How An Optometrist Uses QuickBooks + The Edge For Business Management

j-kestenbaum-ODIn order to analyze your business you need to understand where your money is coming from and going to.  Your practice management software collects data about where your money comes from, i.e. professional fees, contact lens materials, frames, spectacle lenses, nutraceuticals and more.   Payments are collected from patients, insurance or vision plans.  The EDGE™ imports this data and allows you to drill down so you can understand the relationships of how and why you generate revenue and therefore the understanding of where to focus your efforts. Reviewing the numbers by themselves will not impact your business. You need to go deeper and The EDGE™ does all the work for you.

On the opposite side, where is your money going?  Do you know the costs to run both your professional practice and your optical separately as 2 uniquely different types of businesses?  Systematically recording the data in a business accounting software, such as QuickBooks is the first step to understanding your finances.  We must set up a proper chart of accounts that does not clump together expenses and revenue but rather provides great detail of each. The next step is analyzing both your revenue and expense data using The Forensic Study from GPN™.

Dr. Joel Kestenbaum of Optix Family Eyecare Center describes how he uses QuickBooks, The EDGE™ & The Forensic Study from GPN to keep track of both his clinical and optical business.

“The first thing I did is set up categories and subcategories in QuickBooks. Itemize fixed expenses such as rent, taxes, telephone, utilities, various insurance, and staff wages.  In other words, what it costs me to open my door every Monday morning.   Variable expenses include cost of goods, pension plan, 401K, auto expense and others.

I break down my cost of goods by frames, lenses, cases, solutions, nutraceuticals and other.  Frames, lenses and contact lenses are further broken down by vendor so I can easily compare my profit margin for a particular vendor.   Knowing the profit margin is extremely valuable when negotiating pricing.

For example, I collected data from The EDGE from the first 6 months of 2013 and determined that I sold 50 frames from Vendor A and collected a total of $3,000 (or an average of $60 per frame including third party reimbursements).  I also sold 50 frames for Vendor B with a total collection of $6000.   Because I have itemized my payments to Vendor A and B in QuickBooks, I am able to take a glance in QuickBooks and see that my cost for Vendor A was $2800 and $2800 for Vendor B.

What should I do with this information?  Should I be happy with a $200 profit for Vendor A or should I order additional inventory from Vendor B?  Maybe I should raise my frame fees on Vendor A products.  The point is that I have information at my fingertips that allows me to better test the pulse of my business.   The same information can be used to analyze lens and contact lens data.

Now let’s look at taking the data from QuickBooks and entering it into GPN’s Forensic Study.

The Forensic Study is looking at aggregate data.  It does not ask me to break the cost of goods down by vendor.  It does ask for total frame cost, lenses and contact lens costs, rent, employee compensation, and other fixed costs.  It will ask for the square footage of my optical and the clinic areas.

Using sophisticated calculations this study shows me where my business is thriving and where it is lacking.  I review the year to year comparisons to see where I have made improvements and where I’ve lost ground.   The Forensic Study arms me with information to move forward in the proper management of my practice.

My advice is to use QuickBooks to its fullest and use The EDGE™ along with The Forensic Study to gain invaluable insights from a business standpoint.  Don’t just be a good doctor. Be a good business person and you will go to work every day knowing that you are not just spinning your wheels.”

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