1 May 2014
Anonymous
Job Title
• Making sure bills are paid on time and in full is vital for any business. Sluggish cash flow can bring an enterprise to its knees in no time, so giving clients options when it comes to paying their dues can often pay handsome dividends. There are a variety of ways to sweeten the bill pill. VBJ takes a look at some of the options.
AN INCREASINGLY POPULAR means for practices to underpin revenue is by offering health plans, but picking the right one is key, according to Joy Bevan, business development manager at Practice Plan for Vets.
She said: “Health plans allow practices to help owners by providing the support they need to help pets stay fit and healthy.
“Regular visits mean all necessary vaccinations and treatments can be given and, as well as providing the opportunity to monitor the general health of the pet, such arrangements allow practices to offer additional treatments, or items can be offered to plan members at a discounted price as a reward for being a loyal member of the practice.
“Clients are able to budget monthly for the cost of keeping their pets fit and healthy and pay by convenient direct debit – offering complete peace of mind with minimal fuss.”
In the highly competitive and ever-changing veterinary market, Joy warns it is essential to be fully prepared to meet future challenges, which may have an impact on revenue. Clients with less disposable income, a reduction in the number of insured pets and increased competition are all likely to have a bearing on practice profitability. But there are ways to help clients spread the burden.
Joy said: “By paying monthly clients don’t have to save up for what should be essentials; clients can budget and save as the price will be less than it would be as a pay as you go. This also means there is better compliance to preventive health care, which means healthier pets. Clients also benefit from a reduced fee for subsequent treatments to ensure all their pets benefit.
“When a client becomes a plan member he or she is secured to the practice.”
Joy gives the example of a three-vet, single-site practice in South Yorkshire that began offering pay monthly plans to clients.
She said: “Two years in, there was an increase in the sale of flea preparations sold of 640 per cent, wormer sales increased by 29.93 per cent in a year and 17.5 per cent of active clients now belong to a plan, generating £6,000 a month regular income.
“Around 25 per cent of owners may have a plan that funds the preventive health recommendations, but direct debit can also be utilised to collect larger amounts when faced with a large invoice (often unexpected and unbudgeted),” added Joy.
“Practices have the option of being able to provide a client with alternative methods of paying over a four-month period without the need for a consumer credit licence (at the discretion of the practice). A deposit is taken by the practice and the remainder of the invoice is split into four equal payments and collected monthly along with the client’s regular monthly direct debit plan payment.”
For the 75 per cent of owners not on a plan there are often concerns about paying for treatment. In the first instance, larger bills are difficult to pay off in four months, so a practice can offer to arrange a zero per cent finance pet loan.
Joy said: “These are available to most owners following a credit check with the load provider, with a high percentage accepted (more than 80 per cent) and an answer usually given within 30 minutes of application. An owner can then afford to pay for a current invoice or arrange for the procedure to take place, paying it back over the agreed time frame to the loan company. The practice would pay a subsidy fee and receive the lion’s share within 72 hours – removing the bad debt risk – and would need to hold a consumer credit licence.
This can offer peace of mind when lifetime cover is not in place or affordable. But what conforms as an accident?
“There are obvious accidents, but others that might not be so obvious, such as ingestion of poison or a foreign body, road traffic accidents, cat bite abscess, cut pads, eye injuries and trauma injuries – including teeth. There are no restrictions due to age or the clinical history of the pet and they are covered across the whole of the UK,” said Joy.
Despite a wide range of products available to help clients pay their bills, however, things can, and regularly do, go wrong.
Costs for complicated and protracted treatments can add up quickly, leaving clients unable to meet their obligations. But even if they are struggling to pay, all is not lost.
John Earls is a managing director of Quest Debt Recovery.
He said: “In my line of work I have been to all manner of practices, from large corporations to those with one site and a handful of staff. There are some very common themes that have come out. Most notably that some clients seem to think of a vet in a similar fashion to the NHS; they are happy to use the vet services, but are not happy to pay for it.
“It seems all of these practices also share a similar problem – that they don’t provide clients with enough information when they first engage them as clients.”
He added: “A practice does not normally have enough time to give a new client terms and conditions or sign a contract, especially if they are treating an animal out of hours in an emergency. A good way to help protect the vet and the client is to have some general terms and conditions easily visible on the reception wall or desk.”
Increasingly, more of the corporate chains are introducing welcome packs for new clients to include terms and conditions. These packs often include contracts and leaflets on a variety of services with question and answer sections to provide clients with information on scenarios that may be relevant to them.
John said: “It is normal for a practice to advertise the terms and conditions on its website for a client to view. Courts in the UK want to see that a party has made reasonable attempts to bring the terms and conditions to a client’s attention, which could be argued a practice would have done by directing them to its website.”
Having good processes at the front end is also essential, but John argues it’s equally important that, when a client cannot pay an invoice, the right procedures are in place.
He added: “As a debt collection company we are heavily regulated and this means the company has to ensure we are working in compliance with the most up-to-date, fair practices governing the financial sector. The financial sector is going through a major upheaval at the moment with its main regulator changing from the Office of Fair Trading to the Financial Conduct Authority (FCA). The FCA is taking a more robust approach to managing the financial sector, which means agreements to repay debts are going to be heavily scrutinised by the FCA.
“Veterinary practices need to be very careful they don’t enter into arrangements with their clients to repay debts that could mean the arrangements could become regulated. An agreement is said to be regulated when there are more than four instalments and/or the required period to make the payments exceeds 12 months. The agreements must also not charge interest or further charges.”
Should an agreement be deemed as being regulated, the FCA demands that the originator must be licensed with the FCA, which would mean a financial commitment from the practice plus an onerous auditing process to be approved.
John said: “Should a practice not hold an FCA licence, and be seen to operate these agreements without authority from the FCA, there could be a large fine or criminal sanctions.”
