Mar 22, 2017 by Edward L. Blach, DVM, MS, MBA
This is a simple question. Cost of Goods or Cost of Professional Services is an expense category in a chart of accounts that includes inventory costs, laboratory costs, radiology costs, mortuary, food and bedding, as well as several other small categories. This group of expenses collectively represents the second largest expense category in most practices. So, the question is, again, what was your Cost of Goods for the past month?
To ensure a healthy practice, it is important at all times to have current data that will help you know the status of the highest cost areas of your practice, as they will have great impact on your practice. If you don't have current data within a short time after the end of each month, a negative trend could expand and result in losses or at least significant reductions in profitability that would affect everybody in the practice.
To reduce the possibility of negative financial surprises, ensure you have current financial information by a short time after the end of each month. Review your financials. Use them to make changes, if necessary, to correct negative trends or to expand on positive ones.