client loans - what to do about fee?

RE: client loans - what to do about fee?

Evelyn Barbour-Hill — Fri, 01 Jul 2016 13:01:10 GMT

I've no axe to grind, just pointing out that a 7% fee (average, for the sake of illustration) will really be a 8.4% cost to the practice.

I don't think many veterinary practices will not be VAT registered.

RE: client loans - what to do about fee?

Stewart Halperin — Fri, 01 Jul 2016 11:51:08 GMT

I appreciate your comment and VAT is always a tricky subject.

If you weren’t a VAT registered company the fee for obtaining the much needed finance to help those pay for veterinary care who otherwise couldn’t afford it would be a straight forward % of your sales price.

However, you are correct in saying that the % fee would need to account for the VAT element. This, is an unfortunate consequence of being VAT registered, but not something that we can do anything about I’m afraid. Luckily, the finance charge is exempt from VAT so at least you aren’t paying any VAT that you can’t reclaim.

The average fee I quoted doesn't take into account VAT. Therefore some may be paying a lower %, whilst some a higher % for various reasons.

Hope this helps!

RE: client loans - what to do about fee?

Stewart Halperin — Fri, 01 Jul 2016 11:42:41 GMT

Hi Aisling,

A good question, and simple to answer! You are correct in accounting for the cost of the £100 as a business expense.

It would be shown in the P&L as a finance charge:

So,

Bank receipt from Finance Company (Dr Bank £900)

Pay off the debtor (Cr Debtor £1000)

The balance of £100 is the finance fee that you pay (Dr Finance charges P&L £100)

Hope that helps!

RE: client loans - what to do about fee?

Hannah Wynne Richards — Wed, 08 Jun 2016 16:26:19 GMT

Bloody tax

Wynne

RE: client loans - what to do about fee?

Evelyn Barbour-Hill — Wed, 08 Jun 2016 15:24:19 GMT

I've no particular axe to grind here, but

[quote user="Stewart halperin"]1. Our average fee to the practice is 7.5% on a 0% interest agreement with the client, not 10%. This is improved further if you are a member of a buying group or SPVS / VPMA or BVHO or any of the other partnerships and affiliated groups we work with. [/quote]

If it's 7.5% that will actually cost the practice 9%, because the practice is also paying 7.5% on the VAT that they have to collect even though they receive no benefit.

Illustration:

Your fee is £1000. You have to then charge the client £1200, and hand over the £200 VAT to HMRC.

The client decides they wish to take up the offer of the interest-free loan. So, you invoice Carefree Credit for £1200 – that's your £1000 and the HMRC's £200 – you have no option. CC will pay you £1200 less 7.5% of £1200, which is £90. So, you are paying £90 to get your own £1000: that's 9%. (No, you can't recaim anything, you still have to send HMRC £200)

Just saying.

RE: client loans - what to do about fee?

Stewart Halperin — Wed, 08 Jun 2016 13:25:58 GMT

[quote user="Iain Richards"]

Arlo - the advantage is the advantage to the vet.

What's the average profit margin fro a practice, I've seen a 2013 articel from Vet Times saying 13% and a copy of a Zoetis article suggesting a Bell curve around a mean of 10%. In the quoted example, 10% is the fee that the vet practice pays to the finance company for doing the procedure. Even with a profit margin of 20%, half the practice profit is lost.

Or have I got this wrong. OK, it's a while since I ran a practice and I can't recall my figures, but I seem to recall 10 - 15% was the profit margin.

So I ask the question again. Why? How do these things work - for the practice.

Iain[/quote]

Dear Iain et al,

I wanted to respond to your question about 'what's the advantage for the vet?', because we have hundreds of satisfied practices using CarefreeCredit.

I'm going to list the advantages they experience below and am really happy to expand on these in greater detail, if you'd like, either on this forum or on a 'phone call.

1. Our average fee to the practice is 7.5% on a 0% interest agreement with the client, not 10%. This is improved further if you are a member of a buying group or SPVS / VPMA or BVHO or any of the other partnerships and affiliated groups we work with.

2. Statistics from the US (I know we are different, but they do bear looking at) are that practices using this facility increase turnover by 22% and reduce debtors by 66%. We are looking at these stats for our practices but certainly we have vet testimonials I can provide you to show large increases in turnover.

