An Effective Accounts Receivable System for Equine Veterinarians

 

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We can all agree that equine veterinary practice is very hard work. What makes it even tougher after the long hours, fractious horses, challenging cases, and miles on the road, is when we don’t get paid for our services. Despite this, many equine vets resist implementing an accounts receivable strategy. Whether it is because we are afraid of losing clients or a lack of appreciation of the value of our services, we hate asking for money. Our excuse is, “that’s just the way equine practice has always been, and no horse owning clients will ever pay at time of service”. At the same time, we are expected to pay our bills within 30 days and yet most of our clients take 60 days or more to pay us. What happens when that gap gets so wide? We have to borrow money from the bank so we can pay our bills. Something is wrong with that picture.

3 years ago our practice was finding that it was taking us over 60 days on average to collect from our clients. We pride ourselves on paying our bills on time so we were in a position of having to use whatever profits we had or borrow from the bank to pay our bills because our clients had not paid us. We had to do something.

We instituted a simple to follow, but very effective system, that has resulted in the majority of clients paying at time of service, while a few remaining excellent clients retain the privilege of paying within 30 days. Here is how we did it:

Average Days AR

This is the formula we used to determine that our average days AR was over 60 days!!

It tells us on average how long it takes to collect payment on the services we sell. The formula we use is

accounts receivable total.

(sales for previous year/365

Ideally we would like this number to be less that 30 since we have to pay our supplier bills in 30 days. We want to get paid before our bills are due. The closer to zero the better.

Client Categories

Once we had developed this metric, we split our clients into three groups: new clients, chronically late payers, and excellent clients who always paid within 30 days. We realized that the best way to avoid AR problems was to not let customers pay on credit. With that in mind, we developed a policy that all new clients were to pay at time of service, with no exception. Our customer service receptionists would email or fax a new client form to every new client that detailed our credit policy. It asked the new client to give us a credit card to keep on file and to sign their agreement to the policy. 99% of all new clients did this without batting an eye. Those who refused always had an excuse like “I don’t have a credit card”. Our attitude was, if Visa or Mastercard won’t offer you credit, why should we? We wouldn’t say this of course, but we told these people that our vets would expect to be paid with a cheque or cash at the appointment. Right away we are on the right track to reduce our average days AR by getting paid at the time of service.

The slow payers were sent a letter informing them of the new policy, and that because they were historically late on their accounts we now expected them to pay at time of service. We enclosed our credit policy and asked for a credit card on file and a signed acceptance of our new policy. I made sure to be at the office for a few days after sending these letters out expecting a huge backlash from certain clients. Was I every surprised when we didn’t get a single phone call! Well we thought, wait until we call them for a dentistry appointment and ask for a credit card for the first time. Not a peep!

The last group were the great clients. We also sent them a letter explaining our new policy, but let them know that since they have always been reliable we weren’t going to insult them by expecting them to pay at the time of service. However, if they strayed even once past 45 days they would automatically become a COD client. Again, not a whimper from anyone about our new terms

The end result was that we did not receive one client complaint or threat to move to another practice, and at the end of the year we actually had an increase in both sales and new clients. We may have quietly lost a few who did not agree with our new policy, but it appears they were ones we could stand to lose and they were quickly replaced by those who were willing to pay for veterinary services.

Conclusion

It has been 3 years since we instituted our new credit terms and there have been a few things we learned along the way.

  • We must be diligent with the policy. Once we slack off even a little bit we see our Ave Days AR creep up a little bit.
  • If the vets are paid on production, only pay commission on the clients invoices that have paid. This way vets won’t work for just anyone to increase their sales, while at the same time the office must be vigilant about not sending them to work on bad paying clients. Not all practice management softwares can run a report that gives you this information, so you may want to investigate your own software system to see if you can benefit from this feature.
  • Detail what the method of payment will be for every appointment on a day sheet for each vet. This lets the vet know whether the clients will have a credit card on file, or will be paying by cheque cheque or they are a client that is allowed credit terms.
  • Have a very safe system to store credit card information. Most practice software systems can do this. Some veterinarians have had good luck using smartphone apps like Square, which allows you to swipe a credit card using your smartphone. In this manner, a veterinarian can take a payment at the appointment even when on the road.

Of course with every system there are exceptions to the rule. For example, this system can be challenging to implement in a racetrack or breeding practice. The business model of those types of practice depend on numerous part-owners, and trainers that attempt to control the process. At the same time, our clientele has many absent owners in show horse barns and boarding stables but we have not had an issue with acceptance of our system.

