If you love animals but find the spreadsheets a little scary, you are not alone. Most veterinarians go into practice because they care about patient outcomes, not because they dream about accounting. Still, the reality is that your Profit and Loss statement is the clearest way to see whether the practice you care for is healthy. Think of the profit and loss for veterinarians like a clinical chart for your business. It tells a story, it points to the problem areas, and if you pay attention, it helps you make better decisions for the team and the patients.
This guide walks through the P&L in plain terms, with real things you can check and change. No theory, just the kinds of practical steps we wish every clinic owner would take.
Let’s Start With The Basics
Your P&L has four main parts, and once you understand what each one shows, the rest is easier.
Revenue is everything that comes in. That includes consults, surgeries, emergency work, in-house lab fees, imaging, pharmacy sales, and retail items like food and accessories. If you track revenue by type, you will see what brings people through the door, and what is growing or shrinking month to month.
Cost of Goods Sold, or COGS, is what you spend directly to deliver care. Think medications, vaccines, lab supplies, and the disposables used in surgeries. When COGS rises faster than revenue, that is a yellow flag. It could mean discounts, waste, or pricing that needs to be revisited.
Operating expenses cover payroll, rent, utilities, software, marketing, continuing education, and bank fees. These are the day-to-day costs of being open. Payroll is often the single largest line item for a clinic, so how you structure compensation and schedules matters a lot.
Net income or EBITDA is what is left after everything else. That is your bottom line, and the figure buyers will look at if you ever sell the practice. It is also the number you use to plan investments, like a new ultrasound machine or expanding your team.
Organize Your Accounts So The Numbers Tell A Useful Story
If your chart of accounts is a mess, your P&L will be noisy and hard to act on. Use standardized categories for revenue and expenses, so you can compare month to month and to industry norms. Using the AAHA or VMG chart of accounts is a practical first step. It makes it easier to benchmark and to explain your numbers to a consultant or a lender.
When you are setting up accounts, try to separate revenue by service type and provider. For example, track surgery revenue separately from general consult revenue, and if possible, tag revenue to individual doctors. That makes productivity and pricing conversations much more focused.
A few target ranges that many clinics track are useful to know as rough guides.
- COGS: 20% of revenue
- Total payroll: Under about 40% of revenue
- Net profit margin: 10% – 15%.
These are not magic rules, but if you are far outside these ranges, it is worth investigating why.
Look At The P&L Like A Diagnosis
Once your accounts are clean, read the P&L like clinical notes. Start with the big trends, then drill in.
If payroll is creeping up, ask whether hours are right-sized, whether you have the right mix of technicians and reception staff, and whether doctor schedules are being used efficiently. If pharmacy or supply costs are high, look at inventory management. Expired vaccines, overstocking, and inconsistent ordering practices are simple fixes that reduce waste.
Pricing matters. If clients balk at in-house diagnostic fees, that can push more work out to outside labs or lower the perceived value of your services. Regularly review pricing for common procedures and for wellness plans. Look at the average transaction value and strive to increase it through targeted recommendations like dental bundles or preventive care packages.
If you are tracking revenue by provider, you will see who is carrying the caseload and who might need mentoring to increase productivity. That also helps when you are planning raises or considering hiring an associate.
Benchmark Your Performance
Benchmarking shows whether your practice is an outlier for good or for bad. Use industry benchmarking tools or consult groups that focus on veterinary metrics to compare revenue per doctor, revenue per exam, COGS, and payroll ratios.
Adjusted EBITDA is a cleaner profitability measure because it removes one-time items and owner-specific perks. For valuation or when planning growth, adjusted EBITDA gives you a realistic view of sustainable earnings.
Take A Balanced View With Operational KPIs
Profit follows operations.
If you only look at the P&L once a quarter, you miss how daily habits affect long term performance. Track a few operational KPIs alongside your financials. For example, new client intake, client retention, average transaction value, inventory turns, and appointment fill rate. Improvements in those areas usually show up as better margins and steadier revenue.
Treat staff training and client communication as investments. Better technician skill and clearer post-op instructions reduce complications and rechecks. A small investment in front desk training can increase compliance for preventive care, which raises lifetime client value.
Do A Monthly Review
Do a short P&L review every month and make it a quick habit. Focus on a handful of metrics and one action item.
A simple monthly checklist you can run through:
- Compare revenue to the same month last year and to budget.
- Check COGS and call out any category above target.
- Review payroll by role and total payroll as a percent of revenue.
- Pick one expense that rose and decide whether it is temporary or a new trend.
You do not need a long meeting to do this. A 30-minute review with key staff will keep everyone aligned and create accountability for small fixes that add up.
Make Reporting Easier So You Actually Use It
If bookkeeping is a chore, fix the tools first. Integrate your practice management software with accounting, where possible, and map accounts to a standard chart of accounts. Automate recurring items like rent and loan payments so they do not clog your monthly review.
Consider working with a CPA who knows veterinary practices. That saves time and produces better analysis. If you are planning to sell in the future, get comfortable with adjusted EBITDA and consistent reporting now. Buyers value clean, comparable financials.
Need Help With Getting Your P&L Organized?
Staying on top of your P&L ensures you make timely practical fixes, and invest in the systems and people that keep your clinic running well.
If your books are a mess or you’re not getting any insight from your existing reports, it’s time to speak to CPAs who specialize in veterinarians. At Virjee Consulting, we work extensively with veterinarians on accounting, payroll, tax advisory and even consult on practice set-up or acquisition. We’ll be happy to assess your P&L and keep your numbers up-to-date.
