Numbers Talk! December 28, 2022
Many years ago, when I was looking to sell an investment in my first company, a consultant and very wise man said to me, “Al, if you look at numbers long enough, they’ll start talking to you.” This advice, shared with me over 40 years ago, has stuck with me and is actually the basis for our Cleinman Performance System, the financial benchmarking service we launched way back in 1991.
“If you look at numbers long enough, they’ll start talking to you!”
You use numbers every day in your practice. Indeed, optometry, at least the optics side of the profession, can be defined as somewhat of a mathematical profession. Imagine where you’d be if a number that your staff provided to you was consistently inaccurate. Imagine, for instance, if IOP measurements were consistently 10 points off. How would that impact your decision-making?
Such is the challenge for most of you with financial management. Because most of you use cash basis accounting to operate your business…in simple terms, your numbers are off. Your cost of goods is inaccurate because you don’t match costs with revenue. You measure cost of purchases…how much you buy, not the cost of what you sell. Your accounts payable is inaccurate because you track expenses when you pay them, not when you incur them. You can have money in your bank account and be technically bankrupt…because you have a draw full of unpaid, and unaccounted for, bills. And most important, your largest expense, vision plan write-offs, disappears into the ether because you track revenue as you receive monies, not when you’ve earned them.
In simple terms, cash accounting masks potential financial challenges. And in an inflationary environment, you can’t afford to mis-understand your financial situation. It’s time for a change.
We’re so pleased to announce that we have forged a relationship with Allied Financial Partners, an upstate New York based full-service accounting firm. Together with Allied, we’ll be working with our clients to deliver more accurate financial statements, providing a better understanding of your financial position at any given time. Better financial controls leads to improved profits…and wealth.
Allied Financial Partners have multiple offices throughout upstate New York. They currently have optometrist clients, so they know the profession. And through their association with our firm, we will help guide the development of the improved financial reporting that comes with accrual accounting. Allied will provide your practice with numbers that talk.
As we begin to potentially move into a recessionary period, the time to take better control of your finances is now. The switch to accrual accounting is easy. Indeed, QuickBooks allows you to toggle between cash and accrual. And don’t worry, you’re not going to file your tax returns based on accrual accounting…your old method of tax accounting will remain. The difference is that you’ll become far more aware of where your money comes from and where it goes. And you’ll be able to head off challenges because you’ll have more accurate information and tighter controls.
You’ll be hearing more about our alliance with Allied Financial Partners over the coming months and you’ll be able to visit with firm representatives at our upcoming meetings. But if you’re seeking a more responsive accounting firm now, one with all the resources and capacity to handle everything from bookkeeping to tax planning, give us a shout and we’ll make the appropriate introduction. Now’s the time to take the step to better financial management.
All of us at Cleinman Performance Partners wish you and yours a healthy and prosperous 2023 and beyond. Happy New Year!
