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- 2. “Finance without strategy is just numbers, and strategy without finance is just dreaming”- E. Faber
- 3. What is Finance? The life blood and nerve center of a business, it is a very essential to smooth running of the business. The management of money, including activities such budgeting, investing, saving, borrowing, and planning for future financial goals. Without adequate finance, no business can possibly accomplish its objective.
- 4. Importance of Financial management Appropriate use of money Facilitates Financial Decision- making Increase the firm’s value Increasing savings Increasing profitability Acquisition of funds Financial planning
- 5. What is Financial Planning? It is the assessment of your current financial situation and steps to improve it in future. A continuous process driven to reflect the necessary changes. A systematic approach to plan your finances. A forward looking document, taking into consideration your needs, goals and requirement based on the certain assumption.
- 6. IMPORTANCE OF FINANCIAL PLANNING Forecast of Cash flows Raising the finances Managing the flow of internal funds Facilitate Cost control Forecasting profits Measuring Required Returns Managing Assets, funds and cost
- 7. The Financial Analysis It entails the ability to interpret and evaluate the relationship of various statements within specific numerical indicators. It helps in decide whether the business in investible or not. Use to evaluate business performance and value.
- 8. Key Principles in Financial Analysis Safeguarding assets Pricing/ fee structure Procurement of capital ( financing or investors) Cost Evaluation Incremental Performance -Evaluate changes in cost ,expenses, investment, cash flow, revenue profit.
- 9. Key Principles in Financial Analysis Accountability via Departmentalization - Provide additional insights into the profitability of the various service lines and allows the owner to see areas that needs improvement or expansion. Profitability analysis - A review of net income within entire organization /department. Return on Capital analysis -This considers income before distributions to the suppliers of the capital for the specific period . - Percentage of earning before interest, taxes, depreciation and amortization.
- 10. Three key Areas of Financial Analysis 1. Percentage statement Analysis - All expense categories including major expenses incurred by the practice , will be stated as a percentage of a revenue and this should be compared with those of prior period, industry, budgeted performance, this is a better indicator of financial performance. 2. Ratios - These represent the determination of financial statements entry relationship(i.e, income statement to income statement item) -Used to assess aspect of profitability, solvency and liquidity of the business. 3. Variance Analysis - A method of reviewing financial statements in relation either prior periods or budgeted amount, to determine where variances in the financial accounts are occurring and why.
- 11. Gives you a overview of the planned business revenue and expenses over a specified time. Budgets are created annually by financial year. Considerably more static than financial forecasting. Focuses on business’s fixed target than a business wants to achieve. Help to assist you in business operation management. eg. Event budget, facility to build- out-budget Is a well-thought-out projection of business results for the future. Forecasting is prepared for both the short-term and long-term. Experiences lots of adjustments based on the situation and economic condition of the business. It is just a estimation where a company may or may not achieve. It help you move to estimate the business’s future plan. eg. Marketing forecast, pricing strategy BUDGETING FINANCIAL FORECASTING Vs.
- 12. KEYS TO SUCCESSFUL BUDGETING and FINANCIAL FORECASTING Make sure that the budget is realistic. -Avoiding goals that are not grounded in reality is absolutely critical. Perform scenario planning. -it is important to consider multiple potentialities and scenario analysis when preparing budgets and forecasts. Start with clean data. -”Bad data, bad data out”. If a forecast is created off of an inaccurate or incomplete budget then essentially it is charting a cause for problems to arise. Create short-term and long –term Plans using tools, budgets and forecast. - The reasons short and long-term plans are important is that they will highlight problems as they arise and allow for quick responses to ensure the issues do not get out of control. Regularly monitor the budget and update Forecasts. -To be sure that the business is moving in the direction, it should be regularly monitor its progress against the budget and larger forecast.
- 13. What is Revenue? Sources of revenue Patient encounter Surgical procedure /diagnostic examination Vaccinations Dentals Grooming Pharmacy Retails sales -The total amount of income generated by the sale of goods and services related to the primary operations of the business.
