Four-Part Series with Accountant Julie Herres, Part 1: Getting Your Head Out of the Sand about Your Practice Financials | GP 06

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Four-Part Series with Accountant Julie Herres, Part 1: Getting Your Head Out of the Sand about Your Practice Financials | GP 06

Do you fear looking at your financial situation? How do you structure your finances to ensure that you’re bringing in enough money? Can looking at your numbers on a regular basis help you run your business more efficiently?

In this podcast episode, Alison Pidgeon speaks with Julie Herres about getting your head out of the sand about your practice financials.

Meet Julie Herres

Julie Herres is the owner of GreenOak Accounting. The firm provides bookkeeping, accounting, payroll, Profit First services to private practice owners throughout the United States.

Julie and her team have worked with hundreds of private practice owners, so they are uniquely positioned to be a trusted advisor to clients.

To get more information on GreenOak Accounting’s services or to schedule a free consultation, visit or connect on LinkedIn and Twitter.

In This Podcast

  • Why do therapists avoid looking at their financial situation?
  • Things you can find out when looking at your numbers on a regular basis
  • Structuring finances to ensure you’re bringing in money

Why do therapists avoid looking at their financial situation?

If you’re only looking at the bank balance, that really doesn’t tell the whole picture.

Therapists feel fear about their financials and may feel that if they don’t look at this side of the business there is no problem. There may also be a lot of shame sometimes where practice owners feel that they don’t deserve to make money in their business.

Things you can find out when looking at your numbers on a regular basis

  • You may find that there is not enough income to cover your expenses. If this happens you may need to ramp up your marketing efforts or sublet some space.
  • Look for where there is inconsistent income. This could be due to a scheduling problem or you’re not enforcing your cancellation policy or there are billing issues.
  • On paper, it may look like you’ve made a lot of money during the year but in reality, there is not much money left and this could be an indication of too much personal spending. Personal and business expenses should not be mixed.
  • Compensation structures are not sustainable

Structuring finances to ensure you’re bringing in money

Alot of people don’t calculate how much it takes to keep the doors open.

You need to calculate what it takes to keep lights on. If you’re making x amount per session, you need to know how much of that is going towards your overhead and what’s left to go towards you or paying a clinician.

Sign up for free consultation and 5 days of profit-boosting tips for private practice by clicking here!

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Meet Alison Pidgeon

Alison Pidgeon | Grow A Group Practice PodcastAlison is a serial entrepreneur with four businesses, one of which is a 15 clinician group practice. She’s also a mom to three boys, wife, coffee drinker and loves to travel. She started her practice in 2015 and, four years later, has two locations. With a specialization in women’s issues, the practices have made a positive impact on the community by offering different types of specialties not being offered anywhere else in the area.

Alison has been working with Practice of the Practice since 2016 and has helped over 70 therapist entrepreneurs start and grow their businesses, through mastermind groups and individual consulting.

Thanks For Listening!

