Introduction
Financial resources are generally considered as the most important reserves for an organization that assists in leading each and every activity for accomplishing the targets. Therefore managing the financial resources are very much necessary to in order to mitigate discrepancies occurs due to the financial shortfall. This report has significantly described the aspects of managing financial resources by understanding the role concerning the planning techniques which assists in managing the budgets of health and social care. Proper justification for the systems that are required for managing the financial resources within the health and social care are described. Moreover, understanding the necessity of monitoring the expenses generated by the organization is entailed. On the other hand, the report has also empowered how different systems along with the process for managing the resources regarding the finance within the health care organization Care Tech Holdings Plc are highlighted.
Task 1
1.2 Identification of information for managing the resources of finance
The management of financial resources is inclusive of reporting adhered by management through representing basic two financial declarations like profit and Loss which is recognized as Income statement and balance sheet respectively. The Profit and Loss statement is identified as the declaration about financial presentation of the organization. These statements involve sources of income like revenues earned from selling of goods, interest from various investments, funds acquired, donations etc. Moreover the outgoing expenses of the organization are also taken into account like sales cost, salaries of staffs, costs for loan from bank by organization and other administrative costs like computer infrastructure costs, postage and stationary costs, different forms of taxations like corporate taxes, security taxes paid to government etc(Malik, 2016).
From the annual report of Caretech financial performance in 2016, it can be identified that the company has performed on a good level than previous year's comparison. The company has been able to capture a profit of amount £22, 871000 after tax deposit in 2016.
The revenue of the company has been created four different units of service like Mental health, Adult learning Difficulties, Residential Services for Young people and Foster Care Services. The revenue income of the company according to the 2016 Annual report of Caretech, there has been a revenue income of around £148, 979, 000 which definitely suggests that the company has been able to earn a greater revenue income than the previous years (Annual Report, Care Tech Holdings Plc, 2016).
The statement of balance sheet for an organization provides information about the financial position of the company within a particular date. It briefly entails the total assets of the company inclusive of both tangible things owned by company as well as liabilities of the company and equity of the shareholders within a given time of a year. The balance sheet of the company Caretech according to the year 2016 determines to be the company's total assets count to be £378, 301000.
1.3 Explanation of different regulatory requirements
It is essential for an organization to effectively control the financial resources as they need to meet up with the statutory needs of the industry for efficiently operating. There are number of regulators involved in the care industry like Care Quality Commission or CQC, Monitor, Companies House and HM Revenue and Customs, Accounting Standards Boards like IFRS and GAAPS which the companies comply with.
The financial resources at Caretech have to meet up the probable standards through adhering to rules and regulations. One of them is International Financial Reporting Standards which offer the international organizations a framework to prepare and disclose their financial notes. The companies are also meant to document their financial notes in regard to Generally Accepted Accounting Principles (GAAPS) which applies for these principles to be applied constantly in every year. The companies are able to publish transparent financial accounts if they comply their financial statements with the IFRS and GAAPS(Field, 2016).
The governmental body which is assigned for collecting tax from the organizations and public is HM Revenue and Customs. The companies are liable to pay the corporation tax which is denoted to be the tax calculated over the net income earned by the company. Caretech as a company is necessitated to report to HMRC every financial year regarding their financial statements through acquiesce of Company Accounts as well as Tax returns. The company are also allocated for gathering income tax or "pay as you Earn" along with National Insurance Contribution from earnings of employees for making it pay to HMRC. The companies are identified to keep accurate and unbiased data in their financial statements so that they can pay the right tax to HMRC. The annual report of Caretech in 2016 suggests that the company has made corporation tax deposit of £9250, 000 in 2016.
