Staying in control of your practice

Sophie Kwiatkowski explains why cloud accounting is changing day-to-day bookkeeping and accounts.

As a practice owner, monitoring the performance of your practice is key to the continued success of your business.

We often get asked: ‘How can I stay ahead and be in better control of my business?’

The answer to this has been made much easier by the shift towards cloud-based accounting.

With the world of accountancy being digitalised, practice owners have the ability to change the way they look at their day-to-day bookkeeping and accounts.

Gone are the traditional ways of only having an idea of your profits once the annual accounts are prepared six months after your year-end.

With your bookkeeping done on cloud-based software, you can now see all your practice information in real time.

What are the key costs to look out for?

The main two costs are lab bills and materials.

Most software has the ability to run reports to show spending on lab bills and materials.

You can then use this report to benchmark your expenditure in line with turnover.

Usually, we expect materials and lab bills to be roughly 5% to 7% of turnover.

The software enables you to look into these costs in as much detail as required.

For example, you can view expenditure per supplier to compare similar products from different sources to ensure the best value for money is being achieved.

Another key cost to monitor is associate fees.

As a principal, a key consideration is that having associates perform some of the work, still generates a profit for the practice.

Looking at UDAs performed monthly, and comparing this to the amount paid to the associate can help you keep track of the profitability of associates performing contracted work.

Every business owner will have different key performance indicators they want to focus on.

As the main goal is to maximise profit, using the tools available to you to control costs is very important to the ongoing success of your business.

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