKER_03 12:55

Thank you so much, Beth. And we'll be sure to drop the link in the podcast so that our listeners can find it readily if they're not already using it. Yeah. Shauna, so operationally, your practice wants to clean up. What are the first steps that they should take before making those operational changes?

SPEAKER_02 13:15

I agree. Your veterinary software is number one. It's so easy to say, well, it was always set up that way. And 20 years ago, that might have been okay financially and from an income statement for a practice. But as you evolve, you have to adapt with everything and make sure your chart of accounts is good. Operationally, one of the biggest things that I see is inventory. Inventory is a huge thing that can affect your profit and loss statement. And making sure that your cycle counts are accurate, your cost of goods, even the pricing on your products will really help shift that. And then always having that open conversation with your practice leaders to make sure that everybody understands the why behind it. Why are we changing the categories in the penals? Why are we changing the categories in QuickBooks? What does this mean overall financially for the hospital?

SPEAKER_03 14:06

Awesome. Thank you so much. I think this was a really helpful session for our listeners. Thank you all for coming on the podcast today, and thanks for flying with us on Flight Plan Quick Consults. If today's insights helped you climb to new heights, be sure to subscribe, leave a review, and share this episode with your crew. Until next time, keep your mission clear, your team aligned, and your practice soaring.