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19 Aug

Converting to Xero for Veterinary Practice Owners

Posted by Mark McGaunn on Tuesday, August 19, 2014

The path our own firm took to being Xero cloud accounting converts was circuitous.

I first read about Xero two years ago, noted it was something to watch, along with Kashoo, FreshBooks, Wave, QuickBooks Online, and Zoho Books, and went back to business as usual on QuickBooks. But I still read surveys and reviews on the cloud products out there, just in case near-perfect accounting software came into being. Since a client started using QuickBooks online back in early 2000, I hadn’t been too enamored with any online accounting systems-they were just too simplistic and exceedingly hard to navigate, even for a CPA. Plus, they catered it appeared to the very small generic business, not those with over $1 million in revenues.

Fast forward to the 2013 VetPartners Mid-Year Meeting in Kansas City. Kelly Baltzell, CEO of the Beyond Indigo Group, ran over to me to discuss the new cloud accounting package Xero. “My accountant is using it, I love it, and I wanted to know if you are using it for your clients too?” Clearly embarrassed by not being an early adopter (Kelly is much cooler than I, so naturally she would be in tune with it), I stammered that I had heard about it and was waiting to get on until I had heard some good user experiences. “You have to start using it!” That’s all I needed.

The rest is history. We converted our own firm’s accounting to Xero in the fall of 2013 and client conversions happened soon thereafter with our goal of being a 100% Xero firm. Our website and marketing packages were redesigned by a Xero partner in New Zealand, and we became uber Xero- friendly, to the point that Michael Carter of Practice Paradox in Wellington, New Zealand is talking about McGaunn & Schwadron’s integrated use of the cloud, Xero and our industry specialization at Xerocon 2014 in Sydney, Australia this week.

Xero provides a host of automated processes designed to help veterinary practice owners by:

  • a)      Enabling veterinary practice financial data to be populated in Xero with minimal effort
  • b)      Making the reconciliation process much faster and cleaner as bank data is shown against checkbook or credit card data, allowing for a “paperless” reconciliation function, and

  • c)      Sharing seamlessly with over 300 add-on cloud programs to round out  

The change to Xero is not free from operational and generational glitches, though. My partner Alan Schwadron, CPA is not a huge fan of Xero because all of the traditional accounting reports that he is used to creating in QuickBooks are not in Xero. I tell him that Xero is for the user, not the accountant. So there is a new mindset change that needs to be adopted when using the program. Two examples:

  1. Die-hard QuickBooks desktop users may be unsettled by the lack of a proper check register, and home pages don’t look like anything they are used to. QuickBooks attempts to throw the kitchen sink at you by adding every icon known to woman to handle any task on its home page. But QuickBooks is not used by veterinarians for the patient revenue cycle of invoicing, payment collection, and managing accounts receivable. That function is ably handled by Cornerstone, Avimark, Impromed, VIA, Stringsoft, or BeeFree, etc. QuickBooks is really used for recording bank deposits, cash disbursements and various expenses incurred through bank and credit card accounts. Xero automates the process much more than QuickBooks in those basic functions, and by using Xero “bank rules” globally, the system learns what accounts to code transactions based on a variety of your pre-determined rules. The Xero “Dashboard” primarily displays bank and credit card accounts both numerically and graphically, really all you need to control the proper recording of most financial activity. As CPAs, we feel that the more icons there are present, the more potential you have to place data where it doesn’t belong. So Xero gives you just enough to get the job done.
  2. Check writing is a cumbersome task in Xero unless you have the logistics figured out. I did not know when I converted to Xero that the check writing functionality was rudimentary and required an add-on partner to complete the task. Why you may ask? Businesses in New Zealand and Australia do not write checks as much as it seems that US and Canadian businesses do. So there is more online bill pay and credit card usage, which lends well to the automated download of disbursement data to Xero. Does it require a mindset shift to think like a Gen Y practice owner? Absolutely yes. Can you still write checks? Yes, the Xero add-on Checkeeper now lets you print on blank check stock, as well as pay bills that were entered into Xero (they just show up in Checkeeper like magic). Checkeeper check templates may not be perfect if you plan on using pre-printed checks (hence the new blank check stock feature), but if you can successfully navigate the setup phase, it works well. And the now subscription site will hopefully have helpful changes.

Once veterinary practice owners embrace the cutting-edge results that Xero offers, they will be converts. I like the fact that client data can export to programs that are informative and easy to use. Dashboard programs like Spotlight and Fathom are great resources, and Xero has both a proprietary payroll system and other outside vendors like ZenPayroll, ADP and SurePayroll that it works with to eliminate manual data entry.

Once you start using Xero, you’ll find more ways to make it more efficient, and you’ll probably even look at the data in it more than before.

Mark J. McGaunn, CPA/PFS, CFP® leads the veterinary/dental/financial planning divisions at McGaunn & Schwadron, CPA’s, LLC and can be reached via mark@mcgaunnschwadron.com or (781) 489-6651.

12 Aug

Keeping a Future Dentist's Dream Alive

Posted by Mark McGaunn on Tuesday, August 12, 2014

My goal in life is to leave a legacy... Isn't that what we're all searching for?  As a future dentist, my goal is to relieve pain and anxiety that patients face regarding their oral health and the appearance of their smile.  I am a second year doctor of dental medicine student at Harvard University and in May 2017, you'll be able to call me Dr. Lauren.  It is a thrilling situation to find myself in--I'm attending my dream school, living in the wonderful city of Boston, and serving my community as Miss Massachusetts and volunteering and raising funds for worthy causes, such as women's education and Children's Miracle Network Hospitals.  Unfortunately, this amazing experience comes with a hefty price tag.  I will be 25 years old when I graduate as a dentist and I will have at least $200,000 in debt.  If I choose to pursue a specialty, it is likely that it will add an additional $300,000 to my debt burden for a grand total of $500,000.  This is intimidating for many students and it is my fear that future dentists are being deterred from their dreams by the extreme cost.

