The value of an annual fee increase

Originally published in OVMA Focus Magazine January/February 2024

BY NANCY POPPE

A new year has rolled around again and it’s time to consider the fees you’re charging. Should they be increased? Over the past year you may have had clients complain about your fees, and you may be sensitive to your clients’ ability or willingness to pay more for services.

We’ve all felt the effects of inflation at the grocery store, gas pumps and with any purchases we make. Your practice isn’t immune to inflation and its effect on your bottom line. As OVMA’s Accounting Service, we know that DVM and non-DVM wages make up half of the expenses in a veterinary hospital. To retain and attract staff, wages need to increase as the cost- of-living increases. An annual fee increase is a necessity to keep your practice financially healthy.

Ultimately how your fees are perceived comes down to value. Veterinarians offer a valuable service to pet owners, who want to provide the best care for their animals. When clients are educated on what they’re paying for, they will value the service.

OVMA’s 2023 Ontario Pet Owners Report indicates that being interested in a pet’s well-being was the most important factor for pet owners when choosing a veterinarian. However, offering reasonably priced services was also highly rated when choosing a veterinarian. How do we reconcile these two factors? Clients value honesty and communication— they must understand procedures and feel comfortable with the recommendations being made. Team members who communicate services with confidence and clarity will give clients the knowledge they need to see the value in the service being recommended. Once the value of a service is understood by the client, the fee becomes less of a concern and more readily accepted. All team members need to be on the same page. A team that speaks with one voice will give clients a consistent message and achieve the goal of excellent client education.

Review your current fees and compare them to OVMA’s fee guides. Now is the time to make the necessary corrections to your fees. Once you’ve decided on your annual increase, be sure to educate your staff on the changes. It’s imperative that staff understand the fees. If they think a fee is too high, they won’t effectively communicate value to clients.

Team members see revenue coming in, but they don’t see the costs of running the practice. Without a clear understanding of the whole picture, they may jump to the conclusion that the clinic is charging too much. Share this information with the team. You might consider using a pie chart to illustrate the cost percentages for your clinic, without sharing your financials. Staff will understand that the practice needs to set fees appropriately to cover the costs of day-to-day operations. Once your team is on board, they will be your best asset in advocating for your practice.

Annual fee increases should be embraced rather than dreaded. They’re necessary to operate a healthy practice. When you have your team on board, the fee increase will go smoothly and be accepted by clients.

Nancy Poppe, CVPM, CPB, is practice advisor at VetCPA.

Reprinted from the Ontario Veterinary Medical Association’s Focus magazine www.ovma.org

Payroll is like riding a bike

BY GREG TONER

Originally published in OVMA Focus Magazine Nov/Dec 2023

This year, I got to teach two things that I love to do: I taught my daughters how to ride a bike, and I taught practice owners and their administrators how to run payroll using cloud tools.

Like riding a bike, payroll is easy until something unexpected happens. Riding a bike on a flat path with no cars, potholes, cracks, hills, puddles, wind, pedestrians or other cyclists is easy. Riding a bike on a city street during rush hour in a rainstorm is an entirely different experience.

Similarly, running payroll on a regular cycle, where no one was sick, no one took a vacation, every- one showed up on time, there were no statutory holidays and there were no banking holidays to mess with processing timelines, is easy. Get your hours, enter them into your system and go. No problems at all.

With the holidays approaching, payroll is about to start looking like biking down a city street, during rush hour, in the rain.

There are four big issues to watch out for:

Statutory holiday pay

In Canada, there are designated holidays where employees are entitled to a day off with pay. Two of them fall in December: Dec. 25 (Christmas Day) and Dec. 26 (Boxing Day). Shortly after, there’s also New Year’s Day.

Depending on how your pay periods land, all three may be in the same pay cycle.

In Ontario, statutory holiday pay is calculated as 1/20 of the hours that an employee worked in the preceding four weeks. Essentially, the average length of their workday over the last four weeks. Some software automatically calculates this for you, while others require that you do it on your own, and if you’re calculating payroll manually, you’ll obviously need to calculate this as well.

