PRACTICE MANAGEMENT

Stock Days

Stock = 80 Stock = 40 Stock = 20

Stock x 365 Cost of Sales

80 x 365 120

Stock x 365 Cost of Sales

40 x 365 120

Stock x 365 Cost of Sales

20 x 365 120

= 243 days = 121 days = 61 days

By reducing stock to a quarter of its original level , the stock days have reduced from 243 days to 61 days , a far more manageable period .

Of course , the temptation is always to carry as much stock as possible , ensuring that the practice always has whatever a customer will want . But the bottom line is that by doing this , the practice is being put under additional unnecessary pressure .

2 . Reduce Debtors Collection Period This can only be done in one of three ways – all of which veterinary practices know only too well :

a . b . c .

Don ’ t let the client out of the practice until they have paid . Don ’ t take on emergency client ’ s that clearly will not be able to pay . Follow a structured debt recovery system . Of these , the one that I find most neglected is the debt recovery system ; I strongly encourage practices to send the staff members responsible for collections on a debt collections course , and for a formal strategy to be implemented .

3 . Increase Creditors Payment Period This refers to negotiating and re-negotiating terms with your suppliers . The longer the period you have to pay them , the less pressure your working capital will have . You should fail to meet payment deadlines only in emergencies simply because this will incur penalties and will damage the relationship you have with your suppliers .

4 . What Should the working capital cycle be ? Traditionally the KPI ’ s for a veterinary practice are :

0 days shortfall

However , in our current economic climate , this is becoming increasingly difficult as debtors take longer to pay , creditors add pressure for payments and clients take a little longer to make decisions about non-essential treatments and products .

Veterinary practices should :

1 . Decrease stock levels to the bare minimum . Arrange with suppliers better and faster delivery times . With the reduced prices in logistics , many suppliers should be able to deliver within 2-4 days , meaning that you don ’ t have to carry those items in stock .

2 . Improve your debt collection process by making it formal and having a trained member of staff conducting all collections . 3 . Try and negotiate better terms with suppliers .

Even if your working capital cycle does not show a shortfall , or even if it shows a surplus , the working capital cycle needs to be continuously improved as both a safety barrier against potential economic fluctuations and as an additional source of revenue by earning interest on the surplus .

DATE : 28 JUNE 2016 TIME : Session 1 : 12h00

Session 2 : 20h00 COST : Absolutely Free RSVP : Book your spot : http :// vetlink . co . za / webinars /

Please Note : We are running TWO sessions on the same day - please choose the time which best suits you . Only 50 spots per session .

Vet360 Webinars series features an outstanding selection of practical and informative webinars , brought to you by our business authors and other experts . \

JUNE WEBINAR : Performance Management in a Veterinary Clinic

SPEAKER :

Andrew Christie

BComm ( Industrial Psychology )

UPCOMING WEBINARS : 28 June l 26 July l 23 August l 27 September l 25 October l 22 November l 13 December

JUNE

@ 12 / 20h00 vet360

Issue 03 | JUNE 2016 | 6