- 14. REVENUE CYCLE 1.Appointment and scheduling Client Compliance Check-In Patient and Insurance Billing Charge capture
- 15. ENSURING REVENUE MAXIMIZATION 1. Analyze the Practice’s revenue cycle 4. Review the Practice’s current fee schedule 2. Document Financial Policies and Procedures 3. Review The financial tools S T E P S
- 16. Difference between cost and price Cost is the total amount of money necessary to buy a product or a service while the Price is the estimated value of a product or a service when buying or selling. It is the process that determines cost: -Time of human resources(vet., nurses, staff) -consumable goods -equipment investment -efficacy -percentage of aftercare It is the market that determines price: -Value of the service -perception of the value by the client - market price and competition; overall trend of the market
- 17. Pricing Strategies for Veterinary Practice The “Value-based pricing” -The price of the product and services is set according to their value to the costumer rather than the cost to the veterinarian. -Veterinarians needs to do more to help the clients understand the value of the care we provide to their pets especially preventive care. Pricing doesn’t just affect profitability, it also have a big impact on the decisions clients make about their animal’s care Pricing impact both the clients’ decision about their animal care and the financial viability of the business.
- 18. Four steps to Value-based pricing 1. Focus on a single market segment. -This means identify who your clients and potential clients are, the more specific you can be the better. 2. Compare your offerings with those of your next best competitors. - Ask yourself where your clients likely would go for veterinary services if your practice wasn’t an option. 3. Understand what makes you different. - Identify what makes your practice unique in your area or what differentiate you from your competitors 4. Place a dollar amount on what differentiates your practice. - This may take some trial and error because it’s a challenging parts. - For example , you offer complimentary nail trims with all well pet visits and your competitors don’t, you must decide how much this convenience is worth to your clients.
- 19. Pricing Strategies for Veterinary Practice Bundled Pricing - Several products or services are combined and sold as a group for a reduced price. - Despite the fact that the items are sold at discounted prices ,bundled pricing can boost overall revenue and pet health by encouraging clients to expand the care that their pets receive. - Example of this is to offer a reduced price on dental services with the purchase of wellness plan. Preferred Pricing - It addresses the human desire to save money, which people will actually sometimes pay a premium to achieve. -The purchaser may receive a discount as a reward for previous purchases or a an incentive for later ones.
- 20. Pricing Strategies for Veterinary Practice Some key points to keep in mind when building a communication plan with your team. The way we price the products and services and how we talk with clients about pricing should align with the practice’s mission and brand , consider how different options play into the practice’s overall business goals. Any communication with clients especially when it comes to cost should be clear. Try not to leave any misunderstanding. Helping clients understand the value of the veterinary team’s work should be central to the conversation.
- 21. Factors affecting shift of the relationship between the price of Veterinary services and the quantity of the demands Change in population size or the number of consumers Income level Change in taste and preferences The prices of complementary Change in the price of a substitute good or services. Expectations about future changes in prices, income or wealth.
- 22. Risk Management in Veterinary Practice What are Veterinary risk? It is a internal and external factors that can negatively affect veterinarians and veterinary clinic or businesses. May leads to lawsuits, financial loss and severe reputation damage. This include medical negligence, third-party injuries and even damage ,employee injuries and to business property, these may not be avoidable and is challenging to face.
- 23. Risk Management in Veterinary Practice Risk management plays a crucial role in the veterinary industry. Its primary objective is to safeguard the well being of animal patient and maintain the long term sustainability of practices. By adopting risk management strategies, practitioners gain the ability to evaluate different treatment options while effectively mitigating. Failure to assess risk can lead to accidents, fines and imprisonment, claims for compensation, bad publicity and the personal trauma of being responsible for a death or injury. Managing risk requires the investment of time and money, but the process need not be overtly onerous to be effective .