1.4 Evaluation of the systems for managing the financial resources
The managing of financial resources in a health and social care sector is significant as it needs for care and support to be properly handled. The Directors and Regulators should put on a system for controlling financial resources. The system, in spite of gathering incoming and outgoing resources should be capable of identifying activities of procurement, payment, cost, financial accounting, accounts of management and government and management for risks identification. Identification of budget sources, income sources should be collected and administrated properly along with cost centres for analysing allotting of cost for every cost centre. The system should preserve the company assets by placing them in risk management process. There should be separation of duties for collecting of checks and balances so that no individual is inclined in purchasing and recording of purchases of business. There should be also a system for controlling the staff in financial department of company of thorough knowledge of managing finances, incurring on supervisions and also independent assessment through internal and external auditor should be done(Petersen, 2015).
There should be also good IT infrastructure and software applied by company for transactions in business. Microsoft Excel (2013) is one such along with Oracle for procuring the budget of the company. many small business compani9es use accounting software packages like Quickbooks for managing their accounting. The manager of Caretech can use Quickbooks because of its user-friendly phenomenon and also the audit trail through this software is inclusive of tracking all sorts of modification, losses and alterations made in transactions. The inbuilt budget system of Quickbooks also helps in preparation of budget by basing on transaction of previous year.
Task 2
2.1 Discuss the diverse sources of income available to CareTech PLC in the financial year in 2016
Income is a source of money which eventually assists the organization in expanding their business, paying wages, upgrading the technology while creating remarkable changes in the company profile. The sources of income for CareTech Holdings PLC, a leading UK provider of specialist social care services are generally their customers who seek services from these service providers.
Organization running successfully requires funds to cope up with changing marketing as well as to invest in various undergoing as well as new projects. So the sources of income available to CareTechPlc are as stated below;
Reserve bank: The sources of income of CareTechPlc are the funds that have been kept aside to be utilized under unwanted situations. This fund is generally in the form of bank credits, CareTechPlc is a very reputed organization and their reserve reflect similar numbers and thus this can help the organization to utilize money required for investment and expansion
Bank loans: short term and long term bank loans are another resource of income for CareTechPlc which is chosen based on the needs of the organization at the lowest available rate and acceptable tenure. Bank loans are liabilities on the organization which is a source of income as the repayment is radically made in the next months(Kushwaha, 2015).
Revenue: revenue is the money that amounts from selling services or products, CareTechPlc receives this revenue by providing social care services to the service users in the form of assisting people with mental disability, learning problems and foster care homes. Theses service care home meets the need of the patient that seeks their assistance and enhances their lives in this process.
2.2 Analyse the factors that may influence the availability of financial resources in CareTechPlc
Financial resources that are available to a company to make money as well profits depend on certain aspects related to the organization which varies from one organization to anther including the size of the organization, the type of organization, the service provided by the organizational as well as the location of the organization. Financial resources are the amount of cash in the form of liquid d cash available to the organization so that the organization can function efficiently and produce effective results.
The factors that could influence the availability of financial resources in CareTechPlc are explained as follows;
Type of organization: CareTechPlc being a PLC is allowed to sell its shares which would not have been possible if it had been some other type of organization restricting the financial resource which could be gathered by selling their shares. The shareholders invest their money in these companies by buying the shares which includes inflow of money for the organization which can be further invested in business. The private hospitals or healthcare organizations receive fewer amounts of funds than that of the government aided or government healthcare institutions.
Location of the organization: The location of the organization plays a major role in the availability of financial resources as this designates the amount of turnover of the organization. A social are organization in a remote location doesn't generate equal amount of as compared to a township where people are more frequent with their slightest problems(Koropp, 2014).
Service provided by the organization- the range of services the organization provides being a social care organization that took a reputed one in UK allows the organization to make profits. The service provided at CareTechPlc is varying with varied benefits to meet the needs of their service users. NHS funded the nursing services offered by caretech plc. fully but services like care services at home, foster care, etc. were not funded by NHS.
Size of the organization- An organization big or small generates income or are this sources of financial resource of the organizations, well the income surely increase or decreases with portion. The size of the organization many a times calls for activities which would include government fund will as ability to utilize such funds. Higher the number of employees working in healthcare institutions higher was the funds offered by NHS and healthcare organizations.
