Glossary

Every term used in the modules, one line each, in the order you are likely to meet them in your monthly package.

Profit and loss (P&L, income statement): Revenue less expenses for a period. Answers "did we make money this month."
Balance sheet: What the business owns (assets), owes (liabilities) and what is left for the owners (equity) on a single day. Assets always equal liabilities plus equity.
Cash flow statement: Where cash came from and went during a period: operations, investing (equipment), financing (loans and owner money).
Accrual basis: Revenue is counted when earned and expenses when incurred, regardless of when cash moves. How your books are kept.
Cash basis: Revenue and expenses counted when cash moves. Simpler, but misleading month to month for a business that sells packages.
Fiscal year: The twelve months the business reports on. Most small clinics use the calendar year.
Revenue (sales, income): What was earned from services delivered and products sold in the period.
Collections: Cash actually received from patients. A management services agreement usually measures its caps on collections, not revenue.
Cost of services (cost of goods sold, COGS): The product and supplies used up to deliver the revenue: injectables, consumables, retail product cost.
Gross profit and gross margin: Revenue less cost of services. Gross margin is that number as a percentage of revenue. A medspa usually runs 60 to 80 percent.
Operating expenses (overhead, opex): The cost of running the clinic regardless of volume: people, rent, marketing, software, insurance.
Operating income (EBIT): Gross profit less operating expenses and depreciation. Earnings before interest and taxes.
Depreciation: Spreading the cost of equipment over the years it is used, a bit each month, instead of all at once when bought.
Amortization: The same idea for things you cannot touch: start up costs, organizational costs, a trademark.
Net income (net profit, the bottom line): What is left after every expense, interest and tax.
EBITDA: Net income with interest, taxes, depreciation and amortization added back. The standard measure of operating earnings.
Adjusted EBITDA: EBITDA with one time items and owner specific costs removed, to show what a new owner would earn. Requires documentation for each adjustment.
Add back: An amount added to net income on the way to EBITDA or adjusted EBITDA.
Asset: Something the business owns or is owed: cash, inventory, equipment, a deposit, money due from the other company.
Liability: Something the business owes: a card balance, wages, sales tax collected, a loan, visits already paid for.
Equity: Owner money put in, plus profits kept in the business, less anything taken out.
Deferred revenue (unearned revenue): Cash received for services not yet delivered. A liability until the visits happen. Packages and memberships live here.
Gift card liability: The value of gift cards sold and not yet redeemed.
Accrued wages: Pay and commissions earned by staff but not yet paid at month end.
Inventory: Product on the shelf, mainly injectables. An asset until used.
Fixed asset: Equipment or improvements above the capitalization threshold, depreciated over time.
Capitalization threshold: The dollar line above which a purchase becomes a fixed asset instead of an expense. The IRS safe harbor is $2,500 per invoice or per item for businesses without an applicable financial statement.
Current versus long term: Current means due within a year. The loan balance due in the next twelve months is current; the rest is long term.
Due to / Due from: What one of your companies owes the other at a point in time. The two balances must match.
Intercompany: Any transaction or account that tracks money moving between two companies under common ownership.
Working capital: Current assets less current liabilities. The cushion the business runs on.
Cash runway: Cash on hand divided by average monthly operating cost. Months you could run with no revenue.
Accounts receivable and accounts payable aging: Reports listing what is owed to you and what you owe, grouped by how many days old each balance is.
Churn: The share of members who cancel in a month: cancellations divided by members at the start of the month.
Variance (inventory): Product used according to the count, less product charged to patients. The number that catches waste, under charging and missing product.
Par level: The amount of a product you want on the shelf on order day. About six weeks of use for injectables.
Chart of accounts: The numbered list of every account the books use. First digit tells you the type: 1 assets, 2 liabilities, 3 equity, 4 income, 5 cost of services, 6 to 9 expenses.
Double entry: Every transaction touches at least two accounts. Debit and credit are the names of the two sides.
Journal entry: A manual entry moving amounts between accounts. Benchmark's job.