Vacation pay

With so many holidays in such a short period of time, it’s likely that you’ll have staff off during the two weeks leading up to the end of the year. It’s a good idea to have a calendar and know who’s on and who’s off throughout those two weeks and figure out who is using vacation days and who might have run out of vacation days.

Most software can track your staff’s accrued vacation time, so it’s easy to know how many hours your team members have that can be used over the holidays.

If you don’t have up-to-date calculations, determine the year-to-date vacation entitlement and how many hours are left. Compare this to your team’s vacation plans to see if there’s anyone who doesn’t have enough vacation time, and then decide whether you’ll let them carry a negative vacation balance into the beginning of the next year.

Sick pay

As kids go back to school and winter descends, it’s inevitable that you’ll have staff members off. Depending on your policies, some will use sick days or vacation days, and some will have unpaid time off, adding another level of complexity to your payroll around the holidays.

Bank holidays

If you’re paying your team through direct deposit, you know that your payroll provider will need several business days to withdraw the funds from your account and deposit them into your staff members’ bank accounts.

Over the holidays, with the statutory holidays outlined previously, you’ll need to make sure that you don’t miss deadlines, as the banks will be closed, meaning you’ll need to run payroll earlier. Take a moment in early December to note your payroll processing deadlines and mark those dates in your calendar.

Payroll around the holidays can be messy, but if you’re paying enough attention to what’s going on around you, it can be just like a solo ride down a bike path on a sunny day.

Greg Toner, CPA, CA, TEP, CLU, is principal at VetCPA.

Reprinted from the Ontario Veterinary Medical Association’s Focus magazine www.ovma.org

Let’sTalk Turkey

BY GREG TONER

Originally published in OVMA Focus Magazine Jul/Aug 2023

What you need to improve your practice

Running a business is a lot like cooking a turkey. I love turkey—it’s my favorite meal to have with a large group, or a small group and eat leftovers for a week. Cooking a turkey is a challenge. For the first few years of my adult life, I always seemed to be cooking it in a different scenario—using various cooking methods (ovens, smoker, barbecue), a range of sizes from four to 12 kilograms (nine to 28 pounds), and room temperature or straight from the fridge because we forgot to take it out early enough. 

Balancing those factors and capturing the data along the way to figure out when dinner will be ready for your hungry family can be difficult.

I started a turkey diary about 12 years ago and made notes on the turkeys I cooked. Size, room temperature or straight from the fridge, brined or not, what else was in the oven, cooking time, resting time, etc. It was a game-changer. Now I have notes on all those turkeys, and I can accurately predict how long they will take to cook.

And my family is always generous with their feedback on our annual turkey, so I can make notes for future turkeys.

To make a great turkey, I found that I need five things:

1. Data on my current turkey.

2. Data on past turkeys.

3. A target to aim for (generally 165°F or 74°C).

4. Feedback from my family on what went well and what didn’t go well.

5. Data along the way to help me pivot as needed.

Your veterinary practice is a lot like a turkey:

1. You know a lot about your current client base, staff and facility.

2. You know how your staff have performed in the past to support your client base using the facility that you’ve provided for them.

3. You’re working toward something (growth, fewer owner hours, a more cohesive team, etc.).

4. You have feedback from your staff, your clients, your family and your bank account.

5. You have data that your practice generates continuously that you can aggregate to help you achieve your goals.

The key to making a good turkey is understanding how your turkey relates to your experience; understanding what it will take to get to your target; having data along the way to help pivot; and feedback to improve next time.

Improving your practice in any way needs the same: understanding where you’re going and what you have; how it’s gone in the past; where to look for data along the way; and how to measure your success.

If you don’t already have one, I recommend starting a practice journal. Take some time to:

1. Describe your current client base, facility and staff.

• Do you mostly work with one species?

• Are there any niches in your practice?

• Does your facility need work?

• Is your equipment ready to be replaced?

• How do your fees compare to OVMA’s Fee Guides?

2. Reflect on how the last six months have gone.

• How was your spring?

• Did you get burnt out?

• Did your staff get burnt out?

• What has your turnover been like?

• How profitable were you?