Before we instituted our new AR system our average days AR was in the 60 day range. It was taking us twice as long to collect our money as it was to pay our bills. Now we are less than 30 days and have been for 3 years. Our cash flow is much better because money owed to us is acutally in our hands, and not in the pockets of our clients.  Our vets are much happier knowing they are working for clients that are paying when they are supposed to. The customer service representatives spend most of their time making appointments instead of chasing after money. The main thing is that we haven’t a lost a client because of our credit policy, except those few who likely wouldn’t want to pay anyhow.

 

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Tales of a Veterinarian in an EMBA: If I Survived Biochem can I Learn Analytics?

As I approach the last module for the 1st term of my EMBA I have been reflecting on what has been the most challenging part of the program. At the same time I have been comparing what I thought would be difficult to what the reality has been.

As a veterinarian I have been fortunate that I have some  advantages dealing with the program. Long days studying are the norm in vet school, and so are the multiple exams/ assignments that are due within a couple days of each other. The other advantage I have is that as a veterinarian I am trained to exam situations diagnostically. Fortunately, this is helpful when reading a case analysis of a company – what is the history, what are the symptoms, what do the financials (blood test results) tell us, what are the options to fix the problem and what is the prognosis? A business case is very similar to a presenting patient. At the same time I don’t know if I could have been any more pathetic working on Excel spreadsheets when I started.  All of my classmates came in with their own strengths and weaknesses and it has been interesting to see how we are changing.

When I came into the program Analytics and, to a lesser degree, Managerial Accounting terrified me. I actually had sleepless nights before the course worrying about these courses. Leadership, Marketing and Information Systems seemed to be within my comfort range. What I found about Analytics was that it is very much like the Organic Chemistry, Biochemistry and Physics that I took in my Pre-Vet courses; there is only 1 answer and results are directionally related to study effort. It is black and white. I’m not saying it is easy but there are formulas and principles that can be learned and applied. The hard part is looking at data and wondering what story it can tell about a business.

Managerial Accounting and Information Systems have elements of absolutism paired with intangibles that require many of the skills we learned in Leadership for a successful outcome. I found that when we look at businesses in trouble in this course their financials tell a story that require leadership skills to influence organizational, employee motivation and behaviour. Hmm, seems like there may even be some marketing involved.

Information Systems was an eye opener as well, since like Accounting, it is a mix of data, technology, organizational behaviour mixed with leadership skills so that implementation of an It project will be successful.

Marketing blew me away. I thought I had a pretty good handle on the subject, but we dealt with areas like supply chain partners, pricing and business models that have opened my eyes to how marketing is involved in so many layers within a business. We did more accounting in Marketing than we did in the Accounting course! We actually had to prove that the marketing efforts for a business had to make money for the company! Facebook Page Likes are not enough!

Leadership is the course that I went into feeling pretty confident about. I have studied a lot of leadership for my business and some of the best CE I have done was with this subject.  Surprisingly, It has been the most difficult course, because  one assignment required us to use ourselves as the patient and work with key co-workers and classmates to perform a soul searching and sometimes gut wrenching self analysis. There is no black and white when you examine why you deal with situations and people in a certain way. There is no formula to figure out the profit and loss of a person. You just know there are some areas that seem to work pretty good and in another areas, not so much? We all know the saying be the person your dog thinks you are? Well, if I had a dog and it saw how I dealt with certain things it would probably run away. I want to write about this course more in another blog, because I see a failing in leadership throughout our profession on so many levels. Let’s not feel picked upon though, since leadership is lacking in pretty well every industry.

What the courses have done so far is give me a solid background for what comes next. I certainly look at my business differently than I did 4 months ago, I now look at it as an organization with different elements that are easily influenced by the activities of each other. If I don’t have the finances right it means I need to do some data analysis to find out where the shortfalls are coming from. If my staff is not engaged with what we are trying to do it doesn’t matter how great our vets are because people will be less likely to use us, and if we can’t use marketing to improve our financial position why are we doing it? Here is a teaser on that. My Analytics group just completed an analysis of what variables contribute to a Facebook post that has extensive reach and engagement. Stay tuned because I can’t give the results until I submit the paper and get it assessed. This will be another blog too.

If I had to summarize how I have changed approaching the last module of term 1 is that I now analyze situations in greater detail and use all the information that is supplied to come up with a solution or a decision. The other big difference is the questions I now ask about a situation to better understand it. I have a bigger toolbox of knowledge and skills to help me. It is no different than the quality of questions and diagnostic abilities of a veterinarian with training and experience.

I have finished 4 modules of 15. Right now the Term 3 students are in India for their international trip. That will be my class in 12 months. What will be my perspective on things then? How will I run my veterinary business in a years time?

I can’t wait to find out.

