Budgeting – Part 2

Hosted by Pam Stevenson (Ssrecep)
April 13, 1998

Log of the VSPN online chat of Monday, April 13, 1998.
The Monday Night management chat topic was budgeting, and was hosted by Pam Stevenson (Ssrecep). Part 2 of a 2 week session. Pam looks at budgets like driving the Titanic: without planning and advance movements you run right into an iceberg! By examining past financial history, you can more ably equip yourself for handling future needs. Your practice can certainly benefit from implementing a budget or revising your existing one. Learn how to in this informative chat!

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Participants included:
SPIFFYcm, LVanceLVT,
Ssrecep, Scottidog2

Ssrecep: Good Evening, This is Pam... under an alias!
Ssrecep: Tonight is part two of budgeting... are we ready?
Ssrecep: Any further thoughts on budgeting since last week? ... GA
LVanceLVT: I have one! Make more money - it's easier than spending less! <G>
Ssrecep: YES!!
Ssrecep: There is a certain point where you reach profit and have much less pressure on the checkbook
Ssrecep: We all need to reach that point.
Ssrecep: I have experienced both not enough and enough Plus...
Ssrecep: much prefer the latter!
Ssrecep: but even when reaching that point we must look at a budget
Ssrecep: and stay within the confines of it! Or we will..
Ssrecep: be back in the not enough area too fast!
Ssrecep: Did anyone bring your P&L ??
SPIFFYcm: nope sorry
LVanceLVT: Honestly, I forgot about our session until I got home (15 minutes ago)
LVanceLVT: But I've been looking at mine a lot lately. Does that help? ;-/
Ssrecep: no problem...
Ssrecep: that is ok.... my daughter is here visiting.... I JUST now printed
Ssrecep: the P&L for 96 and 97
SPIFFYcm: I'm going thru a big transition and have been looking at a few
SPIFFYcm: P&L's lately
Ssrecep: OK... what area do you see as needing work on your P&L?
SPIFFYcm: I have perfect P&L's...
Ssrecep: :) NOT
LVanceLVT: Well........they balance! <G>
LVanceLVT: Curt, Pam, are you on Quickbooks?
Ssrecep: How about Cost of Goods sold..... what is your %
Ssrecep: I am
SPIFFYcm: I am too
LVanceLVT: Good! so I can ask specific questions! I just got QB in January.
Ssrecep: are you?
Ssrecep: Cool.. fire away
LVanceLVT: My COGS is WAY too high - around 27%. I'm not sure if it's all real or some of my accounting
LVanceLVT: How are you integrating your A/R into QB? I'm assuming that you use some sort of
LVanceLVT: specific vet. mgmt software?
SPIFFYcm: what software do you use?
Ssrecep: A/R is a monthly journal entry.
LVanceLVT: Maybe that wasn't the right question. All the money taken in goes through our vet software.
SPIFFYcm: sorry distracted a moment
LVanceLVT: Hence it is difficult to keep it exactly the same as my QB. EG, I enter deposits on the dat
LVanceLVT: date made (usually the next day) whereas the mgmt sw counts it as the day earned.
LVanceLVT: Visual96 (SoftQuest)
SPIFFYcm: have they come to win95 yet?
LVanceLVT: yes
LVanceLVT: But I haven't <G>
SPIFFYcm: do they have auto integration to QB?
LVanceLVT: I'm promised they will soon, but not yet.
LVanceLVT: I've also been trying to figure out the export from QB, so I can do a really bang up budget
LVanceLVT: in Excel.
SPIFFYcm: the easiest way would be to change the way you enter
SPIFFYcm: the date
LVanceLVT: Do you guys autointegrate?
SPIFFYcm: yep
LVanceLVT: (did we just create a new term?)
SPIFFYcm: makes life so easy... new Webster's coming up
LVanceLVT: Oh well, I guess I'm getting off topic. Pam, fire away, but I may ask QB specific ?s.
Ssrecep: I don't, we use AVS, it is UNIX
Ssrecep: no problem, in 1996 out COGS was 27.9%, then the manager...
Ssrecep: put the purchasing tech on a bonus based on the % of
Ssrecep: inventory. Our 1997 COGS was 20.7% !! and she got 2000.00 in bonuses!
