Managing financial resources in health and social care

Managing financial resources
in health and social care

TABLE OF CONTENTS
INTRODUCTION......................................................................................................................1
TASK 1......................................................................................................................................1
AC 1.1 Costing and business control systems..................................................................1
AC 1.2 Information need to manage financial resources..................................................3
AC 1.3 Regulatory requirement for managing financial resources..................................3
TASK 2......................................................................................................................................4
AC 2.1 Diverse source of income in health and social care.............................................4
AC 2.2 Analysis of the factors that may influence the availability of financial resources5
AC 2.3 Review different types of budgets........................................................................5
TASK 4......................................................................................................................................6
AC 1.4 System..................................................................................................................6
AC 2.4 Decisions about expenditure................................................................................6
AC 3.3 Information for monitoring expenditure...............................................................7
AC 4.1 Financial decisions...............................................................................................7
AC 4.2 Relationship between service delivery, costs and expenditure............................7
AC 4.3 Impact on individuals...........................................................................................8
AC 4.4 Recommendations................................................................................................8
CONCLUSION..........................................................................................................................9
REFERENCES.........................................................................................................................10

INTRODUCTION
In the present age, large number of uncertainties exists in the market which may bring
either opportunities or risks for the businesses. Every organisation whether profit or non-
profit needs to have sufficient availability of funds in the business in order to run
successfully. Present project report is based on financial management in service sector.
Health and Social Care (HSC) is a type of service organisation whose main objective is to
provide services to people. Social work, nursing team, residential home provisions and
hospital wards are the types of health and social care services. Present report will explain the
process of costing and budgeting control in managing financial resources of the entity.
Moreover, the report will discuss about the various types of sources through which firm can
generate income. Along with this, present report will explain about the ways that shows how
financial shortfalls can be managed and assist managers to remove any difficulties. This is to
assist HSC organisation to operate effectively and assure long-run survival.
TASK 1
AC 1.1 Costing and business control systems
Cost is the total of all incurred business expenditures that will be required to offer
services to people. HSC incurred cost so-as-to generate incomes through providing services.
Abnormal cost is the total incurred expenditure that arises due to loss, fire, theft and any
abnormal cause. However, normal cost is the cost that is directly related with the production
and services provided at the cost centres.
Income refers to the cash inflows that are generated from the operating functions
(Folland, Goodman and Stano, 2007).While, expenditures is the amount spent by HSC in
order to provide services to the people. In HSC, absorption costing, marginal costing and
activity based costing principles can be implemented that are given here as under:
Under the Absorption costing, firm accumulates both direct as-well-as indirect
business expenditures that are associated with the rendered services. However, marginal
costing is the cost of producing one additional unit by the firm. In this, HSC considers all the
variable expenditures so-as-to determine the total contribution (Hillestad and et.al., 2005). On
contrary to it, in Activity based costing method, HSC allocates overheads on the basis of its
associated activities by using pre-determined cost drivers.
Cost benefit analysis is a systematic approach in which costs and benefits associated
with different alternatives are analyzed so-as-to take advantages of maximized profits and
saved cost.
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HSC prepares budget for every period. It is a financial planning tool that is helpful to
manage the firm’s operations. It is an advanced planning of operational functions in order to
get maximum profits without any financial difficulties. Capital is the amount that is invested
by owner of HSC to offer services to the people which are known as the capital contribution.
It is the source of cash inflow.
However, under the cash outflow, cost control is very necessary as it drives high
profits to the firm. Controlling cost is the way to get maximum profits and to improve the
operational performance to a high extent. Cost centre are the responsibility centres that are
accountable to manage the cost rather than revenues. For instance, research and development
department is dependable to research about the diseases that are increasing at a fast rate. It
makes the firm able to provide services to diagnose the customer disease through extra care.
Marketing department is responsible to give information to the customers about the offered
services by HSC. The duty of service department is to offer a wide range of services at cost
effective prices.
Competitive tendering is a tender in which numbers of organizations are bidding and
contract will go to the highest bidders. In HSC, forecasting is often used to prepare the
budget. It is a way to estimate the amount of expenditures that can be incurred in the future
period (Drummond and et.al., 2015). High forecasted expenses will make HSC able to
control their spending and to reduce the total cost. Surplus of generated income over the
incurred expenditures is known as profit while excess expenditure will result in loss. On the
other hand, Break-even point is the point at which total revenues become equal to the total
cost. Here, HSC does not have any profit or loss at this point. It seems to be necessary for the
firm to make sales at least at the BEP point because; after that, it will gain profit.
Safeguarding the business assets, custodial operations, securing software through
password and proper documentation of all the activities are some of the preventive measures
that can be applied in the business control system by HSC.
AC 1.2 Information need to manage financial resources
In order to manage financial resources in HSC, managers will require information
regarding business cost. They will be needed to acquire information about people, equipment,
finance, building, and consumable items. HSC have to pay salary to the hired human
resources. Moreover, firm has to purchase equipments like computer and furniture. Finance
will be needed to make payment for the expenditures and other capital requirements such as
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