- 24. A Risk assessment will; 1. Identify the hazards or threats that could be encountered in the particular work. 2. Assess risk of harm presented by the hazard. 3. Identify what needs to be done to control the risk Risk management is an ongoing process design to protect patients, clients, team members and the practice’s financial viability.
- 25. 6-step Approach in Managing risk 1) Identify Internal and external risk Four major categories Hazards- includes weather, fire, water leaks,and animal-related injuries Operational- COVID is the best example. The added complexity and inefficiency of services along with the reduction in staffing created previous challenge for the veterinary community. Financial-includes economic recession or the inability to provide historical services due to business interruption, eg.pandemic Strategic- Think about competitors and the new modes of delivering services like using virtual medicine, mobile care and hospice services.
- 26. 6-step Approach in Managing risk 2). Determine the Potential Frequency and Severity -What is likelihood of a risk occurring and how would it affect? -Focus on the most likely risks posing the greatest harm. 3). Identify Potential Solution 4 main options when developing a risk strategy Avoid the risk Reduce the risk Transfer the risk – The contractual transfer of risk through lease agreements and insurance policies are the most methods in veterinary profession. Accept risk-all risk comes with a price. Accept it as cost of doing business.
- 27. 6-step Approach in Managing risk 4). Select and Implement -Choose the most viable solution, one that balances effectivesness and affordability. -Procuring appropriate staffing and money, ensuring team buy -in and training , setting a target date for implementation is the best solution. 5). Monitor the Result - The risk management strategies must be evaluated routinely to determines its effectiveness. 6). Make Adjustment - As the business evolve, overall risk Management plan should be flexible enough to adjust and cope up.
- 29. Why insurances are Crucial in Veterinary Practice? Veterinarian and Veterinary clinics are under a high amount of pressure and can face risks at any point and some factors are not in their control and having the right insurance can protect their liability, employees, costumers and property. To be financially and legally protected during the policy period.
- 30. What insurances can cover Veterinary Practice? 1. Medical Malpractice Insurance -It is a professional liability insurance for medical professionals. It cover most cost related to medical negligence claims such as fees, compensation and settlement costs. - eg. Pet owner sued a vet clinic and blaming the outcome to veterinarians. 2). Public Liability Insurance - Protect the business if the third-party(owner) sues alleging that negligence cause them or their pet bodily injury or property damage. - The insurance will cover all legal and compensation costs. 3). Employee Compensation Insurance - If employee suffers injury due to their duties. Must provide the cost of medical care, salary as they recover and compensation in case of disability. - Employees are essential part of a veterinary clinic, no matter their role, and the insurance provide them with the best care.
- 31. What insurances can cover Veterinary Practice? 5). Cybers Insurance - Provides the business with a first-party response on loss and a third-party response to cover liabilities regarding the data breach. -One cybers attack can shut down a vet’s online presence and breach all customer- sensitive data. 7). Animal Bailee insurance -Provides to a pet with coverage in the event that the veterinarian or employee are legally liable for injuries, damages or death sustained by an animal in professionals care and custody. 4). Property All-Risk Insurance - Cover business property in case of damage or loss - business owners needs to update the insurance every time they purchase new assets to get the most from their insurance
- 32. What insurances can cover Veterinary Practice? 8). Business Income Insurance - Helps to replace business loss income result of a business interruption event such as fire or theft. 9). General Liability Insurance - Covering claims related to normal business operations - This cover physical injury, property damage, defense costs and personal and advertising injury which includes slander, libel, copyright infringement. 10. Commercial Auto Insurance - If the business uses vehicles for house call, transportation of animals or other business- related purposes, this insurance covers accident, injuries or damage involving company vehicles.
- 33. The comprehensive costs for an animal hospital or Veterinarian office insurance vary based on several factors. Annual Revenue Location and assets insured Types of services provided and risks associated Number of clients Annual payment
- 34. THANK YOU!!