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Podcast Transcription

[ALISON PIDGEON]: Starting a group practice can be really overwhelming. So, if you’re wanting some help to figure out how to start and grow a group practice, please go to and click on Work With Us. There you’ll find information about everybody on the Practice of the Practice team, including me. I specialize in helping people grow a group practice, and I would love to work with you. So please fill out the contact form on the website or email me,
Welcome to the Grow a Group Practice podcast. I am so glad that you decided to join me today. We are doing a four-part series with Julie Harris from Green Oak Accounting, all about different aspects of accounting and finance for your group private practice. I think this subject is so important and I get so many questions about various aspects of financials in group practice. So, I asked Julie if she would come on and do a four-part series, because there’s just so much information that I thought was so valuable. So, we’re going to talk today about how to get your head out of the sand about your practice financials and then the next episode, we’re going to talk about budgeting and forecasting for your group practice. The third episode, we’re going to be talking about compensation in group practice and then the fourth episode, we’re going to talk about profit first in private practice.
So, I hope you join me for all four episodes. I am really looking forward to sharing my conversation with Julie today, with you all about getting your head out of the sand about your practice financials. Julie said, this is something that happens quite a bit in terms of calls that she gets in her accounting firm. And I get these questions and calls as well from potential consulting clients that they really have not been paying attention to their finances. Maybe they are afraid to look, maybe they only look once a year when it’s tax time, but there’s really a lot that you can do to make your financial situation in your group practice really work for you instead of against you. And if you’ve been avoiding it, you’ve been sticking your head in the sand, like an ostrich and now it’s time to start doing something about it, Julie is going to give you some really great tips for what to start looking at, who to talk to all of those kinds of things. So, I hope you enjoy this episode.
[ALISON]: Well, I’m really excited because today Julie Harris, the owner of Green Oak Accounting is on the podcast. She’s an accountant. She’s in the greater DC area in Virginia, and she owns a firm that provides full-service accounting to private practice owners throughout the United States. So, Julie, I’m so happy to have you here today. Welcome.
[JULIE HARRIS]: Thanks for having me.
[ALISON]: So today we’re going to be talking all about getting your head out of the sand when it comes to your practice financials. I’m always surprised at the number of group practice owners I talk to who don’t really have a handle at all on their financials. And so, I wanted to have Julie come on for the series today to kind of help us understand if we want to get our head over the sand, how exactly do we do that? So, I thought maybe we could start out talking today about why do you think Julie, that therapist avoid kind of looking at their financial situation?
[JULIE]: Well, I think a lot of therapists feel fear about their financials and kind of have that sense that if they don’t look at the numbers, then there is no problem. And it’s not always that just looking at the financials is going to show a problem, but if you’re only looking at the bank balance that really doesn’t tell the whole picture, right? Well, there might be money today that really doesn’t take into account all the expenses that you have coming up, how much should have been in there. So, there’s also a lot of shame sometimes as far as feeling that like practice owners don’t deserve to make money in their business. And I find that really odd because when you go into business it’s to support yourself, support your family. And so there really is no shame in making a living.
[ALISON]: Yeah, I think it’s like just that whole situation of avoidance, like, you know, you’re not sure what you’re going to find, so just better to avoid it, right?
[JULIE]: Yeah, exactly, exactly. But there’s so much useful information in the financials that can help diagnose a lot of issues, but also it can just tell you that you’re doing a great job, too.
[ALISON]: Yeah, I think that in my experience, that’s always been the case. Like when I really have dug into the financials, it’s like, “Oh, okay. It’s really not as bad as I was imagining it was.”
[JULIE]: And there’s a lot of comfort in knowing what’s actually going on.
[ALISON]: Right. So, what do you think like, if people are listening to this episode and they’re like, “Yeah, I’ve really been kind of sticking my head in the sand and not paying attention.”? Like what would be some good, like first steps to look at, to like start to get a handle on what exactly you’re looking at or what should you be looking for?
