Medical Equipment & Consulting
Equipment sales and consulting work require different accounting. We track inventory, COGS, and service revenue so you know your real margins.
Two Businesses in One
You sell medical equipment. You also provide consulting services. These two revenue streams look similar on a bank statement but require completely different accounting treatment. Equipment sales involve inventory, cost of goods sold, and margins that shift with supplier pricing. Consulting is time-based, often billed by project or engagement, with labor as the primary cost. When the books lump everything together, you lose visibility into which side of the business is actually making money.
The buyers add another layer of complexity. You are not selling to consumers paying on the spot. Hospitals, clinics, and healthcare systems pay on net 60 or net 90 terms. A $50,000 invoice might sit in accounts receivable for three months before you see the cash. Meanwhile, you already paid for the equipment, paid your sales team, and covered overhead. Managing cash flow in this business requires tracking what is owed and when you can expect it.
Who This Covers
Who This Covers
Medical device distributors, diagnostic equipment suppliers, healthcare consultants who also sell products, and companies providing both equipment and implementation or training services. Any business combining product sales and advisory work in the medical space.
What Complicates It
What Complicates It
Inventory that needs valuation and cost tracking. Large invoices that take months to collect. Sales commissions tied to revenue that has not hit the bank yet. The need to see profitability on equipment separately from consulting. Multiple moving pieces that most generic bookkeeping ignores.
What We Handle
On the equipment side, we track inventory and calculate cost of goods sold properly. This means when you sell a piece of equipment, the books reflect what you paid for it, not just what you sold it for. You see the actual margin on each sale. Inventory gets valued correctly on your balance sheet, and you know what you have on hand versus what has been sold. This matters for pricing decisions, reorder timing, and understanding where your profit comes from.
On the consulting side, we separate that revenue and track it against the costs of delivering those services. Accounts receivable gets managed with aging reports so you know which invoices are current and which are slipping past terms. We track commissions by salesperson and make sure the records are clean for 1099 reporting at year end. Monthly reconciliations, financial statements, and the ongoing reporting you need to manage both sides of this business.
Inventory and Cost Tracking
Inventory and Cost Tracking
Equipment purchases recorded as inventory, not expensed immediately. Cost of goods sold calculated when product ships. Margins visible at the product level so you know which equipment lines are profitable and which ones are barely breaking even after commissions and overhead.
Receivables and Cash Flow
Receivables and Cash Flow
AR aging tracked by invoice and customer. You see what is outstanding at 30, 60, and 90 days. When a hospital system is slow to pay, you know before it becomes a problem. This feeds into cash flow planning so you can anticipate tight periods and manage accordingly.
What Goes Wrong
The most common problem is treating equipment purchases as expenses instead of inventory. You buy $30,000 worth of equipment in March and expense it all. The P&L looks terrible in March, great in April when you sell it, and none of the margins make sense. Without proper inventory accounting, you cannot calculate true cost of goods sold. You think you are making 40% margins because you remember what you paid for something, but you are not factoring in shipping, storage, or price increases from suppliers. The guess is usually optimistic.
Cash flow surprises are the other killer. You close a big deal in June, recognize the revenue, pay the commission, and celebrate. Then you wait 90 days for the check. Payroll still needs to run. Rent still needs to be paid. Suppliers want their money. Without tracking receivables properly and forecasting when cash will actually arrive, you end up scrambling for a line of credit or delaying payments you should not be delaying.
Margins You Cannot Trust
Margins You Cannot Trust
If equipment purchases are expensed when bought instead of tracked as inventory and matched to sales, your margins are fictional. You might be losing money on certain product lines and have no idea because the cost and revenue are never connected in the same period.
Commission Chaos
Commission Chaos
Sales reps paid on deals that have not collected yet. Commission records kept in spreadsheets that do not match the books. At year end, you are chasing down who was paid what and trying to assemble 1099s from incomplete information. It creates liability and frustration.
What Changes
You see the real numbers. Equipment sales show actual margins after cost of goods sold. Consulting revenue stands on its own so you can evaluate that part of the business separately. You know which product lines to push and which ones to reconsider. You know whether consulting is subsidizing equipment or the other way around. Decisions about pricing, inventory levels, and sales focus are based on data instead of feel.
Cash flow becomes predictable. You can look at the AR aging and project when money will arrive. When a large invoice goes out, you know to plan for the 60 or 90 day wait. Commission tracking is clean and matches the books, so 1099 preparation at year end is straightforward. Your CPA gets organized financials with clear separation between product and service revenue, proper COGS, and accurate receivables.
Clarity on Both Revenue Streams
Clarity on Both Revenue Streams
Equipment margins calculated correctly. Consulting profitability visible. You stop wondering which part of the business is working and start making decisions based on what the numbers actually say. Growth comes from knowing where to invest, not guessing.
Year-End Without the Scramble
Year-End Without the Scramble
Commission records tied to the books. 1099s ready without chasing down paperwork. Inventory properly valued on the balance sheet. Financial statements that your CPA can work with immediately instead of spending hours cleaning up before preparing your return.
New Jersey's Fractional CFO Firm
The Next Step:
Let's Talk About Your Business
Tell us about your business and what's on your plate. We'll listen, ask a few questions, and give you a clear picture of how we can help.