3. Vets, nurses and front of house staff love CarefreeCredit as they 'defer' the blame of payment options to us. If a client complains or asks for a plan, the practice simply says 'yes we can do that through CarefreeCredit'. If the client fails our risk algorithm (you will know this in 3 minutes) then the practice blames us but DOES NOT take on the debt themselves. Or do the work but don't expect to get paid!

4. We do receive large numbers of client requests for finance to our office. We do not lend direct to pet owners, so we refer these enquiries to the practice closest to the owner that uses CarefreeCredit, in that way we act as a referral service.

5. Clients that take out our payment plans cannot be on benefits as they won't pass our credit score (though disability benefits are allowed). The type of client we see typically are very good clients that get comfort from spreading the cost. Offering the facility increases bonding with good clients, rather than attracting 'bad clients'.

6. We are simply about making treatment more affordable for clients and reducing vets debtors list and increasing client bonding. We genuinely see pressure coming off vets and clients.

I hope some of these points illustrate how vets benefit, but please do contact us at the office (office at carefreecredit dot co dot uk) if you'd like to chat further.

RE: client loans - what to do about fee?

Mike Aldred — Tue, 07 Jun 2016 10:44:24 GMT

Hi Bob,

Although interest free options are very popular, we do have another option which costs the vet nothing and gives a 'reasonable' rate of interest to the client at 14.9% APR. Always useful to have if costs/margins are of concern....

RE: client loans - what to do about fee?

Lucy Fleming — Thu, 02 Jun 2016 09:50:25 GMT

[quote user="Bob Russell"] Sadly I was not psychic enough to detect this in a 15 minute appointment but a second opinion and hundreds of pounds of investigation later managed! Clearly incompetence on my part![/quote]

Clearly!

RE: client loans - what to do about fee?

Bob Russell — Thu, 02 Jun 2016 09:48:57 GMT

Out of our handful of known detractors two are bad debtors and two are people I would not provide with 'free' treatment or a credit scheme (in full knowledge that it would not be complied with!). Mean, uncaring and greedy vet!

The final one is a person with an FIV positive cat with skin problems. Sadly I was not psychic enough to detect this in a 15 minute appointment but a second opinion and hundreds of pounds of investigation later managed! Clearly incompetence on my part!

RE: client loans - what to do about fee?

Martin Atkinson — Thu, 02 Jun 2016 09:39:49 GMT

[quote user="Anthony Todd"]

If you fix the animal you are on the moral high-ground and often the client is for life.

[/quote]Do really want that sort of client for life? Sounds like you're best rid of them. There are very few of these who genuinely intend to pay now or in the future. admittedly when they do it is gratifying but they are few and far between.

[quote user="Anthony Todd"]The PR deficit from a refusal to treat is, IMHO, a price not worth paying, and so says the animal. [/quote]

My experience is the opposite. Clients who cannot afford fees are not likely to tell anyone you're interested in seeing that you're a nasty mean man because you wouldn't fix their pet for free. Indeed the opposite: if you do then you'll get a reputation for being an easy touch and the ne'er do goods will beat a path to your door.

It used to be said that if you please someone they will on average tell 3 other people but if you piss them off they'll tell 10. Well my take on this is that half of those won't have pets or never go to the vet, 3 go to another vet anyway, and the other 2 will be like the person you've pissed off as they're friends/relatives and you don't want them as clients anyway!

Now whether how your conscience for the welfare of the animal dictates how you deal with the case is a different matter. I do frequently treat animals for free or at greatly reduced cost but my compassion gets thinner the older I get.

RE: client loans - what to do about fee?

Anthony Todd — Wed, 01 Jun 2016 17:39:06 GMT

[quote user="Malcolm Ness"]However, if your choice is to do something at a reduced fee or do nothing at all (while still paying your staff and other costs) then a business argument can be made in favour of doing the reduced fee work.[/quote]

We always tried to get a reasonable deposit [which is often impossible with some vets....] so that our costs were covered.

Usually the clients were grateful that the pet was fixed and paid the balance and we got the associated good PR.

Clients who could not or would not pay the deposit usually we referred to the charities having already given emergency care and diagnosis for free....

If you fix the animal you are on the moral high-ground [a price worth paying IMHO in these times of Vet-fee-bashing] and often the client is for life.

