Understanding Your Animal Hospital’s COGS

Learn More About COGS and How iVET360 Can Help Your Veterinary Practice

Running a veterinary practice involves juggling numerous responsibilities, from patient care to managing your team. One vital aspect that often gets overlooked is understanding and managing the Cost of Goods Sold (COGS). At iVET360, we aim to take the hassle out of this process, allowing you to focus on what you do best—caring for animals.

What are COGS?

COGS, or Cost of Goods Sold, refers to the total amount of money a business spends to produce or acquire the products it sells over a period of time. For veterinary practices, this includes direct costs such as medications, medical supplies, lab fees, and even food for the animals. Essentially, it covers all the costs directly associated with providing your services.

For businesses that procure products for resale, COGS also encompasses the cost of purchasing these items. Managing this figure effectively can significantly impact your practice’s profitability and financial health.

How iVET360 Can Help

At iVET360, we offer specialized services to help veterinary practices understand and manage their COGS. By scrutinizing your expenses and providing a clear breakdown, we help you find smart ways to save money and allocate your resources better. Here’s how we do it:

Detailed Expense Breakdown

We provide a comprehensive breakdown of your COGS, enabling you to identify areas where you can cut costs without compromising on quality. This detailed analysis helps you understand what you’re spending money on and where you can make adjustments.

Custom Budget Tools

iVET360 has developed specific tools tailored for veterinary practices to help manage COGS and payroll efficiently. Given that Cost of Goods and Payroll represent 60% or more of your total operating budget, effective management of these two cost centers is crucial. Our tools allow you to easily determine your budget for labor and product purchasing based on the revenue generated. This ensures you stay on top of your finances and maintain profitability.

Proactive Monitoring

We don’t just provide tools; we also offer ongoing support to help you monitor your expenses proactively. By keeping a close eye on your COGS, you can quickly identify any anomalies or unexpected increases, allowing you to take corrective action before it impacts your bottom line.

Budget Management Tips for Veterinary Practices

Managing a budget effectively is a skill that improves with practice and experience. Here are some key tips to help you get started:

Utility Costs

Utility costs can fluctuate based on weather and other factors. If you notice unexpectedly high costs, check that your supplier rates haven’t changed and that your equipment doesn’t need servicing.

Team Management

Overtime can be a significant expense. Actively managing your team’s time and making it their responsibility to stay within normal working hours can help stabilize costs.

Cash Flow

Cash flow and profit are not the same. Amortizing expenses like property taxes over the year can remove budget spikes, but tracking cash on hand is essential. Maintain daily cash projections to avoid issues.

COGS Percentages

COGS should fluctuate with revenue. If you sell more preventatives than expected, costs will increase accordingly. Changes in expense percentages can indicate cost changes not reflected in your pricing or potential theft.

COGS Mix

A change in revenue mix can significantly impact profitability. For example, radiology is usually more profitable than pharmacy. If you’re doing fewer diagnostic X-rays, profits may decline even if other budget objectives are met.

Join Hands with iVET360

Understanding and managing your COGS is crucial for the financial health of your veterinary practice. At iVET360, we’re here to help you every step of the way with our specialized tools and expert advice. By partnering with us, you can ensure that your practice remains profitable, sustainable, and ready for whatever challenges come your way.

Ready to take control of your practice’s finances? Learn more about how iVET360 can help.

By following these strategies and leveraging the expertise of iVET360, you can keep your practice financially healthy and focused on delivering the best care for your animal patients.