Did you know that graduate students, like myself, pay a higher student loan interest rate than undergraduate students?  In addition, these loan rates are rising (see attached image entitled "loans").  The cost of attendance for my education is about $100,000 per year for four years at the Harvard School of Dental Medicine (see attached chart, entitled "HSDM costs").  Dental students like myself are burdened by debt and unfortunately, this adds to the problem of not having enough dentists in low-income and under-served areas.  New dentists often are forced to practice in areas with plenty of demand and an ability to pay because they themselves need to pay back their student debt.  Loan debt also contributes to the high cost of dental services that most patients are asked to pay.  While this is not an easy situation for me, it is still encouraging to know that I can learn to manage my budget, appreciate my education more since I am financing it, and be generous and considerate in the future, knowing all too well the challenges that students and young professionals are facing.  I have and will continue to lobby on Capitol Hill for student loan debt reduction to help future dentists, in addition to students in other fields, find ways to make their educational dreams a reality.

Hoping you will pursue your dreams fearlessly,

Lauren Kuhn is McGaunn & Schwadron's latest blog contributor. She is the current reigning Miss Massachusetts 2014 and a member of Harvard University's School of Dental Medicine Class of 2017.




11 Aug

Adopting “Un-Insurance” – A Dental Practice’s Patient Benefit Plan

Posted by Mark McGaunn on Monday, August 11, 2014

I’ve come to know one of our dental practice clients fairly well over the last 4 years. Dr. R.  was one of the clients that my partner used as the “deciding factor” in our merger of client responsibilities, in that if I could work well with him and his specific needs, I would pass the test to manage the entire client base. Spending time at a Bruins game during tax season also did not hurt in getting to know him. Now we talk all the time, as Dr. R. wants to get my opinion on anything financial, whether practice-related or of a personal nature. It’s a good feeling to be trusted to impart my wisdom, and he values the discussions we have. I always thought our conversations were slightly one-sided with my listening then providing the advice.

Part of our discussions relate to marketing to both current and prospective patients. The goal in any professional practice, whether in dentistry, veterinary or human medicine, is to (a) get patients in the door who need your care and (b) are willing to pay for that care. Entire industries are in place to help secure both fundamental concepts to your practice’s financial success, but sometimes the fit is not right. New patients may come from the web or referral sites, but their dental insurance plans may have high deductibles, those with poor credit may not qualify for CareCredit, or credit card and CareCredit balances may be fully utilized. Whatever the story, you suddenly find out the patient’s financial limitations to your proposed treatment plans. Or your practice staff may be under the spell of “financial hesitancy”, what Bete Johnson, CareCredit’s Director of Business Development, says occurs with empathetic and caring dental professionals who may put themselves in the economic shoes of patients and possibly derail a practice’s generic financial policy already in place.

Here is where Dr. R. came up with a mini game-changer for his practice. He was listening to a convention’s practice management speaker one afternoon, and asked a probing question at the break. “Can’t I just set up my own insurance plan for patients?”

The rest is history. What Dr. R. did was to create on his own Patient Benefit Plan, not really an insurance plan. For an annual prepayment of $500 ($400 for patients up to age 13), patients receive annual preventative treatment consisting of 2 examinations, 2 cleanings, 2 flouride applications up to age 13, and 4 bitewing x-rays. There is also a 10% discount on additional preventative treatment, fillings, endodontics, oral surgery, crowns, bridges, periodontics and implants. A 15% discount is applied to treatments exceeding $4,000, and a 20% discount is applied to treatments exceeding $10,000.

You may be asking yourself “What is the big deal?” The wisdom is in how the Benefit Plan has managed client treatment plans. Patients are now prepaying one year in advance for basic prophylaxis services to be provided at least six months out from the initial treatment date, hence hygiene appointments (and more importantly, your dental hygienist staff) are booked with patients that will be in a chair waiting for an examination. If more extensive care is warranted based on your hygenist’s thorough oral exam and your follow-up, the patient is in your office, not your competitor’s dental office down the street, and has a thorough understanding of what your benefit plan covers so they can more likely proceed with more extensive treatment options. And 100 patients who have subscribed to a Benefit Plan contribute $50,000 to gross collections each year, a substantial annuity in a start-up or growing practice. Think about what 500 subscribers would mean to the average $1 million practice.

Had the Benefit Plan not been in place, a competing practice with such a plan may indeed have reeled in the new patient, or a recommended treatment plan may not have been implemented due to the uncertainty and cost of treatment. With your own Benefit Plan in place, each party to dental care knows what will be covered and to what extent, without regard to waiting periods, pre-existing conditions, calendar year limits, or waiting periods. A patient can sign up on Day 1 and obtain $18,000 of dental care with all the hoopla that they deserve!

Practices may be concerned about what they are giving away with built-in plan discounts, not what they are receiving. We would rather have the glass be examined and labelled as “half-full”, not “half-empty”. A patient Benefit Plan is a win-win for both parties.

Mark J. McGaunn, CPA/PFS, CFP® leads the veterinary/dental/financial planning divisions at McGaunn & Schwadron, CPA’s, LLC and can be reached via mark@mcgaunnschwadron.com or (781) 489-6651.