Financial strategy and accounting for optometrists is crucial for the success and stability of their practices. Optometrists face unique challenges, such as managing advertising costs, optimizing appointment times, controlling overhead expenses, and effective employment planning. Balancing quality patient care with profitability requires strategic decisions and streamlined processes, including leveraging local advertising and investing in efficient equipment and staffing.

Insurance decisions play a significant role in an optometry practice’s financial planning. Optometrists must weigh the benefits of accepting insurance, which can increase patient volume but complicate billing processes, against the simplicity of a private pay model. Effective financial management strategies, such as detailed hiring processes and regular financial reviews, are essential for optimizing the practice’s financial health.

Collaborating with a business consultant or CPA who understands the optometry industry can provide valuable insights tailored to the practice’s specific needs. Expert advice on tax planning, ADA compliance, and financial management can help optometrists reduce liabilities and enhance profitability. By addressing these key areas, optometrists can achieve long-term success and provide high-quality patient care. 

Accounting for Optometry: Navigating Financial Management, Strategy, and Planning for Optometrists 

Financial planning and accounting for optometry may be something you are anxious about as a practitioner in Fort Collins. With optometry, you deal with science; with accounting, you deal with numbers, and these are two different things. However, when you are running a business, you will be forced to do both at the same time, possibly with limited staff.  

Keeping tabs of the cashflow and managing your finances can be a challenge even if you are numbers-savvy. You must monitor, record-keep, and analyze data to ensure you are not losing money. Keep in mind also that accounting is layered with different factors and branches out to different aspects of the business. In these processes, you may find yourself in a stressful situation and unable to focus on providing the best service possible. Improper financial planning is a costly error. 

With that said, accounting and financial planning for optometrists is essential in ensuring the long-term success and stability of your practice. This involves more than just keeping the books; it requires a strategic approach that encompasses all aspects of the business, from marketing and overhead costs to employment planning and insurance management. By understanding these unique challenges, optometrists (like you) can make informed decisions that will help you achieve your financial goals.  

Addressing Unique Challenges Optometrists Face 

Optometrists, like dental practitioners, massage therapists, and the like, encounter specific financial challenges that require specialized knowledge and strategic planning. From advertising to managing overhead costs, understanding these issues is crucial for maintaining profitability and growth. 

Advertising/Marketing 

Advertising and marketing are vital for attracting new patients and retaining existing ones. Unlike larger medical practices that can afford extensive advertising campaigns, small optometry practices must find cost-effective ways to reach the target audience. This often involves leveraging local advertising, social media, and community engagement to build a strong reputation and attract new clients. 

If you run a small practice, how do you target your niche with limited resources for advertisements? In this case, you will need to factor in how much money you are making. Also, what do you want to be in the industry? Should you accept insurance do private-pay customer only?  

All these must be considered when thinking about how to market your business and how you can fund your advertising efforts.    

Time Spent per Appointment Affecting Profits and Costs 

The time spent per appointment directly impacts an optometrist’s profitability. Optometrists must balance providing quality care with maintaining a high patient volume. Picture this: you can either spend a good amount of time with your patient and get paid accordingly or make $50 per customer for a 15-20-minute session in one hour with insurance. This is one scenario that often discourages other practitioners to get out of insurance because it causes them to churn and do four or more appointments an hour. Then, you will end up running, double-checking, and pushing work down to lower levels. 

Overhead Costs 

Are your overhead costs worth it or are you just working your tail off for less money? Overhead costs can quickly eat into your profits. These include rent, utilities, equipment, and supplies. Covering all of them becomes an even bigger problem if you’re not bringing in enough money per service or not seeing enough patients.  

So now, you have a dilemma: where do you cut back? Should you add more employees or take on a partner to increase the volume of your clients? Should you reduce your number of employees and stop taking insurance altogether? What steps are available to make ends meet and sustain your business?  

Realistically, there is no one-size-fits-all approach to these situations as if you’re playing whack-a-mole while figuring out where to adjust. But ultimately, it all depends on the optometrist’s practice, preferences, and financial reserve to help you get by should you choose one method or the other. 

Employment Planning 

Effective employment planning is crucial for ensuring that your optometry practice runs smoothly. This involves creating a clear organizational chart, defining roles and responsibilities, and planning for future growth. For instance, knowing when to hire additional staff, such as optometric technicians or administrative personnel, can prevent bottlenecks and improve patient care.  