[JULIE]: So, you know, right now it’s the beginning of 2020 still. So, let’s say you haven’t done anything for 2019, right? You don’t have an accounting software, you don’t really have a good handle on what’s going on, or sometimes you do have an accounting software, but you haven’t actually logged in a long time. So, you don’t actually know what’s going on. That’s a great place to start because you’re going to need to tackle that at some point for your taxes anyways. So, start by tackling that, and then make it a habit to go in once a month, once a week. Like on a very regular basis. But I thought we could talk about some of the things that you can find out when you’re actually looking at on a regular basis and how that can help.
[ALISON]: Yeah, that would be great. So, what are some of those things?
[JULIE]: Okay. So, one of the things that often we find when, so a lot of times when a practice owner comes to us and starts working with us, it’s because, sometimes everything is going well, but a lot of times there’s some kind of financial distress or financial insecurity. They’re feeling like something is wrong, but they can’t quite pinpoint what that is. So sometimes what we find is that there really is not enough income to cover the expenses, and what I mean by that is that, you know, the rent is reasonable, the overhead expenses are reasonable, but they’re only seeing, you know, 10 or 15 clients a week. And so, the expense that’s associated with that is just not sustainable. So sometimes it means you probably need to ramp up marketing or sublet some space or hire someone, do something to bring in more income into the business.
[ALISON]: Okay. Yeah, I see that quite a bit. So, I think we’re going to talk more about that too. Like if you realize you don’t have enough income coming in some other ideas that you can do to start generating some more money. But before we get too far into the weeds with that, what would be some other things that you know, once you do start digging into your financials, like, what do you want to be looking at or just sort of some tips that you have about what to look for?
[JULIE]: Sure. I think you should look for inconsistent income where it fluctuates really wildly, and sometimes that’s a scheduling problem. Sometimes it can show that you have an inconsistent or unenforced cancellation policy. It can also show that you’re having billing issues where you’re not getting paid on a regular basis. It can also show that you’re not collecting co-pays in a timely manner. So sometimes you’re, as you remove yourself as the group practice owner, it’s easy to lose sight of some of those things but if you see really, very wild fluctuation, that could be an indication that something like that is going on.
[ALISON]: I’m really glad you brought that up because I see that a lot in my work with consulting clients, that they may not have a good policy around, you know, making sure they’re collecting what’s owed at the time of the appointment. And they don’t realize until they go back and look at their financials that, “Oh, now I have thousands of dollars that I haven’t collected.” And they don’t realize how quickly it adds up and really having a good structure in place to make sure you are collecting what you’re supposed to be collecting because it can become a runaway train really fast.
[JULIE]: It really can. And having a clear process on exactly who’s doing that work is really important to you.
[ALISON]: Yeah, definitely. So, what are some other things that we should be looking for as well?
[JULIE]: Well, so, sometimes by clearing everything up. Like doing the financials, what you’re going to find is that on paper, you made a lot of money in a year but in reality, there’s actually no money left and that can be an indication of too much personal spending. And sometimes people come to us and tell us, “I really am not paying myself for my business.” And that’s what they think the truth is but when we actually look at what happened in the business, they might not be paying themselves on purpose or intentionally, but they are running a ton of personal expenses through the business. So, you know, they are paying themselves in a way and they’re, but a lot of times they’re taking out too much money. And so, it’s suffocating the business. There’s not enough money left to pay for the business expenses.
[ALISON]: So, like, is that pretty much a no, no, though, to mix personal expenses in with the business expenses?
[JULIE]: Very much a no, no. You should really have personal bank account, business bank account. And there should be, the only personal items that should go through your business is when you’re actually taking a distribution or a draw from your business. So, you would either transfer funds directly from your business account to your personal account and then pay your expenses from the personal account. But you shouldn’t pay personal expenses from the business. You should transfer to your personal account first.
[ALISON]: Right, right. Yup.
[JULIE]: But it’s surprisingly common though. So, if you’re doing it, it’s a good time to stop. And if it’s happened in the past, we can’t change anything about that, but that’s something that we find often.
[ALISON]: Right. So, when I used to, in the early days before I had my assistant do it, I used to buy like supplies and stuff for the office. And I would be out at Target anyway, you know, shopping on the weekend for my family or whatever and I would literally like put all my stuff up on the belt and separate it out into two separate orders and pay with the two separate cards just to make sure everything was totally separate. So, it wasn’t like there was personal and work stuff all mixed up in one transaction. And I think —
[JULIE]: That’s great.
