Apr 22, 2016 by Andrew Clark
Strive to consistently record financial results in the same file every month. Imagine what would happen if every once in a while your lab recorded BUN results in the CBC column. Not only would the report be medically worthless but also cause you to be reluctant to rely on the lab results.
The same ‘misfiling’ situation is the most common source of inaccuracy in veterinary financial statements. Without a reliable structure and guidelines, each month the book keeper makes her best guess as to how to record a specific income or expense. Unfortunately the book keeper occasionally guesses wrong or inconsistently and records the income or expense in a different category than she did in previous months. Now you have the ‘financial BUN in the financial CBC column’. “There has to be a way to keep that from happening”, you say.
You are right, there is a way. Once again, the accounting profession has crafted a solution for us, the Chart of Accounts. A Chart of accounts shows assets, liabilities, equity, revenues and expenses, all in one place and broken down into subcategories. http://www.investopedia.com/terms/c/chart-accounts.asp
Unfortunately, QuickBooks does not come complete with veterinary specific charts of account. They are available for companion animal practices and equine practices from several sources.
AAHA offers a companion animal Chart of Accounts. https://www.aaha.org/professional/resources/library.aspx#gsc.tab=0&gsc.q=chart%20of%20accounts&gsc.sort=
Marsha L Heinke CPA, Inc offers QuickBooks ready small animal or mixed practice Chart of Accounts as well as a comprehensive desk reference Equine Practice Chart of Accounts. They also offer an electronic version of the Equine COA that can be used for brand new QR files. In existing QB users, they offer a service which reorganizes their existing COA to the Equine COA format. http://www.vpmp.net/products-page
Whether your practice customizes the QuickBooks Chart of Accounts or uses a commercially available practice type specific Chart of Accounts, it is critical that you and your book keeper familiarize yourselves with the account definitions so that the same item goes in the same account every month. Once you begin to achieve consistency in your data entry you will begin to have more confidence in your financials as well as in your ability to make decisions based upon the financials. Your financials can become a decision support tool rather than an aggravating mystery.