Say, you want to make more than a million bucks per year. That means you need to offer more services and have more employees to handle different kinds of services, such as: eye exams, contact lense fitting, sales (if you decide to sell eyeglasses, too), and the like. By carefully planning employment needs, optometrists can avoid overstaffing, which leads to unnecessary payroll expenses, or understaffing, which can result in burnout and decreased patient satisfaction. 

Not Upselling 

How many times have food servers asked if you want a dessert after the main course? It’s called upselling. Optometrists often miss opportunities to increase revenue by failing to upsell additional services or products. Offering additional services, such as specialized eye exams, or selling premium products, like high-end frames or lenses, can significantly boost income. Providing staff with sales training and ensuring that patients are aware of all available options can help maximize these opportunities for you and your staff.  

Even an optometry CPA knows the value of adding more services to your practice and upselling them to your customers.  

The Role of Insurance in the Business 

Insurance plays a significant role in the financial planning of an optometry practice. Deciding whether to accept insurance and which plans to accept can impact patient volume and revenue. While accepting insurance can attract more patients, it also involves dealing with complex billing processes and lower reimbursement rates. Conversely, focusing on private pay patients can simplify billing but may require more marketing efforts to attract clients. Optometrists must weigh the pros and cons to determine the best approach for their practice. 

Effective Financial Management Strategies for Optometrists 

Effective management strategies are essential for optimizing the financial health of an optometry practice. This includes hiring the right people, managing finances efficiently, and continuously evaluating and improving processes. 

As a CPA and financial consultant, Steven J Wick’s method has always been to figure out where a business is now and where it wants to go. “We try to figure out the issues and create a list of action plans. And then we work with that list to fix the issues. Of course, there’s the basic budgeting and forecasting…”  

The key is to learn and understand your business’ weakest and strongest points and pay attention to the different aspects of your firm for effective financial management. Pay close attention and analyze how your company is doing.   

Hiring People 

Considering the hiring process in financial planning allows optometrists to budget appropriately for salaries, benefits, and training programs. It ensures that staffing levels are aligned with patient volume and business growth, preventing overstaffing or understaffing scenarios that can impact the practice’s profitability. Strategic hiring decisions, guided by financial planning, help optimize labor costs and contribute to the overall financial success of the practice. 

Effective management strategies for optometrists must include a well-structured hiring process and a clear organizational chart. Properly defining roles and responsibilities helps streamline operations and improve financial management. Key positions in an optometry practice typically include: 

• Optometrist(s): Provide eye care services, manage clinical operations. 

• Office Manager: Oversees daily operations, manages staff, handles administrative tasks. 

• Receptionist(s): First point of contact for patients, schedules appointments, handles patient communications. 

• Optometric Technician(s): Assists with eye exams, prepares patients for procedures, maintains equipment. 

• Billing Specialist: Manages insurance claims, handles patient billing, ensures timely payments. 

• Sales Associate(s): Manages the optical dispensary, assists patients in selecting eyewear, processes sales. 

A clear organizational chart helps in understanding the hierarchical structure, ensuring each staff member knows their role, contributing to smoother operations and better financial oversight. Meanwhile, a structured hiring process is also important to save your time and your applicants’ time. It also allows you to carefully pick the right people for the job. Be prepared and do the following: 

• Define job descriptions 
• Conduct thorough interviews 
• Perform background checks 
• Be clear about the salaries and make sure to offer market-based yet competitive compensation package to ensure financial viability 

Offering competitive salaries and benefits can attract high-quality candidates and reduce employee turnover. Such instances can cost you time and money as well because a staff leaving your company would affect productivity and income. 

How do detailed organizational charts and hiring process impact financial planning? 

Creating a detailed organizational chart ensures that every staff member understands their responsibilities and how they contribute to the practice’s success. On the other hand, effective hiring ensures that the right individuals are placed in the right positions, leading to increased productivity and reduced turnover.  

This not only saves costs associated with frequent hiring and training but also improves patient satisfaction and retention, which are critical for financial stability. Well-defined roles and responsibilities streamline operations, allowing for accurate tracking of labor costs and better financial planning. 

Proper Financial Management: Managing Labor Costs 

Labor cost refers to the total sum of all expenses associated with employing workers within a business. It encompasses more than just the wages or salaries paid to employees. Some practices, especially small ones, can cover only the basic expenses in the list below, while bigger ones make sure to offer all. Labor cost includes: 

• Wages and salaries: The direct payments made to employees for their work. 

• Benefits: These can include health insurance, retirement contributions, paid time off, and other perks provided to employees. 

• Payroll taxes: Taxes employers must pay on behalf of their employees, including Social Security and Medicare taxes. 

• Overtime pay: Additional compensation for employees who work beyond their standard hours. 