[ALISON]: Yeah, and I think a lot of people don’t realize like, yeah, you have to be really boundaried with not mixing those things together.
[JULIE]: And it’s not that hard to do when you’re at Target to just split your things. But after the fact, if you’re looking at that transaction six months later, it’s really hard to remember what was personal and what wasn’t. And so, it’s best to just keep it completely separate.
[ALISON]: Right. Right.
[JULIE]: So, the other thing that we find in the financials is that sometimes the compensation structures aren’t sustainable. And I think we’re going to talk about it at length in the series, but that is something that can happen really easily. Sometimes what the numbers also show us is that the practice owner is not delegating enough in how we usually want to decide is if, let’s say there’s a practice with an owner and three other clinicians, but yet the owner is still bringing in most of the revenue on their own. Usually that means that they’re not delegating and they’re not actually passing on appointments to their team. And they’re not being a great leader at that time.
[ALISON]: Right. Yeah, I see that all the time. That’s definitely something that is hard for people to wrap their head around when they become a group practice owner.
[JULIE]: It’s probably hard to let go but you know, to be a group practice owner, that’s something that must be done. But the same also applies to admin work. So sometimes the practice owner believes in seeing that many clients, but they really feel overworked. They come to us saying like, “Oh, I’m working around the clock. I feel like I never get a break.” But then they’re doing all the billing themselves, answering the calls, answering the emails. So, you don’t have to do all that yourself. You can hire someone to help you with those things so that you can be working in your area of genius.
[ALISON]: Right, and I think that’s such a big game changer for people when they do get an assistant and they’re like, “Oh my gosh, I have all this time now to like work on the business or do the marketing, or see more clients,” if that’s what they want to do or whatever. You know, it’s amazing how much that can make such a big difference
[JULIE]: Can free you up for all the important things.
[ALISON]: Right.
[JULIE]: Sometimes it’s easy to get stuck in your updating the website and stuff. Because sometimes it feels less difficult than the things that you really need to tackle. So, I think that that might happen sometimes.
[ALISON]: Yes. So one thing, just switching gears a little bit that I hear from you know, I talk to a lot of consulting clients who are thinking about starting a group practice and they’re like, “Well, I talked to somebody else in my town and they said that they’re running this group practice, but they’re not making any more money and they’re really struggling and they’re kind of regretting they started this group practice.” And I just think like, to myself, like, obviously they’ve structured it wrong because you should absolutely be making money. If you’re running a group practice, you’d be making more money.
And I think so much of it comes down to the structure and also obviously how you have structured the finances as well. So can you speak a little bit about that, like how you maybe advise practice owners kind of structuring their finances to make sure that they’re bringing in money or that, you know, if they have a number in mind of what they need to make per year to support their family and all of those things? Like how do you of manage the finances to meet those goals?
[JULIE]: Okay. Well, so for, you’re completely right. If you are going from solo to group practice, you should be making more money. Period. If you’re thinking you’re going to make less then you shouldn’t do it. Or if you don’t feel like you should be allowed to make more money then you’re, don’t do it. Your life is going to be a lot easier as a solo practitioner. But so, here’s the thing. I think a lot of people don’t calculate how much it takes to keep the doors open. So, what I like to know is just the baseline of if you’re not doing anything excessive, so what does it take to just keep the lights on as far as rent, as far as the, you know, the minimum software that you need? Well, we’re not paying for continuing education or things that could be a pushback.
So how much do you need to keep the doors open, but then apply that as a percentage of your average, your insurance reimbursement or average fee, if you’re a private pay? So that you have an idea of, let’s say I’m getting, you know, $150 per session and 35 of that, $35 of that goes straight to overhead, right? So, then you have an idea of what’s left for everything else, whether that be you or hiring an admin or paying a clinician. Like that’s a great way to put it in a little bit of a bite size. But I also think that you should know, have a dollar amount, like how much money do you need to take home each month? And there can be a wish number and a reality number, but what does it take to keep your home life going so that you can back into how much you really need to bring in for the practice?
[ALISON]: Yeah, and I think that’s one thing group practice owners don’t realize; is like, you can really design your business to meet those goals. Like, you know, there’s not like somebody who’s telling you, “Well, you’re only ever going to make 90,000 a year and then don’t wish for anymore because that’s not going to happen for you.” Like you could design your business to make $500,000 a year.
