Tips to Avoid Fraud and Embezzlement
We see embezzlement in the veterinary office all too often. The average embezzlement amount REPORTED is over $100,000 in a veterinary practice, and we know most is not reported or ever discovered. Please review the following tips to avoid embezzlement, as well as signs from employees to be aware of.
-Limit access to practice management software to make adjustments, and format software to disallow deletions or changes after the close of each month. Assign passwords to each employee. Ensure the software company understands that you are the only person that can make changes to the software.
-Clearly set expectations and protocol for making adjustments.
-Review daily reports for adjustments, provider production (ensure there are no “zero” charges), collections, over-the-counter collections, and audit/deletion. Ask questions and research as appropriate.
-Review and confirm the accuracy of daily reconciliation of deposit, petty cash, and cash drawer. Confirm monthly bank reconciliations.
-Review accounts receivable aging reports each month and research any accounts as appropriate.
-Do not allow team members to purchase things for the office and be reimbursed.
-Match up all accounts payable checks with statements and confirm accuracy. Watch for vendors or names you don’t recognize or come up frequently.
-Confirm all bills and credit card statements are accurate.
-Never sign a blank check for a team member, client, or vendor.
-Ensure checks are in numeric order and keep all voided checks.
-Look for trends, such as missing checks, incorrect deposits, missing charts, increased adjustments, and patient complaints.
-Review the details of each team member’s paycheck and year-to-date numbers.
-Perform background checks according to state law.
-Have your veterinary-focused CPA involved with your bookkeeping
-Implement a comprehensive written Office Policy and Employee Manual
Potential Employee Warning Signs
- Resistance to change or having your veterinary CPA or consultant view additional practice information
- Collections have slowed with no justified reason
- Daily deposit reconciliation is not being done timely or is inaccurate
- Adjustments increase with no justified reason
- Team member refuses to take a vacation, wants to take work home, has a financial crisis, and/or resents your income and lifestyle
Why it May Be Okay to Overpay for a Veterinary Practice
Jim Vander Mey, CPA, ABI, is a Senior Veterinary Practice Broker with OMNI Practice Group, as well as a Certified Public Accountant. In this video, Jim explains the cost of waiting to buy a veterinary practice. You may be surprised how much money you could lose out on by waiting to buy, even in 2020, and why overpaying for a veterinary practice now can end up saving you $$$ in the long run.
Read MoreHelpful Tips on Retaining Staff After the Transition
By Corey Young, DDS, MBA, ABI and Jen Bennett, OMNI Practice Group
Congratulations! You just achieved a major professional milestone in completing the purchase of your new practice.
There are many tasks that will require your immediate attention after closing, but one often overlooked item that is crucial to your transition is ensuring you retain the staff.
Here are some helpful tips for you to consider:
The first thing you will want to do is a formal “meet and greet.” I highly recommend that you meet your new employees within two days of the seller notifying the staff. This will help ease their anxiety about who the new boss is and give you an opportunity to personally remind them that they are an asset to the practice. It is also always a nice touch to schedule the introduction during lunch hour and as a kind gesture, to bring lunch for all. Be sure to check with the seller on any dietary restrictions, food allergies, and favorite restaurants.
Next, your new staff will be worried that you will be making changes that may negatively impact their lives such as pay, benefits, work hours, scheduled time off, etc. Make it a top priority to understand their concerns and to assure them that you will carefully evaluate all potential changes before making any decisions. While things might not be run exactly how you want them to be, be sure to weigh the consequences of losing a key staff member because of a decision you might make. Sometimes it is better to leave things intact while you get yourself established with the staff and with your new patients before you implement your desired changes.
Finally, you will be busy but find time to make a personal connection. Set aside one-on-one time with each staff member, get to know them, what they care about, and why they got into veterinary practice. Establishing a relationship early on will pay dividends down the road as your new patients will certainly be asking their trusted veterinary technician, assistant, or office staff member, “What do you think about the new guy/gal?” The goal is to not only retain your staff but to retain patients as well. Having staff in your corner is critical to your long-term success.
Buy a Veterinary Practice Now, or Wait?
Jim Vander Mey, CPA, ABI, and licensed commercial broker with OMNI Practice Group, explains to veterinarians the cost of waiting to own a practice and how buying a practice now should pay off.
Read MoreThe Cost of Not Owning in the COVID Era
By Corey Young, DDS, MBA, AVI
I know. Running a business seems daunting. You just want to be a doctor and not have to worry about the rest. I understand. That said, it is wise to consider what is left on the table by being a career employee, or by waiting for that perfect practice to show up.
Let us consider a fictitious practice:
- Overhead: 60%
- Gross: $550,000
- Net: $220,000
- Acquisition price today, due to COVID environment: $300,000
- Interest rate: 4%
- Loan of $330,000 (acquisition price plus one month of working capital) over ten years: $3,341 monthly payment/$40,000 annually/$400,930 over life of loan
Let us assume 10% growth in the first two years and 5% growth in the next eight, all while maintaining overhead percentages.
- Total income over those ten years $2,600,000
- Estimate of practice value in ten years $700,000
Sum of income and asset value $3,300,000
As an associate, how does this compare your compensation package over the next decade?
