At VetBooks, we believe that accurate financials are key to business success, and few tools are as valuable in achieving them as the VMG/AAHA Chart of Accounts (CoA). This standardized financial framework provides veterinary practice owners with clarity, despite its infamous complexity.
Here’s why the VMG/AAHA CoA is not only worth the effort but essential for maintaining a thriving veterinary business.
What is the VMG/AAHA Chart of Accounts?
You can think of the VMG/AAHA CoA as the veterinary industry’s standardized filing system. Imagine you have two filing cabinets: one for your income statement (i.e., revenue and expenses, or profit and loss statement) and another for your balance sheet (i.e., assets, liabilities, and equity). Each cabinet contains drawers representing financial categories, and inside those are folders for specific transactions.
Each transaction your practice processes, from vaccine sales to electric bills, is filed in the correct folder (i.e., coded to the right account number). The VMG/AAHA CoA includes more than 250 categorized accounts, organized by function.
When asked about the importance of the chart of accounts, Matt Salois, President of VMG said that while “[t]here’s definitely some complexity in the industry chart of accounts, we can’t forget that veterinary practices are complex businesses. Having a standardized chart of accounts is the best way to analyze this complexity and compare your practice to other practices.”
Reasons we love the VMG/AAHA Chart of Accounts
The VetBooks team strongly supports the VMG/AAHA CoA for many reasons.
1. The VMG/AAHA CoA reflects the true complexity of your practice
Veterinary practices are not simple businesses, they’re many businesses rolled into one. A veterinary clinic is a doctor’s office, pharmacy, groomer, laboratory, hotel, retail establishment, and more. Operational complexity deserves equally complex and detailed financial tracking. The VMG/AAHA CoA reflects the multifaceted nature of a veterinary business, providing a clear understanding of the factors that impact profitability.
2. The VMG/AAHA CoA helps you manage for profitability
Vets want to help pets, but that’s not possible without a profitable business. The VMG/AAHA CoA enables practice leaders to evaluate financial performance in granular detail, so you can see which areas of your practice are thriving and which may be dragging you down.
When you understand profitability, you can identify and address weak points while shoring up strong ones. The VMG/AAHA CoA is designed to enable better business decisions that are grounded in real data.
3. The VMG/AAHA CoA creates a common language for comparison
Without some standardization, it’s impossible to compare and benchmark financial performance meaningfully. The VMG/AAHA CoA provides the profession with a shared financial framework, enabling individuals, industry groups, consultants, and other professionals to work from a similar playbook. If you’re trying to learn from peers or benchmark your data against others, start here.
Is the VMG/AAHA Chart of Accounts right for your practice?
The biggest drawback to the VMG/AAHA CoA is also what makes it great: its detail. In-house veterinary bookkeepers or managers can become easily overwhelmed dealing with an accounting method that uses more than 250 accounts. Some hospitals make attempts to simplify the categories to save time and energy, but this defeats the CoA’s purpose.
For managers juggling an intense workload in veterinary practice, a professional veterinary bookkeeping service such as VetBooks can provide valuable assistance. Bookkeepers experienced in veterinary business management and dedicated only to the art of clean financials can navigate the VMG/AAHA CoA’s complexities for you.
Clarity is worth the complexity
It takes work to manage books using the VMG/AAHA CoA. However, if you’re serious about understanding your numbers and managing your business like the complex operation it is, there’s no better system. When used effectively, the CoA provides unparalleled visibility into what drives your success and how to sustain it.
Let VetBooks help you manage your veterinary books and make the most of the VMG/AAHA Chart of Accounts without stressing your team. Schedule a meeting with our leadership team to get started.