[JULIE]: Absolutely.
[ALISON]: You know, like that’s up to you. And it’s just a matter of structuring it in a way that’s going to allow that to happen. So, I’m glad to hear you say that.
[JULIE]: I feel like often people forget or business owners can sometimes forget that they’re not an employee. They are completely in control of how much money they bring in. So, it’s not, you know, when you’re in a pinch, it’s not just about how can I reduce expenses. You can also look at how can I bring in more income, whether that is increasing your rates, whether that is subletting some space that you’re not using, whether it’s using your space in a more efficient way so that you can see more, so that more clients can be seen in that exact same space in the same amount of time. I think there’s a lot of different ways to add revenue to the business.
[ALISON]: Yeah, and I think that’s the other thing that I realized working with clients that they want to make more money and they don’t think to look at “Well, what resources do I already have that I’m not maximizing?” Like I was just talking to some practice owners yesterday about like, “Okay, well, is your space really being utilized like 12 hours a day?” And they’re like, “Well, we actually don’t have anybody that wants to work in the morning. So, like the space doesn’t get used to like noon time on.” And I’m like, “That’s, you know, four to five office spaces that have 20 hours a week that are vacant that you could have filled.” Like that’s another hundred hours per week of potential income that they’re just like leaving on the table. Like they already have that office space. It’s just a matter of hiring somebody else to fill that blocks of time.
[JULIE]: Right. And when you’re looking at that data before you hire, then you can be a lot more intentional about who you’re hiring where you’re advertising a position for morning or Saturday where you’re requiring Saturday hours or whatever it may be that you can make sure you’re filling that particular space.
[ALISON]: Right. Right. Yeah. So, I think when you’re looking at, how do I generate more revenue? Not necessarily like, “I got to start a whole new thing or I got to go out and rent another office.” Like you’re probably not maximizing what you already have. And it could just be as simple as like, “Oh, I need to hire somebody to fill in extra hours.”
[JULIE]: It can be that simple. And a sublet is, depending on the size of the practice, a sublet can also be a consideration too. I find that a lot of times people are open on this time on Saturdays or don’t want to be, or are not full on a Saturday. You know, if you’re needing additional income, I think that’s something that should be considered. There’s people out there who want just one day a week because they’re working in an agency and would love to use your space.
[ALISON]: Yeah. One thing I’m looking at too, because my space sits empty on a Saturday is potentially paying therapists more if they want to work on a Saturday. Yes, to make it more sort of appealing to them. But also, it’s just like bonus for me because otherwise the space is just going to sit empty.
[JULIE]: I agree.
[ALISON]: Yeah, I want to go back to one thing, I think you kind of said briefly a few minutes ago about figuring out what your average reimbursement rate is per session.
[JULIE]: Yes.
[ALISON]: I think that has been really helpful for me to know like, “Okay, what do I need to bring in for that hour to cover my overhead, to make sure I’m turning a profit?” That really helps me because we need to figure out, okay, what are the lower paying insurances that it makes total sense to drop because I’m not making enough in that hour to justify continuing to take that insurance? Do you find that that’s a really important sort of piece of financial data that helps practice owners make those types of decisions?
[JULIE]: It is, and it’s usually pretty easy too, if you’re looking at, you know, it doesn’t have to be a complicated exercise. So, you can look at all of the income that you’ve brought in in the last year, for example, and then look at the number of sessions that you’ve had in that year. So just divide the income by the number of sessions. It’s not a perfect science, but that’s okay. You’re going to get an average number. So, if that number is for example, 125 per session and then you look at specific individual reimbursements and you see that one company is reimbursing under a hundred dollars, for example, then you certainly could drop that one insurance company. And that opens up your hours to more profitable sessions.
[ALISON]: Yeah, and I also think that would help you to figure out what to pay your staff for that hour. Because what I find is people pick a random number out of the air like, “Oh, it seems like I should pay my staff 70% of whatever they bring in, because that just seems generous.” Like that number is not at all based on actually looking at financial data and then I get calls later, like, “Oh no, I’m paying my staff too much. I’m not making any money. What do I do?” So, I think knowing that like what your average overhead per session too is really helpful then to figure out what can I actually afford to pay my staff?