The PR deficit from a refusal to treat is, IMHO, a price not worth paying, and so says the animal.

RE: client loans - what to do about fee?

Malcolm Ness — Wed, 01 Jun 2016 11:07:57 GMT

Some are talking of 'profit' and others of 'margin' and that is the important bit.

If you are busy enough that you would be turning away full-fee work to do the credit company stuff, then you would be silly to take it on. However, if your choice is to do something at a reduced fee or do nothing at all (while still paying your staff and other costs) then a business argument can be made in favour of doing the reduced fee work.

RE: client loans - what to do about fee?

Bob Russell — Wed, 01 Jun 2016 10:50:49 GMT

With many insurance companies requiring a 10% 'co-payment/variable excess' what is wrong with the loans having a similar fee? Fair on practice, fair on client and fair on those clients having insurance!

We would take up Carefree credit if it was cost neutral but not as it is. I am sure many/most of the referral centres have higher margins and are more likely to take the hit.

Nice idea but just not well implemented in my view!

RE: client loans - what to do about fee?

Michael Woodhouse — Tue, 31 May 2016 23:37:39 GMT

[quote user="Arlo Guthrie"]

I think it's wrong to think (and judge) these schemes as though they were the only option. i.e. they are a bad thing because people should be insured. Of course in an ideal world everyone would be insured. But they're never going to be, and for some people they seem to me to be a very good solution.

PS - no conflict of interest here; I'm friends with people behind http://www.carefreecredit.co.uk, but nothing to gain financially from them!

[/quote]

It's the way they are set up that I find distasteful. Why not say we can offer an interest free loan that has a 10% up front admin fee? The fee could be paid directly to the finance company - the vet doesn't necessarily have to see more money - just the usual fee.

Has anyone systematically looked at uptake for the same bill? People seem very willing to get up to their necks in debt with these payday loans. If offered a 10% fee as the only charge it is still comparatively affordable borrowing.

RE: client loans - what to do about fee?

Iain Richards — Tue, 31 May 2016 21:09:36 GMT

Arlo - the advantage is the advantage to the vet.

Or have I got this wrong. OK, it's a while since I ran a practice and I can't recall my figures, but I seem to recall 10 - 15% was the profit margin.

So I ask the question again. Why? How do these things work - for the practice.

Iain

RE: client loans - what to do about fee?

George Cooper — Tue, 31 May 2016 18:16:37 GMT

and SO OFTEN there is a softer approach to be made, not one that allows every test and procedure that may be felt to be necessary, but one that sees the animal restored to health and well being....

As ever this "because we can, we must" attitude is muddying the waters. In so many cases a pet will get back to normality with the most basic of treatments. And in support off this - go read Prof Whatsisname's (Day?) essays in the Record where he laments that every new grad feels the need to be a specialist from day one.

To the OP - if you seek to subsidise every client, you will NOT be there for the other 99% who need you. Toughen up, sadly!! (That said there is ALWAYS room for INDIVIDUAL acts of charity...always.)

RE: client loans - what to do about fee?

Arlo Guthrie — Tue, 31 May 2016 17:52:05 GMT

[quote user="Iain Richards"]I've never been able to see the advantage in these schemes[/quote]

I can think of quite a few!

1. Greater choice for the consumer.
Before these schemes came along, the only way of protecting against an unforeseen big veterinary bill was insurance. For some people, an extra £300 (average) on insurance every year is a lot in absolute terms (on top of whatever else they spend on the dog). Others might think that the chance of their (perhaps young) pet becoming ill are remote, and therefore it's a lot to cover what they see as a relatively small risk. These schemes effectively allow people to self-insure, and a proportion of those will end up better off than those who insure.

2. For vets
I would think think these are a great way of deflecting unfair pressure for you to perform for free on compassionate grounds. In other words, you don't have to say: "Sorry no cash, no treatment", you can just say: "If you can't afford this unforeseen bill, you can get free veterinary credit from this organisation." If the credit company refuses, it's not you refusing.

and yes, serena holmes

[quote user="serena holmes"]I can see a clear advantage with these schemes-an animal-who doesn't have the luxury of choosing its owner-gets the treatment it needs.[/quote]

PS - no conflict of interest here; I'm friends with people behind http://www.carefreecredit.co.uk, but nothing to gain financially from them!

RE: client loans - what to do about fee?