Ssrecep: This is one way the you can involve others in your budgeting program!
SPIFFYcm: any idea on how she did it
LVanceLVT: Hmmm...and if you add that $2000.00 into your equation, what does that do to your %?
Ssrecep: Make it important to them.
Ssrecep: We spent 115,000 LESS in COGS and had no shortages...
Ssrecep: paid out 2K in bonus.... a fair deal don't you think?
LVanceLVT: yup! fair deal.
Ssrecep: Put in place the just in time inventory system and threw out the BULK purchases and
Ssrecep: delayed payments.
Ssrecep: Curt... how about your COGS % ?
Ssrecep: Are you happy with it?
SPIFFYcm: actually yes... 23.6
Ssrecep: great...
Ssrecep: any areas of concern, Linda or Curt
SPIFFYcm: nope
LVanceLVT: Food
Ssrecep: what is the %
Ssrecep: do you have that or an idea?
LVanceLVT: Not quite sure due to some internal problems (owner not writing things down, etc.),
Ssrecep: Ideally it should be 3.5 % or less
Ssrecep: 3% is best
LVanceLVT: but I know it's not worth the hassle. I am contemplating not carrying
LVanceLVT: any OTC foods at all. Just the Rx stuff, and most of that would be special order.
Ssrecep: if your food % is high you may have a shrinkage problem, not be recording in hospital use or
Ssrecep: possibly are selling a lot of non Rx diets that are a loss leader.
LVanceLVT: Not to mention the incredible amt. of room the stuff takes up which could be put to better
LVanceLVT: (more profitable) use. We are a SMALL hospital.
Ssrecep: I agree.... food is a necessary evil unfortunately.
Ssrecep: When we work on our budgets we have two choices to change tings..
Ssrecep: reduce expense or increase income.
Ssrecep: Ideally a combination of both, but as you said Linda it is a lot easier..
Ssrecep: to increase income than to reduce expenses in our "exceptionally well run"
Ssrecep: hospitals.
Ssrecep: To many owners believe that reducing expenses is the only way to
LVanceLVT: Speak for yourself! <G>
Ssrecep: help the budget.
Ssrecep: We are dull group tonight.... or is it me?
SPIFFYcm: sorry
LVanceLVT: I am trying not to monopolize. You know I'm a talker.
Ssrecep: not that I don't adore you both... but this is like preaching to
LVanceLVT: Pam, unless the others are really LOOKING at their numbers, they won't find out
Ssrecep: the choir... I would rather have a three way call with you two!
LVanceLVT: that there is a problem. I had to get help (I'm not a natural accounting type) to note the
LVanceLVT: right numbers. Now that I've looked, I'm kind scared.
LVanceLVT: The rest must still have "ostrich syndrome"
Ssrecep: Linda, your observation is so true...
Ssrecep: most owners and managers know how little...
Ssrecep: about finances in their practices.
Ssrecep: Or don't want to know!
Ssrecep: How much responsibility do you have for the accounting?
LVanceLVT: Everything but the year end 1040s.
Ssrecep: That is a lot, are you accrual?
Ssrecep: or cash?
LVanceLVT: cash
Ssrecep: That is easier...
Ssrecep: at least you don't have to post your A/R.
Ssrecep: or your outstanding A/P
LVanceLVT: true
LVanceLVT: Though I do try to enter the outstanding bills in QB as they come in. This really helps me
Ssrecep: Anything I can help you with?
LVanceLVT: keep an eye on how much in the hole I really am.
LVanceLVT: have you played w/exporting to Excel?
Ssrecep: QB is great for that bit of reality!
Ssrecep: No, I still make my spread sheets by hand!
Ssrecep: Have you had much experience or luck :)
LVanceLVT: Well, I used to do a direct link with Peachtree, but I'm having trouble finding the codes to
LVanceLVT: link QB to my spreadsheet.
LVanceLVT: So I thought I could make an export work.
Ssrecep: It should work, others do it.
Ssrecep: and it is integrated with excel
LVanceLVT: Pam, thanks for your time. Next time I run into a problem w/QB, can I call you?
Ssrecep: Thanks for being here :)