• Bonuses and commissions: Extra payments given as incentives or rewards for achieving certain performance goals. 

• Training and development costs: Expenses related to the training and ongoing education of employees. 

• Hiring and recruitment costs: The costs involved in recruiting new employees, such as advertising job openings, conducting interviews, and onboarding new hires. 

• Other employee-related Expenses: This can include uniforms, safety gear, and any other costs directly related to employment. 

Labor costs significantly impact the financial health of an optometry practice, affecting everything from daily operations to long-term profitability. As the largest expense for most practices, managing labor costs effectively is crucial for sustainable growth and financial stability.  

How can optometrists manage labor costs effectively? 

Accounting for optometry can be compared to accounting for other private practices, such as dental practice and the like. Just the same, to deal with labor costs, optometrists should: 

• Analyze staffing needs: Regularly assess patient volume and adjust staffing levels accordingly to avoid overstaffing or understaffing. 

• Implement efficient scheduling: Use scheduling software to optimize employee work hours, ensuring peak times are adequately covered without unnecessary overtime. 

• Crosstrain staff: Train employees to perform multiple roles, enhancing flexibility and reducing the need for additional hires. 

• Monitor productivity: Track employee performance and productivity to ensure that labor costs are justified by output and patient care quality. 

Proper financial management involves strategic planning to align labor costs with revenue generation. If you are aiming for higher revenue per year, you may need to hire more than 20 of them. That means managing a bigger manpower and spending more.  

By effectively managing labor costs, optometrists can ensure that their practice remains profitable while providing high-quality patient care. This approach contributes to proper financial planning by allowing for better budgeting and forecasting. In the context of accounting for optometry in Fort Collins, effective labor cost management ensures that the practice operates within its financial means, optimizing resources to achieve long-term financial goals.  

Optometry practice accounting though can be a tough job for an optometrist to handle if you are offering multiple services. In this case, the need for a professional finance manager for eye clinic or CPA for optometrists would be essential. 

Financial planning for optometrists through labor cost management 

Addressing labor costs as part of financial planning for optometrists is essential for the overall success of an optometry practice. Proper financial management in this area includes regular review and adjustment of staffing levels, compensation, and benefits to ensure they align with the practice’s financial health and growth objectives. To maintain control over labor costs, consider the following strategies: 

• Budgeting for salaries and benefits: Establish a clear budget for employee compensation and benefits to prevent overspending. 

• Performance-based incentives: Introduce incentive programs that reward productivity and efficiency, motivating staff to perform at their best. 

• Regular financial reviews: Conduct regular financial reviews to assess labor costs against revenue, adjusting as needed to maintain profitability. 

• Outsourcing non-core tasks: Consider outsourcing tasks such as billing and administrative work to specialized firms, potentially reducing in-house labor costs. 

Incorporating these strategies into financial planning ensures that labor costs are managed effectively, contributing to the overall financial health of the practice. For optometrists in Fort Collins, accounting for optometry in Fort Collins becomes more straightforward with a solid plan for labor cost management, leading to better financial outcomes and the ability to invest in growth opportunities.  

An optometry CPA or professional financial planner can help you handle these, especially if you are logically and emotionally invested in your practice. After all, “Everything we do in life is related to emotion in a way and I also understand the emotions they have for their business,” explains Steven Wick, a CPA and business consultant. 

How can a business consultant or optometry accountant help enhance your financial planning process? 

Anyone can write and look at numbers, but it takes someone who fully understands and cares about your business to carefully plan for the future of your practice. As a CPA, Steven provides more than just straightforward accounting. Sometimes, he comes up with ideas that could potentially help optometrists thrive. 

As an optometrist, you can benefit greatly from accounting for optometry in Fort Collins or working with a business consultant who understands your industry. A consultant with experience in optometry can provide valuable insights and strategies tailored to the unique needs of an eye care practice. 

“Without proper financial planning, you’re like going into something without a map,” says Steven Wick. “Instead of doing ready-aim-fire, you’re like doing ready-fire-aim. And with growth, nothing is linear. Otherwise, it would be a lot easier. But it’s more like stair steps on so many areas and different steps in a process.” 

Hiring a consultant familiar with the optometry industry ensures that you understand the specific challenges and opportunities you may face. This specialized knowledge allows them to provide more relevant and effective advice. For instance, an optometry CPA in Colorado will be well-versed in the local market conditions, regulations, and industry trends, enabling them to offer tailored financial planning for optometrists and management strategies. 

