Bookkeeping is often considered a basic business function and rarely gets the attention it deserves! For our Accountants this baffles me, as it’s so disastrous when bookkeeping is completed incorrectly.
I would argue that bookkeeping is one of the most critical business functions for your pharmacy. It translates every single activity, interaction, decision, and conversation that happens in your pharmacy, into a single concise snapshot. For it to operate properly, it takes considerable training and skill.
Let’s dig into this more:
1. Determining the value of your business relies upon the accuracy of your financial data.
2. To obtain funding for equipment finance, a new family home, acquiring a new business, bringing in a new partner, all depends on accurate financial data.
3. Meeting all your ATO, ASIC, State Revenue and other local, state, and federal government obligations relies on accurate financial data.
4. And let us not forget probably the most important aspect, business management decisions.
In my role, from both doing over 75 valuations annually and my pharmacy consulting, I am exposed to a lot of financial records, and the quality range of these reports are enormous! Some clients send through beautiful data, it is always accurate and can be produced quickly. Furthermore, any queries I have are addressed quickly. When that happens, the valuation can be turned around promptly and with great certainty, which helps everyone.
Then there are those that are, let me say, the opposite. Let’s call them the problem children! There are so many problems, nothing makes sense, and takes forever to get any information. Lastly, any questions I have can sometimes take months to be answered. (By the way, in case you are wondering, 9 months is the longest time it has taken me to do a valuation).
Also, unfortunately over the course of my career when I have seen businesses go under, (which is not something any of us want!) poor financial records are a common issue. This is because the business owner doesn’t have clarity over how the pharmacy is actually performing.
With bookkeeping being such a critical function, it is important that it is completed properly. Pharmacy owners, and or untrained family members doing their own accounts late at night is not good practice (Though in saying that, I do know some pharmacy owners who produce financial data of such high quality, that would rival even the best.)
Generally, you need someone to undertake this function, who are professionally trained, and subject to the highest of quality practice standards. My view is that all pharmacy owners should be outsourcing their bookkeeping function, and here is why.
Savings costs or losing opportunities
Some owners will say, they will do it themselves to save costs. But what cost are they actually saving? What about the lost opportunities of spending that time training your team spending time with your family and friends, focusing on refining your marketing strategy. Lastly, actually having a holiday and not processing and paying wages whilst in your hotel room, swearing at the poor internet connection.
2. Accuracy
Absolutely fundamental to the decision-making process. Good decisions are made on good data. Think of your business valuation for bank funding, selling your pharmacy, bank compliance reporting, tax obligation, business decision making, selling your interests, admitting a new partner. Accuracy is paramount to good business decisions.
3. Efficiency
The professional providers of bookkeeping services often have their processes so refined, together with very clever tech, that they can turn around the monthly accounts quite quickly. Which is important in getting monthly financial reports out to the owners in quick time.
4. Relying on a team as distinct from an individual.
Yes, we are dealing with humans, and as every business owner will be able to tell you, when you are relying on a solitary individual, your risk profile grows. Because humans get sick, there are unforeseen family issues and emergencies, they go on holiday, have families, sometimes just resign, and leave, or are incompetent at their job. This is life and its just the way it goes. Spreading your risk with dealing with a team of people means less interruptions and less risk of too much knowledge within the brain of one individual. People come and go, but you always have a team who look after you who are following a system and methodology.
5. Quality Standards
Often when you are dealing with professional organisations, such as accountants, they are subject to very high professional standards (like you pharmacy owners are.) Particularly those who are subject to the professional standards of Chartered Accountants, CPA’s, and the Tax Practitioners Board. There are mandatory requirements for professionalism, ethics, standards of practice, and professional development.
6. IT Developments
Most providers of these services are very much in tune with the latest in software tools that can boost efficiency and accuracy. Certainly, in Peak Strategies time of being in existence, the changes in bookkeeping software and add on tools has been enormous. We can process so much more for much less time, much more quickly with greater accuracy. Unless you are in this game, most wouldn’t be aware of what tools are around that can help them. Often there is the additional cost efficiency we get by bulk usage of these tools as well.
7. Does it Make Sense?
The Nobel Prize is in the question, not the answer. I know our team are trained to ask the most important question. “Does it make sense?” Some will just reconcile the accounts with the blinkers on and not take that second look. The best will not send anything out without asking that most fundamental question.
The best use of an owners’ time is not reconciling a bank account or the petty cash float. They are far more important. They have a business to run, a team to lead, train and manage, systems and procedures to develop. One pharmacy I know, says his hourly rate of return is at least $1000 per hour. So why would you sacrifice $1000 per hour, for something you can outsource for substantially less. With today’s massive labour shortages, efficient and effective use of you time is critical. My tip for the new year would be to use your time wisely! In the final weeks of 2022, sit down and look at your pharmacy from a bird’s eye view, look at what you can outsource and as an owner what is the best use of your time.
Need to bounce some ideas around? Book in an obligations free session with one of our team.
