Why the AAHA Chart of Accounts? We encourage all our clients to use the AAHA Chart of Accounts
Financial reporting is vital for understanding a practice’s financial condition and concerns, as well as in identifying areas for improvement. We recommend our clients use the AAHA Chart of Accounts because:
1. It is a well-defined chart of accounts and every account is specifically defined for the veterinary industry. You get the ability to spot the areas of concern. For example: If you are using one revenue account and suddenly from one month to another it drops 10% it might be really hard to figure out what is happening inside of the practice. If you use the AAHA Chart of Accounts, with multiple revenue accounts, you can usually spot areas of concern right away. For example, the 10% decrease in boarding revenue pops right out. You can now focus on the reason. In our example, the boarding revenue drop in March 2020 was caused by people not traveling due to COVID-19. The same goes for expense accounts as well as expenses and revenue accounts set side by side and related to each other. If your ‘In-house Lab Revenue’ is lower than ‘In-house Lab Cost’ what is going on? Potential missed charges, price structure changed and we have not reflected our pricing, etc.
2. Benchmarking. When using the AAHA Chart of accounts you are using standard accounts related to the veterinary industry. It’s smart to compare apples to apples. Why compare to others? This provides a great starting point to discover and understand which areas of your practice are strong, efficient, and very profitable vs the ones that are below average or need improvement. Is your gross profit below 77%? Let’s dig deeper to discover why? You might have an overall sales issue or the answer may lay in the cost of goods sold.
Not currently using AAHA Chart of the accounts? The transition from traditional accounts to AAHA Chart of accounts doesn’t have to be a painful process. We can help. Call or email us today to get started.