CASE STUDY: How a Skillful Accounting for Optometry in Fort Collins Helped a Client Figure Out the Best Option for His Practice 

Optometrists need to understand how insurance works to help you decide if you should accept one or not. Why? Because often, this determines the amount of money you can make and the quality of service you can render your clients.  

One client approached Steve and asked for help with accounting for optometry. He was focused on clients with insurance and entertaining more than two clients per hour. For some time, this approach seemed to be profitable. But as he became too busy with his practice to even check his books, he felt burnt out and in need of additional staff to help him out.  

So, he checked his finances and that’s when he realized that his finances are not looking good. This optometrist worked almost non-stop to make more money, but in the end, his income still suffered. He then realized that he was losing money from taking insurance, just as he thought otherwise.  

As much as he would like to continue, our client had to shut his clinic down for a while so he can reorganize and determine what to do.     

The challenge is whether to take insurance or stick to a private pay scheme. Both systems have their pros and cons and choosing just one is a hard decision to make. As discussed previously, it is more likely for an optometry clinic to attract more customers if insurance is accepted, including Medicare. However, it could compromise the quality of services that your business offers because you become more focused on servicing four or more patients in an hour to compensate for the price cut. 

Seeking Help from an Optometry CPA  

At this point, he reached out to Steve at SJ Wick. He knew he had let things get too bad and wasn’t sure what made sense moving forward: to accept insurance or not. “I advised him to find what made sense financially and intrinsically” says Steve. This recommendation came after talking through what this optometrist specifically wanted for his quality of care. 

Steve walked him through what volumes would need to look like with costs and where chasing insurances would cost him in employee time. He also explained the consequences of declining insurance in terms of time spent on servicing clients. Apparently, this would mean being more invested in marketing and bringing in clients. 

In the process, the client realized that not taking insurance could be a more profitable approach. This would also allow him to provide the quality of care he wanted. He was willing to invest in marketing/advertising to be able to do that and he knew it wouldn’t cause the same burn out he had been feeling before. He was also able to figure out what made sense as far as keeping employees. 

With the help of SJ Wick, he has established a realistic and more sensible growth plan that can also help set him up for retirement later. 

Tax Planning and Tax Services for Optometrists 

Tax planning is another critical aspect of financial planning for optometrists. Understanding the various tax deductions available, such as those for equipment purchases, office improvements, and professional development, can significantly reduce tax liability. A CPA who specializes in optometry can help identify these opportunities and ensure that the practice remains compliant with all tax regulations. 

Your clinic will benefit greatly, as well, from tax services for optometrists offer by accounting firms like SJ Wick & Associates. That’s because tax credits constantly change, sometimes from year to year. It is important to have a CPA backing you on financial management and optometrist tax deductions. They are experts who know the requirements for tax deductions for optometrists, such as ADA compliance, equipment, travel, rent, mortgage, etc. 

ADA Compliance 

ADA compliance (Americans with Disabilities Act) not only attracts a broader patient base, but it also qualifies you for tax deductions for optometrists. It is not only a legal requirement but also a good business practice. One of the requirements for this tax credit is the purchase of devices or equipment that allows disabled individuals better use or access of services (e.g., providing visual and audio aids for education on eye diseases, installing ramps and accessible restrooms, ensuring that online services, like appointment scheduling and patient forms, etc).  

According to Section 44 of the IRS Code, businesses qualify for up to $10,000 or 50% of the eligible expenses, if you earned a total of $1 million or less during the previous tax year.   

CPA Steven Wick knows the importance of this. “We can see if you need to buy a special machine for your clinic or even create your own company website, so your practice becomes ADA compliant. That’s an important thing because you can get potentially some credits there. There are so many things to look at as far as accounting for optometry in Fort Collins and what you could potentially qualify for and allow you to make some money so that you’re not freaking out,” he explains. 

Take Advantage of the Benefits that Good Financial Management and Accounting for Optometry in Fort Collins Can Provide 

Financial planning for optometrists and accounting for optometry in Fort Collins involves addressing unique challenges, making strategic decisions about insurance, implementing effective management strategies, and seeking expert advice when necessary. By focusing on these areas, you can improve your business’ financial health, enhance the patient care that you provide, and achieve long-term success. Whether through better advertising, efficient use of time, or strategic hiring and financial management, you can navigate the complexities of the business and thrive in a competitive market. 

SJ Wick & Associates, P.C. can help you manage your personal and professional finances so you can focus on growing your optometry business. Our team will provide comprehensive data analysis and expert projections, which you can use to achieve your goals. We also offer tax services, payroll, bookkeeping, and business consulting. Let us know how we can help you by giving us a call today!