by Katey Keeton | Blue Heron Consulting
It’s the end of the month, and you finally sit down to review your Profit & Loss statement. At first glance, things look encouraging. Revenue is strong. Expenses seem under control. The bottom line shows a profit.
You feel a brief sense of relief—until you open your bank account.
The balance doesn’t match what the P&L suggests should be there. Not even close.
You go back to the report, scanning line by line. Payroll looks lighter than what actually came out. Inventory costs don’t reflect how busy the hospital’s been. A handful of expenses are grouped into categories you don’t fully recognize.
You pause and think, “We use QuickBooks… so this should be accurate.”
But the numbers aren’t answering the questions you really need clarity on:
- Can we comfortably make payroll next month?
- Are we actually profitable, or just moving money around?
- Why does the practice feel financially tight when the report says otherwise?
If you’ve ever looked at your Profit & Loss statement and thought, “This doesn’t feel right,” you’re not alone.
One of the most common frustrations we hear from veterinary practice owners and managers is this: the numbers on the P&L don’t seem to reflect the cash in the bank. The practice feels busy, revenue appears strong, but the financial picture feels murky—or worse, misleading.
This disconnect isn’t a sign that you’re bad at business. It’s usually a sign that the bookkeeping system underneath your financial reports isn’t telling the full story.
Let’s unpack why this happens, what it means, and how practices can start closing the gap between financial reports and financial reality.
The P&L vs. Your Bank Account: Why They Rarely Match
A Profit & Loss statement is designed to show performance, not cash. Your bank account shows liquidity—how much money is available right now.
Key differences include:
- Timing: Revenue may be recorded when earned, not when collected.
- Expenses: Bills may be logged when incurred, not when paid.
- Non-cash items: Depreciation, loan principal payments, and owner distributions don’t behave the way most people expect.
When bookkeeping isn’t structured intentionally—or consistently—these differences get amplified, making the P&L harder to trust and harder to use for decision-making.
Why “We Use QuickBooks” Doesn’t Mean Your Books Are Accurate
QuickBooks is a tool, not a system. Many veterinary practices use QuickBooks, but software alone doesn’t ensure accuracy, consistency, or insight. In fact, QuickBooks will happily generate reports even when:
- Accounts are miscategorized
- Transactions are duplicated or missing
- Payroll is partially recorded
- Inventory and COGS aren’t aligned
- The chart of accounts isn’t built for veterinary-specific reporting
Without a veterinary-informed structure and regular oversight, QuickBooks often becomes a data repository rather than a decision-making tool. Using bookkeeping software is a starting point. Using it well, and in a way that supports clarity, compliance, and strategy, is something else entirely.
Bookkeeping Is Not the Same as Accounting (and Veterinary Practices Need Both)
For many veterinary practice owners and managers, bookkeeping and accounting tend to blur together. They’re often handled by different people, discussed at different times of the year, and only fully examined when something feels off. In reality, bookkeeping and accounting play very different roles in the financial health of a practice, and understanding that distinction is key to building clarity, confidence, and long-term stability.
Bookkeeping focuses on:
- Recording transactions accurately
- Categorizing income and expenses correctly
- Reconciling bank and credit card accounts
- Maintaining clean, timely financial records
Accounting focuses on:
- Interpreting financial data
- Strategic tax planning
- Financial forecasting and analysis
- Advising on business decisions
When bookkeeping is inconsistent or incomplete, accounting becomes reactive instead of strategic. And for veterinary practices—where payroll, inventory, production, and compliance are tightly interconnected—that gap can be costly.
Clean books are what allow accountants (and practice leaders) to answer questions like:
- Are we truly profitable—or just busy?
- Is payroll sustainable?
- Can we afford another associate or technician?
- How does this month compare to last year, really?
Additional Reasons Your Numbers May Feel “Off”
A few other common contributors we see in veterinary practices:
- Payroll Is Only Partially Reflected
Bonuses, benefits, payroll taxes, or retirement contributions may be recorded inconsistently—or not at all.
- Inventory Isn’t Properly Tracked
Without accurate inventory accounting, Cost of Goods Sold can be understated or overstated, distorting margins.
- Loans and Credit Cards Are Masking Cash Flow
Principal payments reduce cash but don’t show up on the P&L, creating confusion when reviewing “profit” versus cash availability.
- Reconciliations Aren’t Happening Regularly
Unreconciled accounts allow errors to compound quietly over time.
Practical Tips to Improve Financial Clarity
Financial clarity doesn’t happen overnight, and it doesn’t require you to suddenly become an expert in bookkeeping or accounting. For most veterinary practices, improvement comes from a series of small, intentional changes that create more consistency, visibility, and confidence over time.
If you’re looking to improve alignment between your reports and reality, start here:
- Review your chart of accounts and implement the AAHA Chart of Accounts to ensure it reflects how veterinary practices actually operate.
- Reconcile monthly—every bank account, every credit card, every time.
- Separate operational expenses to get a clearer picture of practice performance.
- Track payroll fully, including taxes and benefits.
- Compare trends, not just totals—month-over-month and year-over-year insights matter more than a single snapshot.
- Consider bringing on a veterinary-specific bookkeeper to ensure your numbers are accurate and free up time to reinvest in other areas of the business
Whether your numbers feel slightly confusing or completely disconnected from reality, these practical steps can help close the gap between what your reports show and how your practice actually feels day to day.
The Bigger Picture
When bookkeeping is done well, your financial reports stop feeling like a puzzle and start becoming a tool—one that supports confident decisions, sustainable growth, and long-term ownership goals.
If your P&L doesn’t match your gut (or your bank balance) it’s often not a red flag about your practice. It’s a sign that the financial foundation underneath your reports needs attention.
