It's 7:15am in a suburban medical practice. The waiting room isn't open yet. You've already scanned yesterday's appointments, a wage run preview, and a debtor list that somehow grew again. What you don't have is a single page that tells you whether the business is healthy - or just busy.
Most $1M-$10M practice owners I work with don't need another 40-line dashboard. They need five numbers they can defend in ten minutes: utilisation, labour percentage, debtors days, gross margin, and cash runway. That's the KPI pack. Everything else is optional colour.
Software will happily give you fifty metrics. Practice owners usually have time for five - if those five answer the decisions that actually show up: hire or wait, chase debtors or ease terms, raise capacity or protect margin, draw or hold cash.
Profit alone won't carry those calls. Cash alone won't either. (If your P&L and bank account have been arguing lately, that's a related story - not this one.) The point of a KPI pack is rhythm: same definitions, same cadence, same owner glance before the diary takes over.
I keep the pack boring on purpose. Boring is readable between patients.
1. Utilisation (or billable capacity used) For a professional practice, this is the share of available clinical or fee-earner time that turned into billed work. Say a four-associate dental practice has about 640 bookable chair-hours in a month and bills 512 of them - that's 80% utilisation on that simple definition.
You're not chasing a universal "perfect" percentage. You're watching trend and mix. Utilisation at 88% with exhausted associates and rising overtime is a different story from 72% with empty gaps and the same overhead. Owner question: are we full in a healthy way, or full in a brittle way?
2. Labour percentage Labour cost as a share of revenue - wages, on-costs you track consistently, and contractor labour if that's how you staff chairs or files. On a $3.2M legal practice, labour at 42% of revenue is a different operating shape from labour at 51%.
Watch the direction over 3-6 months, not a single pay cycle. A temporary locum month can spike the ratio without meaning the model broke. A slow creep while fees stay flat usually does mean something. Owner question: is labour rising faster than the fees that fund it?
3. Debtors days How long, on average, invoices sit before cash arrives. A simple view: debtors balance / (revenue / days in period). If a physiotherapy group holds about $186k in debtors against roughly $240k of monthly fees, you're looking at something in the mid-70-day zone on that sketch - before you even open the ageing.
Ageing still matters: 30 / 60 / 90+. Debtors days tell you the average drag; ageing tells you where the drag hides. Owner question: if half of the 60+ landed this fortnight, what would that do to the bank?
4. Gross margin Revenue less the direct costs you treat as cost of delivery - associate costs, labs, medical supplies, brief fees, or other direct inputs depending on the practice. A $4M insurance brokerage style business at 58% gross margin has a different overhead story from the same revenue at 49%.
Margin answers "is the work itself still paying for the machine?" Overhead and drawings live further down. Owner question: on comparable work, is margin holding, or are we busier on thinner jobs?
5. Cash runway How many weeks of known outflows the available cash would cover if revenue paused or lumped the wrong way - wages, super rhythm, rent, key suppliers, and near-term BAS-style remittances you already know about. Say a practice has $210k clear after a wage run and fixed outflows run about $35k a week: that's roughly six weeks on that narrow definition.
Runway is illustrative and business-specific. It is not a personal emergency-fund lecture. Owner question: do we have enough weeks of fixed outflows to sleep through a quiet billing month?
I don't publish a universal scoreboard for every practice type. A dental chair mix, a litigation file mix, and a GP clinic don't share one "correct" labour percentage.
What I do push for:
Illustrative shape for a staffed practice in the $1M-$10M band: utilisation watched weekly or fortnightly; labour % and gross margin monthly; debtors days and ageing weekly; cash runway weekly in tight months, fortnightly when calm. That's a cadence preference, not a rule of law.
Keep it ugly and useful:
| KPI | This period | Prior | Note |
|---|---|---|---|
| Utilisation | 80% | 76% | Locum week included |
| Labour % | 44% | 43% | Flat |
| Debtors days | 52 | 47 | Two insurers slow |
| Gross margin | 55% | 56% | Lab costs up |
| Cash runway (weeks) | 5.5 | 6.0 | BAS week ahead |
Ten minutes. No colour gradients required.
If your practice is drowning in reports and still short on decisions, the fix is usually subtraction. Five owned numbers beat fifteen ignored ones.
If you want help building a one-page KPI pack around utilisation, labour, debtors, margin, and runway for your practice, send me a note via Full Cycle Accounting and we can set the definitions to match how you actually work.
This is general information only and doesn't take into account your objectives, financial situation or needs. Before acting on it, consider whether it's appropriate for you - or talk to me about your situation.
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