David Mills — Tue, 31 May 2016 15:56:47 GMT

[quote user="Martin Atkinson"]Not when we have called to request assistance, or their idea of an emergency is different from mine.[/quote]

It depends what you were asking for and whether the client was eligible by location and benefits. What cases were they? Where did the clients live? And what benefits were the clients in receipt of? You know, just to stop this becoming a bit silly.

[quote user="Martin Atkinson"]And that is if they answer the phone in the first place![/quote]

The phone always gets answered, usually within 5 rings. May be longer on occasion. We've 70 inpatients today so it sometimes the phone has to wait.

RE: client loans - what to do about fee?

Martin Atkinson — Tue, 31 May 2016 14:11:32 GMT

[quote user="David Mills"]It's re-open, and has been for a couple of months, and has always been open for emergencies [/quote]Not when we have called to request assistance, or their idea of an emergency is different from mine. And that is if they answer the phone in the first place!

[quote user="David Mills"]

There are quite a few PDSA PetAid practices around - the PDSA pay a monthly retainer per animal to the vet, who then treats at their discretion.

There are a number of PDSA funds to which owners can apply.

[/quote]When we have requested assistance from the PDSA they have said to do the work and then send them the bill and they would 'consider it'. I'm afraid I want something a little more concrete than that!

As for the Blue Cross I had a case of a dying kitten last Saturday which they told the client tho take it to a vet who would stabilise it over the weekend then they could take it to them on Monday. Again not overly helpful in terms of me getting paid for my work.

RE: client loans - what to do about fee?

David Mills — Tue, 31 May 2016 12:36:10 GMT

[quote user="Martin Atkinson"]Since the Putney Hospital closed admission to new cases[/quote]

It's re-open, and has been for a couple of months, and has always been open for emergencies

There are quite a few PDSA PetAid practices around - the PDSA pay a monthly retainer per animal to the vet, who then treats at their discretion.

There are a number of PDSA funds to which owners can apply.

RE: client loans - what to do about fee?

Bob Russell — Tue, 31 May 2016 10:02:19 GMT

The purpose of the loan is to generate work that otherwise would be unlikely to take place. Viability needs to be looked at as it will impact the profit per procedure but 100% of nothing is nothing!

We don't offer this but probably would if this was a bigger practice.

These are not charity cases and the people taking out the loan need to pass credit checks! I think a low interest loan with no cost to the practice, would work out just as well but may not be profitable enough for the lender!

RE: client loans - what to do about fee?

Martin Atkinson — Tue, 31 May 2016 09:58:11 GMT

[quote user="serena holmes"]I can see a clear advantage with these schemes-an animal-who doesn't have the luxury of choosing its owner-gets the treatment it needs.[/quote]The problem is that if you encourage these people they will just continue to get animals they can't afford to keep. If you can't afford a vet, you can't afford a pet!

[quote user="J G Wray"]

What is the definition and purpose of charity?

[/quote]If you mean RSPCA/PDSA/Blue Cross etc then depending where you are and in our area especially they are next to useless. Since the Putney Hospital closed admission to new cases seeking such care is limited to the local RSPCA clinic which can do very little other than basic stuff. PDSA and Blue Cross make worthless, vague promises of payment but their clinics are further than most 'charitable' clients can be arsed travelling.

A better question would be: what is the purpose of pet insurance?

RE: client loans - what to do about fee?

J G Wray — Tue, 31 May 2016 07:23:28 GMT

[quote user="serena holmes"]I can see a clear advantage with these schemes-an animal-who doesn't have the luxury of choosing its owner-gets the treatment it needs.[/quote]

Dear Dr Holmes,

Two questions:

1. What is the definition and purpose of charity?

2. How would you feel about paying for the treatment from your own salary?

RE: client loans - what to do about fee?

serena holmes — Sun, 29 May 2016 07:53:34 GMT

I can see a clear advantage with these schemes-an animal-who doesn't have the luxury of choosing its owner-gets the treatment it needs.

RE: client loans - what to do about fee?

Iain Richards — Sun, 29 May 2016 06:39:10 GMT

I've never been able to see the advantage in these schemes, where everyone bar the vet benefits. "Doing work you wouldn't do" does not equate to profit. The one benefit of the scheme is that the company credit check the client for you. You are right about the "fee" - I don't even think you can write it off.