Hence, these factors influenced the availability of the financial resources.
As a home manager of the organization I need to find out the effects which certain condition have on the availability of financial resources for the organization geographical conditions as well as local authorities have various policies which can affect the business.
2.3 Review different types of budget expenditure in CareTech Plc.
Budget is that fund which virtual demarks the boundaries of the amount of fund the organization is allowed to spend in given amount of time under given circumstance sin certain ways . A budget allows an organization to lead on the lines which will generate profit for the organization as well as allow the organization to utilize the finds in a conventional pattern to save generously, to invest and distribute when required.
Budget expenditure allows an organization to meet the needs of the growing competition where as a firm leads on the lines which have been set previously, eradicating impulsive decisions. Budget is set based on the changed external environment the changing market and the needs of the customers, allowing the budget to be utilized not under present condition but under the changing conditions(Kellermanns, 2014).
CareTech Plc. Also have various types of budget expenditure which allows the organization to invest and carry on transaction in a planned manner. As a home manager at CareTechPlc I need to seek ways in which budget expenditure can be framed, evaluated and then utilized accordingly.
- Sales budget
- Master budget
- Budget for overheads
The sales budget is the amount of money demarcated to be utilised for encouraging sales for the organization, their budget is actually the amount of money which instigates other budget. The sales budget of Care tech plc. helped in understanding the amount of money that can be spent on activities that would help in increasing the sales of the company.
The master budget is the amount of money which is utilised by the managers to meet the needs of the organization on the whole and thus function for the organization. This budget helps the managers to understand the limit of expenses that can be done for different activities within the organization to ensure profitability.
The Budget for overheads is the expense of the business actually which includes taxes and duties and similar financial elements. This helps the managers to understand the ways in which taxes can be paid on time to avoid penalization.
As a financial manner of the organization I need to ensure that the entire department participate in formulating the budget plan department wise as well as on the whole, so that the budget is a decision made inu8nsiosn for all round development of the organization.
2.4 Evaluate how decisions about expenditure could be made in CareTech Plc.
CareTech Plc. Is a health and social care organization , and being the manager of the organization the decision for expenditure need to be decided carefully as well as with proper analysis of various internal an external factors. The factors which influence the decision are the external environmental analysis, priorities of the organization, strategies which need to be formulated and eliminating unnecessary details and aspects.
The external environmental analysis process allows the company mangers to project the behaviours of the finances, position as well as competitive advantages achieved by the company, this can be done through various techniques such as SWOT analyses (seeking the strength, weaknesses, opportunities and the threat to the organization) and the PEST, SLEPT analysis (discussing the political, social, economic and technological aspects which may affect the functioning of the companies). Understanding the business environment would help in analysing the level of competition as well as the expenses associated with offering care services within the country thereby helping in taking appropriate decisions about expenditure.
As the home manager of the organization the strategies which affect the expenditure of the organization should be of prime priority, the needs of the employees their shortcomings should be met with proper training programs', the technological aspects such as need for computer as well as other machineries should be meet with strategic thought process and not just impulsively(Massingham, 2014). The emotional aspects should be kept at a distance as they influence the decisions which should be taken while keeping in mind the welfare and the needs of the organization.
Task 3
3.1 Assuming there was financial shortfall in CareTech PLC; explain how this situation could be managed.
Financial shortfall is a state where the company has imbalance in the amount of cash available and the funds actually need to fulfil the expenses. Shortfalls create insecurity in the minds of the employee as they fear of being sacked or their contract being terminated, shortfalls also lead to loss of trust and the suppliers turn hostile as they disagree to supply materials on credit.
CareTechPlc should seek for ways in which they can get rid of these shortfalls so that the organization can get rid of this crisis and regain their previous position among their customers and in the market. This can be done while the company seeks for short term loans as well as equity funds.
