As a veterinarian, you are dedicated to the health and well-being of animals, but to effectively run your practice, you also need to focus on the health of your business. A well-structured system of internal controls can help you streamline operations, increase profitability, and safeguard your assets. Here are five key internal controls every veterinary practice should implement to achieve business goals.
1. Separation of Duties: Safeguard Your Finances
One of the most effective ways to prevent fraud and errors is by separating financial duties among your staff. In a veterinary practice, this might include dividing responsibilities for invoicing, receiving payments, and reconciling the bank account. By ensuring that no single employee has control over all aspects of a financial transaction, you reduce the risk of theft or financial mismanagement.
How to Implement:
- Assign one team member to handle billing and invoicing and another to process payments.
- Designate a different person (such as an office manager or accountant) to reconcile the bank statements monthly.
- Regularly review your accounts receivable and follow up on outstanding invoices.
Business Benefit:
Improved financial transparency and reduced risk of fraud create a healthier bottom line and build trust with both clients and staff.
2. Inventory Management Controls: Protect Your High-Value Assets
Veterinary practices often carry expensive medications and supplies. Without proper oversight, these items can be easily misplaced or misused, leading to financial losses and even potential health risks for patients.
How to Implement:
- Establish a system for tracking inventory, with regular counts and audits of medications and supplies.
- Use inventory management software integrated with your practice management system to monitor stock levels and identify discrepancies.
- Assign responsibility for inventory oversight to a specific employee who is not involved in purchasing decisions.
Business Benefit:
Better inventory management reduces waste, improves cash flow, and ensures you have the necessary supplies on hand when patients need them.
3. Client Billing Controls: Ensure Accurate Revenue Collection
Accurate billing is crucial to maintaining a steady revenue stream. Without proper controls, your practice may miss out on payments or face disputes from clients over charges.
How to Implement:
- Use a standardized fee schedule for all services and regularly update it to reflect market rates and costs.
- Implement a double-check system for invoices, where a second staff member reviews bills before they are sent to clients.
- Offer transparent and detailed invoices, breaking down each service and charge to avoid confusion or disputes.
Business Benefit:
Effective billing controls enhance cash flow and client satisfaction by ensuring clear, accurate, and timely invoicing.
4. Access Controls: Safeguard Sensitive Data
Veterinary practices handle sensitive client and patient information that must be protected. Implementing access controls helps secure your financial records, client data, and medical information against unauthorized access.
How to Implement:
- Use role-based access in your practice management software, giving employees access only to the information they need for their specific job functions.
- Regularly update passwords and user permissions, especially when employees leave the practice.
- Invest in cybersecurity measures such as data encryption, firewalls, and antivirus software.
Business Benefit:
Enhanced data security not only protects your practice from potential breaches but also builds client trust and meets compliance requirements.
5. Regular Financial Reviews: Monitor Business Health
No matter the size of your veterinary practice, regular financial reviews are essential for tracking performance and identifying areas for improvement. These reviews help you spot trends, control expenses, and plan for growth.
How to Implement:
- Schedule monthly or quarterly financial reviews with your accountant or CPA to go over profit and loss statements, cash flow, and key performance indicators (KPIs).
- Set realistic financial goals and compare your actual results against these benchmarks.
- Use financial data to make informed decisions about staffing, services, and investment in new equipment.
Business Benefit:
Consistent financial reviews provide valuable insights into your practice’s profitability and help you make strategic decisions to achieve your business goals.
Conclusion
Implementing these internal controls can help veterinarians like you focus more on your patients while maintaining a strong, healthy practice. From safeguarding your assets to improving cash flow, these key measures provide a solid foundation for long-term business success. If you need help setting up or refining these controls, consider working with a CPA who specializes in veterinary practices. At High Impact CPA, we offer tailored accounting and tax planning services designed to help your practice thrive.
Ready to get started? Contact us today to learn how we can support your financial goals and help you build a more efficient and profitable veterinary practice.
