Financial Management, Accounts Receivable & Pet Insurance – Key Vocabulary

Vocabulary flashcards covering fundamental accounting, performance metrics, accounts receivable processes, third-party financing, and pet health-insurance terminology relevant to veterinary practice management.

Profit

The financial gain that remains after a business spends less money than it earns.

Revenue

All money brought into a business from services performed or products sold, before expenses are deducted.

Bookkeeping

The process of recording and tracking all financial transactions of a business.

Balance Sheet

A financial statement listing a company’s assets, liabilities, and owner’s equity at a specific point in time.

Assets=

Liability + Equity

Anything of quantifiable value owned by the company.

Liabilities

Debts or obligations owed by the company to others.

Owner’s Equity

The residual interest that belongs to the owner after liabilities are subtracted from assets.

Income Statement

A report that shows revenue and expenses over a defined period to indicate company performance.

Key Performance Indicators (KPIs)

Metrics used to monitor and evaluate the financial health of a veterinary practice.

• Revenue generated per DVM

• Generally speaking, DVMs generate 4.5 to 5 times their wage.

• Average transaction charge - ATC

• Revenue by category

• Work hours per transaction

• Active clients and new clients

• Accounts receivable aging

Revenue Generated per DVM

KPI calculating how much income each veterinarian produces; typically 4.5–5× their wage.

Average Transaction Charge (ATC)

Total revenue divided by total number of transactions within a period.

Practice ATC

• Total practice revenue ÷ total number of transactions

• Example – A clinic received $9000 on Monday and there were 58 transactions.  The practice ATC is $155.17.

Doctor ATC

• Total medical revenue divided by total medical transactions attributed to a specific veterinarian.

• Example – Dr. A saw 15 patients on Monday and $2900 was received.  The doctor ATC is $193.33.

Accounts Receivable (AR)

Money owed to a business for services or products not paid for at the time of service.

Accounts Receivable Aging

A report categorizing outstanding client balances by length of time owed.

Is AR a bad thing?

• For the business, yes.  AR negatively affects the business from a monetary view.  When money is not paid at the time of service, it will cost the business money to obtain that money later.

• For example – create an invoice reminder to the client which can cost paper, ink, envelope, postage, and employee time.  Even when performed electronically, time is involved as well as the software cost.

• The longer an AR balance is present, the less likely the balance will be paid. 

• Also, because no money was collected, there is now a $0 transaction that plays a role in the KPI previously mentioned.

Zero-Dollar Transaction

An invoice recorded without payment, lowering ATC and other KPIs.

Third-Party Payment Plan

External financing option (e.g., CareCredit, Scratch Pay) that allows clients to pay over time while the clinic is paid up front.

CareCredit

A health-care credit card offering instant decisions and promotional financing on transactions ≥ $200.

Scratch Pay

A service that provides quick, transparent payment plans with no deferred interest and no credit-score impact on checking rates.

Non-Sufficient Funds (NSF)

A bank return indicating a client’s check could not be processed due to lack of funds.

Collection Agency

A third party hired to recover outstanding debt, typically keeping 40–60 % of the amount collected.

Employee AR

Outstanding balances owed by staff members for their own pet care, often discouraged due to collection challenges.

Pet Health Insurance

A policy that helps owners manage financial risk for veterinary expenses, increasing acceptance of recommended care.

Premium

The monthly or annual payment an owner makes to maintain an insurance policy.

Deductible

The amount a policyholder pays out-of-pocket before insurance reimbursement begins; may be per-incident or annual.

Copay

The percentage of a covered bill that the owner remains responsible for after the deductible is met.

Preexisting Health Condition

Any illness or injury present before the policy’s effective date, typically excluded from coverage.

Waiting Period

Time span after policy purchase during which coverage is not yet active.

Exclusion (Insurance)

A disease, condition, or treatment that the insurance policy does not cover.

Aged Accounts Receivable Report

A management tool listing clients with unpaid or credit balances to assess AR amounts.

Bad Debt

An outstanding balance deemed uncollectible and written off by the practice.

Balance Adjustment

A manual change made to a client’s account to correct or alter the amount owed.

Client Spending Range

Grouping of clients based on their total expenditures within a set time frame (e.g., last 365 days).

Discount Summary

A report showing totals and types of discounts applied on closed invoices.

Sales by Product Class

A financial report detailing revenue totals by category of product or service.