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Annual accounts Monthly book keeping
I am not going to go into this in detail, don’t I can’t impress strongly enough how important
worry! But I do want to mention a couple of it is to keep some sort of simple monthly
points which might allow you to understand management accounts for your dispensary
where your accounts can be misleading or business. If you don’t then how on earth do
not representative of your true dispensary you know if you are trading in the black or
financial position. the red! A basic double entry bookkeeping
First, where possible you need to ask to see approach is all you need in place to keep a
your dispensary accounts separate from the clear check of where you are rather than just
main practice accounts and you need to keeping your fingers crossed for the end of
check that all the line items in these accounts the year.
represent all the dispensary income and In each month you simply need to calculate
expenditure. your income (PCSE payment from your
• Make sure all the rebates paid direct to statement for that month, any dispensing
bank are accounted for in your accounts. fees collected from patients plus any rebates
paid into your bank account or other income
• Accountants will often apportion such as DAC fees or private prescription
excessive costs into the dispensary income) minus your out-goings (drug
accounts, especially staff costs and invoices/statements minus discounts plus
purchases made that do not represent ACTUAL dispensary staff costs calculated to
medicines dispensed. This can really remove hours not spent dispensing). I know
distort the profit margin. Make sure only this figure will not be the final out-going
dispensing staff costs are being allocated figure as you will have heat and light and rent
to the dispensary and not all hours worked etc but for the purposes of checking that you
by staff associated with the dispensary or have a positive margin it is a good start and
prescription admin. All costs associated will alert you to any downturn in margin. Now
with processing prescription requests or you can effectively manage the business on
letters or other practice admin are not the back of fact not supposition.
dispensary costs. (To work this out just
think about if the task would remain if If you get into analysing a little deeper you
the dispensary closed? If it would then it can go a step further and separate your
is a practice admin cost not a dispensary dispensing fee income from your drug cost
cost even if it happens to be carried out income and then look at the margin on your
by a ‘dispenser’) I appreciate that it might drugs plus your margin on running cost
be prudent to apportion the staff costs income (fees). Now you will have more of an
to the dispensary in order to reduce your idea as to whether you are losing money on
potential tax burden but for the purpose drugs or not and whether the cost of running
of understanding your dispensary business your business needs addressing.
you need to see the real accounts if you You wouldn’t run any other business without
are to see your true profit or loss. After knowing whether or not you are making profit
that point let your accountants do their or loss on at least a quarterly basis, so why
magic! would you not apply the same principles to
• If you have a WDA then please make running your dispensary?
sure your wholesaling activity is being
accounted for separately from the
dispensary. Again, poorly managed If you need help contact me at
wholesaling activities can impact
negatively on the dispensary margins carolinepond@chasepoeple.com
and the two businesses must be run as
standalone businesses. It is essential one
does not prop up or negatively impact
the other. Two sets of books required here,
even if it is a lot of extra accounting work.
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or call us on 01904 558 350 Understanding the basics | PS Magazine 29
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