{"id":10281,"date":"2021-06-01T00:00:03","date_gmt":"2021-06-01T07:00:03","guid":{"rendered":"https:\/\/todaysveterinarybusiness.com\/?p=10281"},"modified":"2022-06-15T17:47:55","modified_gmt":"2022-06-15T17:47:55","slug":"chart-of-accounts-veterinary","status":"publish","type":"post","link":"https:\/\/navc.sitepreview.app\/todaysveterinarybusiness.com\/chart-of-accounts-veterinary\/","title":{"rendered":"How to Account for Your COGS"},"content":{"rendered":"

Imagine this scenario: A practice broker says you will get a much higher price for your veterinary hospital if you reduce your spending on the cost of goods sold (COGS) from 30% of gross fees to 25%. In a practice grossing $2 million, you would need to cut spending from $600,000 annually to $500,000. Alternatively, you could increase your gross fees by $400,000. How will you achieve the 25% goal?<\/p>\n

The best place to start is to compare revenue by category (vaccines, surgery, pharmacy, etc.) with each area\u2019s product costs. Compare the current period, whether a month, quarter or year, to the previous period to determine where income-to-expense ratios are falling. When the ratio is lower, the business is making less gross profit in that category than before. If the ratio is higher, you are earning more on each sale.<\/p>\n

From there, you can look at what you charge, whether better pricing is available and whether efficiencies are possible. It\u2019s not simple, but you know where to focus.<\/p>\n

Unfortunately, many veterinary practices don\u2019t track costs in enough detail to make good comparisons. Some use just a few COGS categories<\/a>, such as:<\/p>\n