Pharmacy Accounting: Three Tips to Manage Payroll Expenses
How do you keep a lid on pharmacy payroll costs when wages are rising to attract and keep talent?
Pharmacy advisor Katie Musorofiti, CPA shares three ways that independent pharmacists can manage these costs and improve cash flow. She recently published her insights in the July 2022 “Bright Ideas” issue of NCPA America’s Pharmacist magazine.
Katie provides a baseline for how much a pharmacy should spend on payroll costs on average, which is about 10.5 percent of total gross revenue. Associated payroll tax should be around 9 percent while a typical retail owner’s salary should be about 3 percent of total gross revenue. These averages can change if the pharmacy is involved in things like clinical services, compounding or durable medical equipment, but it is a baseline to keep costs in check.
Her first tip for managing payroll requires pharmacies to keep a tight rein on staff scheduling and overtime. This happens by knowing the needs and habits of the community and scheduling store hours accordingly. It also requires an understanding of your team, such as the employees who frequently switch shifts or take extra shifts, which can disrupt time and attendance expectations and lead to overtime costs.
Her second tip for payroll management is to investigate automation that can replace manual processes such as medication synchronization or pill packing. This investment requires more staff time and training initially, but it reduces payroll costs in the future. Automation also allows staff to work on activities that generate more revenue, which supports business growth and better wages.
The final tip is to outsource pharmacy accounting and payroll administration. Working with a knowledgeable team can help pharmacy owners identify rising payroll costs earlier and make changes to their store hours, staff scheduling, manual workflow or administration. With more time to build their business — and cash flow through improved pharmacy accounting — owners can reward and retain their team.
See our Beyond Bookkeeping Series: Eric and Katrina Shoffner reward their employees through proactive pharmacy accounting.