[JULIE]: Yes. So just yesterday we were working with a client who asked us is my business going to make it? So that was the question, because that’s the direction things are going. And so, we looked at the average reimbursement, we looked at the overhead, the admin, the rent and the commission. And the average commission in that practice is close to 75%, and there’s a variety of reasons that those numbers were picked, but that’s the reality. And so, what we were able to see is that the profit per session is actually a negative amount, so there’s no way to dig out of that hole without one of the expenses changing. And it’s not a great situation to be in, but the good news is there’s still time to do something about it.
Like, because now, you know, and now you can do something about it. So, we can rework the numbers to get back to a point where there is a profit, but what if you didn’t know? You know, we’ve seen what happens six months from now where you’re taking out basically payday loans to just make the next payroll, and that hole gets even gets even deeper. So if you know and you can do something about it, but it shouldn’t, that number of that commission, that percentage, that flat fee, it should never be decided just because that’s the biggest, biggest expense in a practice, and it’s usually not one that’s given a whole lot of thought in my experience. Is that you’ve seen as well?
[ALISON]: Yeah, it just seems like they just go by, “Oh, well the practice down the street, that’s what they’re doing,” or, “Oh, well, I’m just having these other staff come in and use my office when I’m not here. So, like, my overhead is super low.” So of course I can be more generous with paying the staff, but then they don’t think about, well, down the road, you’re going to rent more offices and now your overhead is going to go up or they don’t think about the fact that you need to also pay yourself through what you’re making, the clinicians, because otherwise, why are you running this group practice? And you also need to have some profit saved for an emergency fund for, you know, just obviously if you don’t have cash or profit in your business, then you’re not going to have a business very long.
So, I see that a lot. So that’s the one thing that I always talk to clients about. Like, “Have you looked at the numbers and run the numbers to really see, like, what can you afford to pay people?” And err, on the side of being a little bit more conservative in the beginning, like maybe they do want to pay 60% when I’m like, “Maybe you should start at 55 to just see how things go. You can always raise it up, you can always profit share. Whatever you want to do.” But like it’s always such a tough situation to then have to go back to your staff and be like, “Well, I’m paying you too much. So, you’re all getting a pay cut.” Like that is a terrible situation to be in. And so yeah, you really have to think through those numbers before you decide and look at the data.
[JULIE]: And you should give yourself room to increase the pay at some point too. Everyone eventually wants a raise. So, if you start at that top line where you really can’t go any higher, it makes for a tough conversation when someone does ask for a reason there really is no room for that.
[ALISON]: Right. Right. So, any last-minute tips, Julie, for us in terms of how to get our head out of the sand, if we’ve been avoiding looking at our financials?
[JULIE]: just do it as soon as possible and I promise you are going to be relieved that it’s done and there’s so much information that you can get from those numbers. Just take care of it. Just do it.
[ALISON]: Yeah. Yeah, there’s nothing, no magic answer except just do it.
[JULIE]: Just do it. If you don’t want to do it, then hire someone to do it.
[ALISON]: Yeah.
[JULIE]: Just get it done.
[ALISON]: Right. Right. Well, Julie, this has been really helpful. I’m glad that you were able to take the time to share all of your knowledge with us and we’re actually doing a four-part series, and so, next week we’re going to be talking all about budgeting and forecasting for your group practice. So definitely stay tuned for that episode. Julie, if folks want to get ahold of you, what’s the best way for them to get in touch?
[JULIE]: Sure. So, you can go to our website and that is, just like the tree, the Green Oak, and you can sign up for five days of profit boosting tips for private practice and you’ll get access to a lot of our templates as well.
[ALISON]: Awesome. And then is that, I know you wanted to do a giveaway as well for the audience. Is that what you’re talking about there?
[JULIE]: Yes. So, you’ll get our budgeting template, you’ll get all kinds of different templates that you can use in your business, like our ratios, and you can get all those from the website.
[ALISON]: Awesome. Well, Julie, thank you so much. It’s been very helpful.
[JULIE]: Thank you for having me.
[ALISON]: So, I hope you felt like you got lots of actionable tips from Julie about how to get your head out of the sand about your practice financials. She’s such a great wealth of information. Please stay tuned for the next three episodes. We’re going to be interviewing Julie again on various subjects relating to budgeting, compensation, profit first, lots of important topics that I get questions about all the time. So, I will see you in the next episode.
This podcast is designed to provide accurate and authoritative information in regards to the subject matter covered. This is given with the understanding that neither the host, Practice of the Practice, or the guests are providing legal, mental health or other professional information. If you need a professional, you should find one.