Is your practice succeeding? 3 must-have reports for tracking your practice’s performance

Imagine you're at the Wimbledon finals. You’re all set to watch a great match, but just before it begins, the referee announces that they will not be keeping score. There will be no points awarded in the match.

How are you supposed to know who’s winning if there are no points? How can you even follow the match if there are no numbers on the scoreboard? Without the points, there’s no way to tell how well each player is performing.

The same idea applies to your practice. To know how well you're doing, you first have to know the points—or, in this case, the metrics that will help you make informed decisions.

Numbers are the language of business. Whether you like working with them or not, you need to know your numbers if you’re going to make empowered decisions for your practice.

What numbers matter most for your practice?

If you don’t already have a bookkeeper, I recommend that you hire one. Your numbers can’t help you if they’re wrong, and it’s pretty tough to make smart choices for your business if you don’t have the proper reports and information.

With that in mind, let’s cover the basics. Below are the must-have metrics (both financial and non-financial) that you need for tracking how well your business is doing. These are the points on your practice’s scoreboard.

• Turnover (revenue)
  Also known as revenue, turnover is the total amount of income received by your practice over a given period of time.
• Gross profit
  This is the amount of revenue left over after deducting the cost of goods sold (COGS). The term ‘goods’ includes the services you provide. So for your practice, the COGS covers any expense directly tied to the delivery of care.
• Net profit
  Your net profit is how much revenue is left after subtracting COGS and all other operating expenses, like rent, utilities, insurance, etc. An ideal net profit is around 20%.
• Cash flow
  The money going into and out of your business at any given time is your cash flow. It’s both the revenue you generate and the expenses you pay out. Cash flow is often confused with profit, but they’re actually quite different.
• Number of patients
  This is the total number of patients who visit your clinic during a time period. If a patient has more than one appointment during that time, they are only counted once.
• Average spend
  To calculate the average amount spent by patients, just divide your turnover (revenue) by the number of patients you saw during the same time period.
• Rebook rate
  Your rebook rate is the percentage of patients who leave your clinic with a new appointment on the books. Your goal should be to rebook every patient who requires another treatment, but the actual percentage will vary between modalities and treatments types. If you know you need to see someone again, make sure you book them in.

Note:

In Cliniko, you can find your rebook rate included as part of the practitioner performance report.

It’s absolutely crucial that you become familiar with these numbers because they’ll show up a lot on the different financial statements you’ll get from your bookkeeper. You need to know what these numbers mean, how they interact with each other, and what they can tell you about your business.

The 3 statements you need every month

By the middle of every month, these are the three reports you need from your bookkeeper:

1. 1.Profit and loss statement
   Sometimes known as an income statement, the profit and loss statement is a summary of your practice’s revenues, costs, and expenses for a given time period.
2. 2.Balance sheet
   A balance sheet covers all of your practice’s assets and liabilities, including any funds received from loans or outside investment.
3. 3.Cash flow statement
   Your cash flow statement shows you how much money is coming into your business and how it’s being spent. This offers a glimpse into how well-prepared your practice is for unexpected financial challenges.

Be sure to have these reports by the middle of each month (between the 10th-15th). For example, if you’re looking back at December’s performance, you’ll want to have these statements by mid-January.

That way, if you need to make some adjustments within your business, you’ll be able to react quickly rather than waiting until the end of the year when it’s probably too late to do anything about it.

Note:

You can check with your professional organisation about references for qualified bookkeepers and accountants who can help you manage your financial documentation.

Now let’s bring it all together. If the numbers are points, then each report is a scoreboard. You need to maintain a close eye on them, so you’ll always know how well your practice is doing and be able to answer the question, ‘Are you winning?’.