The sources of funds which could allow CareTechPlc to regain their situation are funds in the form of;
o Loans: banks proved loans to the organization whenever these organizations face a crisis or are under debt. The organizations can immediately take loans from the banks to cope up with the financial shortfall however; the organization should make sure that they are able to repay the loan with interest within the stipulated time frame.
o Borrowings: money can be borrowed from the potential partners or other business organization.
o Government funds: Government policies in the region allow the organization to retrieve money from funds as provided by the government for the needs of theseorganization.The funds can be used to manage any financial shortfall within the organization. The organization can apply for government funds when in need of money specifying the underlining issue of financial shortfall.
o Extracting money from receivables: receivable are those partners who have debt towards the CareTechPlc and the organization needs to be cautious about these debtors and ensure that the payment is made as soon as possible. Debtor's money when received will allow the organization to invest even more into business as the cash shortage will have receded(Grichnikand Stanley, 2014).
o Reassessment of the budget: this will allow the organization to assess the areas in the expenses made by the officials, department which can be re-established or altered. Virement can also be applied under such shortfalls which allow the manager to investment the amounts of unutilized money of one department to be utilised in other departments. This would help in managing the financial shortfall experienced within one department without hampering the activities of other department and also reduces the liability of paying extra interests to the banks in case of bank loans.
3.2 Explain what action you would take if you suspect occurrence of financial fraud in your organisation.
Financial fraud is a condition when an individual gives higher preferences to their personal needs over the needs and interest of the organization. Financial fraudulent practices can be eliminated by safeguarding the interest of the company, taking into account the financial transactions, every detail of every irregular transaction should be checked so that any irrelevant or confusing transaction can be reported to the authorities of CareTech Plc.
Financial fraud consequences should be set while framing the organizational structure, the policies, principle and strategies to carry on the activities of the organization, the consequences should be grave and every employee should be well aware about certain work ethics which will prohibit them from being indulged in such activities(Stanley, 2014).
As a home manager of CareTechPlc I formulated well-structured plans for the organization so that every financial activity can be monitored, if any of the employees are involved in such activities and the matter is grave the condition should be reported and the employee should be suspended. A red flag is raised whenever fraudulent financial practices noticed in CareTech Plc. After every possible evaluation regarding the practices has been made. The fraudulent activities create a negative impact in the mind of the customers, other potential customers and the partners of the organization effecting business on the whole.
3.3 Evaluate budget monitoring arrangements in CareTech Plc.
CareTech Plc. As various types of budget monitoring arrangements which include the commitment accounting system, Virement as well as the expenditure profiling system these are some of the most effective budget monitoring arrangements. Budget monitoring is very important as it seeks the gap between the budgets allotted for various activities, expense with the actual expenditure. Budget monitoring delivers the variance between the projected and actual expenditure figures. These techniques have been discussed below -
Expenditure profiling-
This process is used by the managers of CareTech Plc. where the actual expenditure is compared with the projected expenditure for the period with respect to the assignment or task taken up by the organization. Variance when noted is corrected over time and hence mitigated or limited so as to restrict the possibilities of this variance in the next financial period. The variance noted in this budget monitoring system is a result of overpriced or under priced projects.
Commitment accounting:
Some costs in the organization are not reflected in the financial statements, and hence wrong overview is eliminated, and commitment accounting is the solution to these hidden expenses and immediately includes financial information.
As a home manager of CareTechPlc it is important for me to monitor the budget allotted for the activities in the health care organization. The various department of the organization such as the finance department the audit committee as well as the departments of the organization should be made aware of the budget so that there doesn't happen to be any over spending or irrational expenses.
Task 4
4.1 Information required for making financial decision
In accordance with the business dealings, it is important to secure effective financial information with proper advice for making efficient planning for the health care. Different managers that are engaged in the health care entities are ought to entail their diligence with other important stakeholders for the entity. They are justified with proper roles for assisting in gathering the information relating to the financial activities and utilizing them into proper field.
Payback period calculation also provides adequate information to make appropriate decisions for investments in future. This information will offer the managers an idea about the time that would be required to get profit as a return from the investments made by the health care institution. This helps the managers to decide on which projects to invest and where they should not to prevent occurrence of loss (Merianos&Gotsis, 2018).