P.S. I’m planning to write over the next few weeks a bit more on the specific courses I took this term and how I have applied what I learned to my business. If there is anything in particular you would like to know make sure you leave a comment. Thanks

Why Veterinarians Struggle with Social Media

Elephant PaintingWe have worked with several veterinary practices with our consulting business, Digital Pulse Consulting, over the past 4 years on social media and we have come to realize that the main obstacles to the successful implementation of a veterinary social media presence are……..veterinarians.

Time and time again when we look at veterinary businesses that can’t seem to get it online the underlying factor are the veterinarians that either own the hospital or those working for it. There are 3 reasons why veterinarians can fail at social media. One of the 3 is easy to deal with but when 2 or 3 are at play it is a significant challenge.

Veterinarians are too old

Not all vets are too old, but recent AVMA figures tell us that 32% of the veterinary workforce is over the age of 55. When we look at practice owners in North America the majority are middle age or older and they are men. The simple truth is that older guys don’t get social media. I should know because I am one of them. When Facebook first came entered the mainstream I had to force myself to use it since I could see it was going to be a significant communication channel. I’m not a psychologist so I don’t know why that is but there is a lot of surveys that show that woman are more likely to use social media than men, and that older men are less likely to use it.

The challenge then is if an older male veterinary practice owner doesn’t sees the value of social media in their life it is harder for them to advocate the use of it in their business. It is getting easier to get buy in now from these older vets, since like it or not, social media is here to stay and they are starting to use it.

Veterinarians are too busy

Veterinarians are busy. True.  And the longer they are in practice the busier they are. I don’t understand this argument from vets because they often have support staff that answers the phone or assists with procedures so why should social media be any different. One of my favorite veterinary groups to present to are technicians since they see how they can be part of the process.

This doesn’t mean that a practice owner should hand over all social media responsibilities to the youngest person on staff. This person running the social media efforts for a business is the one responsible for presenting and managing it’s image and reputation. The practice owner has to make sure what is posted on Facebook or Twitter is in line with the goals of the business. More on this next week.

Veterinarians are scientists, not artists.

Social media scares many vets because there is so much uncertainty involved with it. Vets rarely improvise during a procedure. You won’t see them try a new anesthetic protocol on a whim, yet so much of the fun and success we see with social media is trying new things. Lets also not forget the uncertainty that is inherent in interacting with people on line. Bad things rarely happen, but if your frame of reference is the consequences of a procedure or operation gone wrong you tend to be a little shy about jumping into the unknown.

All is not lost for veterinarians though. As I mentioned, they are starting to use it more and more, and those who want a successful client list will learn to love it. I am seeing less and less of the cross-armed bored, sometimes hostile face of the older vet looking at me as if I’m from Mars. When I see this my inner voice wants to say “how do you like being a dinosaur?’ or “do you still use a rotary dial phone?”, but I realize change is hard for some people and my job is to get these resistors to get on board. Nothing is more satisfying than meeting up with a vet who was dead set against Facebook telling me that they are now having a blast with it.

What kind of pushback are you getting in your veterinary business about social media?

Is it just from vets or are others digging in their heels?

What do you do to get them on board?

Let us know in the comment section. Thanks

Photo courtesy of http://www.ramonaspainting.com

Elephant Painting

How to Schedule your Facebook Posts

I have been fortunate to work with many veterinary practices and their social media efforts. To that end I created a company called Digital Pulse Consulting to advise veterinarians and others in the animal health care industries on marketing and other business challenges. As part of our service to our clients we often send them How-Tos on certain subjects. I thought I would share them on this blog as well. Here is our first one. It is written by Heather McPherson who works with our clients and their social media efforts. We hope you enjoy.

We know that we need to have a social media presence for our veterinary practice but finding the time to have an engaging presence all of the time can be a challenge. Try this time saving tip to schedule your Facebook posts. This will help you during busy times, over the weekends or if you find out your posts get more action at a certain time and you are unavailable to post at that time!

Step 1) Create your post as you normally would with your content, whether it is a photo or link or something else entirely.  Once your post is perfect and ready to go, click on the clock in the bottom left hand corner of the post.

step 1

Step 2) This will open up a calendar for you to pick the date and time that you would like your post to be published.

schedule a facebook post

Step 3) Once you have chosen your time, click on the Schedule button in the bottom right hand corner of your post.

step 3

Step 4) Once your post has been scheduled you will be prompted with a message telling you so.  Voila success!

step 4

Step 5) If you would like to see a snap shot of your scheduled post you can visit your activity log.  This can be found in your Admin panel in the edit page drop down.

activity log

We hope you have found this useful. Let us know if you have any other questions about social media and we will do our best to answer them.

