Frame Inventory and Bookkeeping for Optometry Practices

Optometry Practices Run Two Businesses in One

An optometry practice is part clinical service, part retail business. Eye examinations generate GST-free Medicare-rebated income, while frame, lens and sunglasses sales are a genuine retail operation with cost of goods, margin, and stock that ties up cash if it doesn't move. Treating both the same way in your bookkeeping loses visibility on what's actually profitable.

Why Frame Inventory Tracking Matters

Frames represent real cost of goods that needs accurate tracking to understand true margin. Without it, it's hard to know which ranges are actually profitable versus which are sitting in a cabinet, tying up cash that could be working elsewhere.

GST Treatment Isn't Uniform

Eye examinations attracting a Medicare benefit are generally GST-free. Frames, sunglasses and most retail eyewear are taxable supplies. A single patient visit might include both — a GST-free eye test and a taxable frame purchase — and these need to be itemised and coded separately, not bundled into one transaction.

Does Xero's Built-In Inventory Work for This?

It depends on stock volume and complexity. Practices with significant frame ranges often get more out of a dedicated retail point-of-sale or practice management system integrated with Xero, since Xero's native inventory tracking is fairly basic for genuine retail stock management.

Setting Up the Split Correctly

• Separate income accounts for clinical (GST-free) and retail (taxable) income.
• Cost of goods tracking for frames and lenses, ideally integrated from your practice management or POS system.
• Itemised invoicing so combined transactions are correctly split at the point of sale, not reconstructed later.