Risk determination also provides appropriate information that helps in making proper financial decisions. Identifying the risks can be done by referring to prior investments and risk analysis over a period of time. This helps the managers to choose projects of offering health care services to the service users which are less risky.
Moreover, the analysis of the cash flow will also assists the managers to understand the movement of the operations, investments and financing values of the business. The administration will be assisted by the analysis about the operations will incur loss or can achieve profit by entailing health and social care operations.
4.2 Analysis of the relationship between the services delivered for a health and social care
There exists a significant relationship between the health care services delivered, costs and expenditure. The research studies depict that the quality of service delivered by the healthcare institutions depend on amount of investments made by the organization. The cost to the company increases in case of delivering high quality of health care services to the individuals. Superior quality of services requires the delivery of effective services by the care givers or staffs of the health care institution as well as implementation of latest health care technologies and systems. In order to keep the staffs happy and satisfied and ensuring that they offer superior quality of health care services required paying thme higher wages thereby increasing expenses and cost of the company. On the other hand, implementation of new technologies also requires huge investment by the institution. In case of paying low wages to the care providers they would not be satisfied and hence deliver inferior quality of services. Therefore, it is obvious that superior the quality of healthcare services delivered, higher will be the costs associated with delivery of healthcare services.
4.3 Evaluation of impact upon the financial considerations within an individual
There are different factors which have through impact upon the people that are accessing proper health care services and have recommended on behalf of the Health Department that the council and the government are needed to make proper assessment of the requirements. The assessment has assisted in identifying the requirement of individuals for evaluating the risks for independence(Smith, 2014). The government has to decide about the priority and the needs needed for understanding the category and also the eligibility in supporting the social care perspectives within the country. Different councils that are engaged within the for measuring the eligibility like FCAS or Fair Access to Care Services has inculcated the critical, substantial and also moderate and lower aspects where the decision are based on the respective information provided. Different individuals belonging to different categories like critical, substantial and moderate have different financial consideration impacts. The people who belong to the critical level have very low income level and hence they are entitled to get health care services for free from the government as well as private institutions. Those whose income level are a bit higher and belong to the moderate category are also likely to get financial support. They get a support of only 33% which means that the government or government aided healthcare institutions help the individuals to get medical benefits and treatments by paying only 67% of the entire bill. Those people who have adequate income and are able to bear the expenses are not entitled to get any benefits from the government or healthcare institutions.
4.4 Suggestion for the ways in improving the health and social care services
Health care services are crucial for any ailing people that have faced severe illness. In order to provide efficient care services, it is important for the organization for working out different functions regarding the financial control along with the accountability. These perspectives have measured the organizational performance by determining proper records of the transaction related to the expenses and revenues that are occurring within the health care firm like Care Tech Holding Plc.
Training system: The health care entity has required implementing efficient process along with inevitable guidelines for ensuring quality standards to the ailing individuals. Therefore, proper recruitment of the staffs those are engaged in health care operations and also training among the employees that are old within the health care are immensely important(Brooks, 2015). Budgetary system: the needs for reducing the cost acquired and utilization of well equipped machineries will help in underpinning the basic cause of the illness and proper treatment can be done easily will a cent percent chance to cure the ailing individual. Therefore, proper budget are needed to be prepared in order to identify the potential utilization that are made for the health care services. Thorough scrutiny regarding the financial systems applied for managing the cost are needed to be done regularly in order to improve the service of the organization Care Tech Holdings Plc.
Result oriented payment: the government of UK offered payment to the health careinstitutions on the basis of quality of services offered by them to the care users. This would ensure that the healthcare institutions offer superior quality of services in order to get higher payment from the regulatory bodies.
Conclusion
Thus it can be concluded that the health care service providers should accompany efficient process of managing the financial resources in order to inherit better service to the patients that are severely ill. The commission regulated by the government has to ensure proper norms so that proper qualities are ensured to the patients.