Does Your Veterinary Business Need a New Years Review?

monkeythinking

I’m not one for New Year Resolutions. Every year-end I feel like a New Years Scrooge because I don’t create personal resolutions for the coming year. I have blogged about resolutions for our business, but lately I have fallen off doing those too.

I’ve been wondering why I feel this way over the past couple of days and I have come to realize that what I end up doing this time of year is reflecting on the last 12 months. I do this to see how I have done with the little changes that have affected me over the period. I think of life as a series of continuous lessons that happen when you least expect it. My reflections focus on those lessons and what I have done to learn from them.

When it comes to our business my reflections focus on making sure that we are continuing to be the kind of business we set out to be when we first started. We are going into our 12th year of business. We have grown from a husband and wife team to 3 locations with 11 vets and about 20 support staff depending on the season. It is easy to lose track of what was important to my wife, Melissa, and I when we started our veterinary practice. I vividly remember getting our first order of supplies and medications from our distributor and wondering if anyone was ever going to use us.

There were 3 things that my wife and I felt were critical in our new business.

An unrelenting focus on our client’s and their relationship with their horse(s).

Prior to opening the business we had spent a lot of time as students and in our internships with experienced vets who either treated horses like livestock, or gave the impression that the client was lucky to have them as their vet.

We saw how frustrated horse owners were by the lack acknowledgement of the bond they had with their horses. We saw how they were dying to be educated on horse health care issues. We saw how they wanted some respect from their vets.

When we opened our business we made a point to spend time with clients talking about their horses and calling the day after an appointment to see if everything was ok. We demonstrated that we cared about the clients and their horses

We also began sending out client newsletters with health care tips and soon started client education seminars. We have continued and added to this with our strong presence on social media and a robust web site.

The biggest way we were able to show respect to our clients was to show up on time for an appointment. If we were going to be more than 15 minutes late we would call to let them know. We still get compliments on our punctuality.

Making sure vets can have a work like balance

When my wife and I were in vet school we realized that the days of a new vet wanting to work 80+ hours 7 days a week were a thing of the past. In spite of this, many vets bemoaned the lack of work ethic in these new grads. Sounded like sour grapes or jealousy to us. We vowed that when we hired vets we would make sure that they worked reasonable hours and were able to share on call. We wanted to challenge the saying that if you like horses it is better to be a small animal vet so you will have the time to do so.

I knew we were on the right path when one weekend my wife and I were on call and our three associates spent the weekend riding or showing their horses…in the summer.

Giving staff an opportunity to grow.

During our internships we met some excellent technicians and receptionists. They were integral to the ongoing success of the practice…and they were paid horrible wages. We realized that if they didn’t have a husband or wife with a “real” job they would be living below the poverty level. On top of that there were few opportunities to develop skills or new roles within the business. That didn’t seem right to us so we were determined to pay our non-vets competitive or above wages and to grow our business so that there were opportunities for growth.

About 3 or 4 years ago I had a light bulb moment when I realized that if we want to offer the best customer care our staff has to love being at work. How can they deliver amazing client care when they didn’t care about our business? Since then we have put an intense focus on making sure we have an excellent work environment based on mutual respect, growth opportunities and profit sharing. This is still a work in progress but I love the fact that our staff at all of our locations gets along well and has several good laughs in the day. One of my favorite compliments from a client was a remark that she loves when our vets come to the farm because they and the techs seem to be having a great time.

I figure if we are maintaining or improving on what we set out to do with out business there is no need for a grand proclamation for the coming year. It’s not as if I am going to wait until the end of the year to make changes for the following year.  We have the foundation of what makes our business special so we will use that to guide our business throughout the year.

It is a good idea though to look back on the year to make sure we are keeping true to what we want to be as a business.

 

I would like to thank you for reading and listening to this blog over the year. I appreciate all of the feedback I get either in person or on the comments page. If there is anything you would like me to discuss in 2014 let me know.

Happy New Year everyone. May you be healthy, happy and prosperous

 

The Value of an EMBA – Veterinary Business Podcast #30

Readers of my blog over the past few months have read how my EMBA is transforming me as a business leader. After each module I find myself a little bit smarter, a lot more humble, and eager for the next learning challenge. Going back to school has helped me beyond my expectations. I have wondered is it just me, or would other small business owners appreciate it as much as I do.

I asked Liz Snelgrove, director of EMBA recruitment and Program Services of the Ivey School of Business to join me in a discussion on advanced business education and why small business owners should consider it. I also asked for her perspectives on the challenges facing small and large businesses. Liz brings a very broad perspective on the subject since she has a chance to meet EMBA business students from all industries and all sizes.

You can download the podcast here or subscribe to it on iTunes.

I welcome your comments so please don’t be shy.