Bank feed: Transactions downloaded automatically from the bank into QuickBooks, waiting to be categorized or matched.
Categorize: Tell QuickBooks which account a new bank transaction belongs to.
Match: Link a bank transaction to an entry already in the books, so it is not counted twice.
Bank rule: An instruction that codes a recurring transaction automatically.
Reconciliation: Matching the books to the bank statement until the balances agree to the cent. Done every month for every account.
Close: The set of steps that finishes a month: reconcile, count inventory, roll deferred revenue, book depreciation, tie intercompany, produce reports.
Register: The list of every transaction in one account, in date order.
Rebook at checkout: The share of visits where the next appointment was booked before the patient left.
Recall: A message sent before a treatment wears off, to patients who did not rebook.
Lead: Someone who reached out (form, call, chat, message) and is not yet a patient.
Conversion rate: The share of one step that reaches the next: leads that book a consult, consults that book a treatment.
Cost per new patient (customer acquisition cost): All marketing spend divided by new patients.
Revenue per marketing dollar: Revenue divided by marketing spend. Under 3x the spend is not paying back.
Google Business Profile: Your free listing on Google Search and Maps. The single most important marketing asset a local clinic has.
Local SEO: The work of ranking in the map and search results for treatments in your area: a complete listing, reviews, consistent details, and a page per treatment.
CIP (Confidential Information Memorandum): The document that presents the clinic to buyers: history, team, market, three years of financials, the EBITDA bridge, growth levers.
Teaser: A one page, no name summary sent to potential buyers before they sign a non disclosure agreement.
Management presentation: The meeting where shortlisted buyers question the owner and the team. Often where the price moves.
Letter of intent (LOI): A non binding offer setting price, structure and an exclusivity period. After it, the price only goes down.
Data room: The shared folder holding every document a buyer asks for in diligence.
Rollover: Part of the sale price taken as a stake in the buyer's company instead of cash.
PC (professional corporation): The physician owned medical practice. Patients, revenue and clinicians belong here.
MSO (management services organization): The management company that runs the business side and charges the practice a fee.
Management fee: The fixed monthly amount the PC pays the MSO for management services. Never a percentage of collections.
Reimbursable expenses: Costs the MSO pays on the practice's behalf and recovers from it.
Waterfall: The required order of payment: professional payables, reimbursables, then the management fee.
Sweep: The daily transfer from the Practice Account to the Management Account after reserves are held back.
Corporate practice of medicine: The rule that only licensed physicians may own a medical practice. The reason the two company structure exists.
Sales tax: In California, collected on retail products sold to patients, not on services, and paid by you on supplies used in services. Other states differ; check yours.
Resale certificate: The document that lets you buy retail products without paying sales tax, because you will collect it when you sell them.
1099-NEC: The form reporting payments to non employee service providers. Needs a W-9 from each vendor and a list to your CPA by mid January.
W-9: The form a vendor fills out giving you their tax ID. Collect it before the first payment.
EIN: Employer Identification Number, the federal tax ID of a company. Each of your companies has its own, which is why there are two payrolls.
Section 195 start up costs: Pre opening expenses that are partly deducted in year one and mostly spread over 180 months.
C corporation: A corporation taxed separately from its owners. Owners are paid salary through payroll; profits paid out are dividends.
Officer compensation: Salary paid to a corporation's officers through payroll.
Quality of earnings (QoE): A buyer's review that rebuilds EBITDA from source documents before a sale.
Multiple: The number a buyer multiplies adjusted EBITDA by to arrive at a price. A "turn" is one whole number of multiple.
SOPs: Standard operating procedures, the written steps for how the clinic does things. Buyers read them as proof the business runs without the owner.
Earnout: Part of a sale price paid later, only if agreed targets are hit.

Educational material from Benchmark Advisors, not tax, legal, medical or investment advice, and not a promise of any result. The sample clinic and its figures are invented. Rules differ by state and change; confirm anything that matters with your CPA, your attorney and your state board. Full disclaimers.