3. Summarize your goals and objectives for your practice.

• What do you want the rest of the year to look like?

• How profitable do you want to be?

This will give you an overview of where you are today and what you’re striving to achieve.

Define your budget and scorecard

Now the numbers part. You really should have a monthly budget, and monthly financials, to assess your progress toward that budget. Your journal will provide context to those numbers. The budget and budget versus actual analysis will anchor your practice scorecard. Other things that make sense to have on your initial scorecard are:

1. OPERATIONAL

• Appointments booked per day.

• Appointments booked more than 48 hours in advance.

• Missed appointments.

• Surgeries per day.

• How many hours you’re physically in your practice.

2. FINANCIAL

• Revenues by day, month and appointment type (consult versus surgery).

• Expenses: start with your three biggest expense items and add any that you want to watch.

• Profit.

• Cash flow.

Staff happiness is incredibly important, too, but it’s hard to assign a number to it. Make a point of talking to your staff and having casual conversations with them. Know what’s going on with them and get close enough to understand their frustrations and what brings them joy. Add any insights you gain here to your practice journal.

With this scorecard, you can start to convert your goals from your journal to numerical targets for your practice. 

Measure

This should be the easy part, but it may take some time to get the processes set up. You’ll need data from your practice management system and monthly financials from your bookkeeper.

Compare your budget to your actual performance in a spreadsheet. Highlight any major variances, and figure out what can be done to improve on shortfalls and take advantage of areas you’re excelling in. Add your appointment statistics at the top and take it all in.

Reflect

Look back in your journal to remind yourself about what was going on. What should you be changing? What’s working and what isn’t? Where are you spending too much? Where should you be spending more? Are there numbers that you should add to your scorecard?

Make notes in your journal on first impressions of what needs to change. Then talk to your staff about making those changes a reality, and document what the processes are to make those changes. Make sure everyone follows those processes.

 Improve

This is the time to layer in your plans for your practice. What do you want to change? Do you want to add new equipment? Do you want to extend your hours? Is it time to hire a new team member?

If it feels like every day, month and year is completely new and uncharted territory, it’s time to find the commonalities. They’re likely there, but you’re losing sight of them in the day-to-day of practicing veterinary medicine. By defining what success looks like with a budget and scorecard, you’ll give yourself a yardstick to measure yourself, your team and your practice against.

With mechanisms to surface the important data, you’ll have insight into how your practice is really running and be able to reflect on those results. With that, you can decide what needs to change and what needs to be done more.

Greg Toner, CPA, CA, TEP, CLU, is principal at VetCPA.

Reprinted from the Ontario Veterinary Medical Association’s Focus magazine www.ovma.org

CRA My Business Payments - Online banking

Here are the instructions on how to proceed.

1. Sign in to your financial institution’s online banking account.

2. Navigate to the ‘Tax Filing Services’ and select.

a. If this is your first time using this service, select Register, and enter your name and phone number.

b. Verify your business bank account(s), and continue.

3. Select ‘Add Payment Type’ and select the tax payment type you’re making:

a. Federal – Corporation Tax Payments – TXBL (balance owing) or TXINS (to set an instalment payment).

b. Federal – GST/HST Payment, etc.

4. Enter your 15 digit CRA business number (9 digits followed by the program account reference number - e.g. RC000X Corporate Income Tax, RT000X GST/HST, RP000X Payroll deductions).

5. Select the Pay option and which account you would like the payment to come out of.

6. Fill in the Period ending, Payment amount, and Payment date.

7. Verify all of the information for accuracy and submit.

8. You will have the option to print a receipt, or alternatively, you can use the other features such as ‘View/Cancel future transactions’ to show the pending payment or the History tab to view any transactions from the Tax Filing Services.

Participating financial institutions:

● ATB Financial

● Bank of America

● BMO

● Canadian Western Bank

● CIBC

● Citibank

● Desjardins

● J.P. Morgan

● KEB Canada

● Laurentian Bank

● Meridian Credit Union

● National Bank

● RBC Royal Bank

● Scotiabank

● TD Canada Trust -

● Alberta Credit Union

● Atlantic Canada Credit Unions