Financial Management for Organizations

The assignment delves into the crucial role of financial management in organizational success. It highlights the importance of robust financial planning and management, particularly for organizations operating in volatile markets. The text discusses best practices, challenges faced by diverse organizations, and the need for strategic financial decision-making to ensure resilience and efficiency.

Managing Financial
Resources

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1...........................................................................................................................................1
1.1 The principles of costing and business control systems:......................................................1
1.2 Information needed to manage financial resources: .............................................................2
1.3 Regulatory requirements for managing financial resources:................................................2
1.4 Managing financial resources in health care organisation:...................................................2
TASK 2............................................................................................................................................3
2.1 Diverse sources of income in health and social care:...........................................................3
2.2 Factors influencing the availability of financial resources to the health and social care
organisations:..............................................................................................................................3
2.3 Types of budget expenditure in health and care organisations:............................................4
2.4 Expenditure made within the Health and Social care organisations....................................4
TASK 3............................................................................................................................................4
3.1 Managing the financial shortfall...........................................................................................4
3.2 Action taking during Suspected fraud...................................................................................5
3.3 Evaluating the Budget monitoring.......................................................................................5
TASK 4............................................................................................................................................6
4.1 Information need for taking the effective financial decisions...............................................6
4.2 Relation between delivery cost and expenditure in health and social care services.............6
4.3 Financial consideration give impact on health and social care.............................................7
4.4 Suggesting the way to improving the financial system and process.....................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
The management and usage of the financial resources in the health and social care is a
high priority matter. As better management of funds will help in developing better and high
standard health and social care for the society (Epstein and Buhovac, 2014). In this report there
will be an overall evaluation of the systems and process which are used in managing the financial
resources in health and social care. This will help in understanding how the financial decision are
taken and how we can monitor budgets. Evaluation of the impact which occurs due to the
financial decision taken to provide health and social services to the society and individuals.
Furthermore, this report will allow people to understand what core systems are available and
how these systems provide assistance in financial management of health and social care. It will
encourage understanding of monitoring budgets.
TASK 1
1.1 The principles of costing and business control systems:
Costing is described as the official terminology to assess and ascertain the cost. Costing
include a lot of valuation system which helps in determining the value of goods and services
(Ahlstrom, Chen and Yeh, 2010). Cost is basically the amount which a person pays to buy
something.
Six Principles of costing:
 Materiality: It deals with Significance of Transaction, Balance and errors.
 Stakeholder engagement: Involving the stakeholders to implement the decision.
 Consistency: Same financial approach in all organisation.
 Data accuracy: Accurate data for control.
 Transparency: For auditing and monitoring
 Cost efficiency: Better control systems.
Business Control system are put in place to control and monitor the business activities.
These system allow the auditor in evaluation. There are certain principles of business
control system:
 Prevention control: Prevent any devastating situation.
 Security: Providing safe environment to staff.
 Defective control: Process of determination of inaccuracies.
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 Managing control issues: Helps in dealing with compliance issues.
1.2 Information needed to manage financial resources:
Information is necessary for the management of financial resources in health and social
care (Lusardi, 2011). The data is collected for the past performance to understand where do the
inaccuracies occurred and what the issues were in existence in the financial system. The
information which will be gathered regarding the difficulties, variances and crises will help in
getting better cash flow and insolvency advices. A proper information management will help in
creating a better, transparent, accurate accounting information, short and long term forecast,
auditing reports, risk management. Information required here will be about people, equipment,
building, consumable item, administration, trends, external influences, costs, legal requirements.
The information will make the business system more effective and efficient as the
evaluation and monitoring of the system will be done in much easier manner. This will enable
the health and social care in enhancing its services to a high standard which will ultimately help
the society and people.
1.3 Regulatory requirements for managing financial resources:
There are many companies which are offering their health and social care services to the
society. To make sure that all the companies provides a better and effective health and social
care the legislation and laws are put into the system. The prime task of the legislation and laws
are to make sure that the companies providing health care services do not face bad credit
management and the variances/ shortfalls do not hamper their activities (Altenburg and Pegels,
2012). Therefore the UK and NHS have formulated a guideline which has to be followed by the
companies if they want to serve in the health and social care market. They must have to get the
credit licence and have to follow the terms and conditions stated in the health care legislation by
the government and the national health services. The company have to maintain a proper process
to keep a updated documentation report of income and expenditure as well as the services.
1.4 Managing financial resources in health care organisation:
There is high need to manage the financial system of the company, no matter it belongs
to which sector. Any health and social care organisation have to maintain a proper financial
management system(FMS). The financial management system is made up of tools and process
which provide effective control, use and allocation of financial resources. It also helps in
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conservation of the various financial resources which might have been wasted otherwise (Renz,
2016). The process of management of financial system can be done by tracking the process
which are occurring in the system, such as- salaries, utilities, material, people, etc. these are also
called budge line items in FMS. These items have to be recorded in timely manner. The income
and expenditure should be tracked in proper way by recording all the transactions taking place in
the organisation. Proper generation of financial records is necessary as to get the exact numbers
for the evaluation of the whole financial system.
TASK 2
2.1 Diverse sources of income in health and social care:
The income which the health and social care organisations generate is usually comes
from the customers and the corporate entities. The income registered in various health care
organisation is the outcome of the funding mechanism developed by the corporates and the
government, such as- taxation, social insurance, grants, loans. There funds which flow into the
organisation from the charitable trust and the welfare programs. The people who have interest in
promoting health care for many reason also provide the charity to the organisation. Organisations
also source funds from the pooling of their funds as certain type of revenue collection. This
reduces the financial risk as they get mitigated as the result of sharing of different funds. So the
main sources of funds encountered by the health and social care are the payments by the patients,
taxation for health and private insurance. Organisations have to be careful while dealing with all
three sources.
2.2 Factors influencing the availability of financial resources to the health and social care
organisations:
The availability of financial resources for the organisations which are dealing in health
and social care are influenced by various financial risk which exist in the market (Aras, Aybars
and Kutlu, 2010). The revenues are available from various sources such as social insurance(tax
from different entities), Government agencies, welfare organisation, etc. The organisation in
developing countries face the most challenging task in the revenue generation and collection as
the income levels are low and there companies have constricted administration and institutional
capacity. Therefore these companies are dependent on out of pocket payments. Organisation use
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risk pooling where they pool their funds to avert any risk in any department so keep the process
going.
2.3 Types of budget expenditure in health and care organisations:
The health and care organisation uses different types of budgets according to their
requirements (Remund, 2010). Their main concern is social and healthcare sector for which they
prepare different budgets. Such as- personal budgets, operating budgets, sales budget.
Operating budgets: These budgets shows the product and services which the
organisation will add in their service structure during the financial period.
Personal budgets: These are prepared for the determination of the expenses which the
organisation will incur in the budgeted year. All the cost which are incurred by the company are
known as expenses.
Sales budgets: This budget show the actual estimation regarding the sale of services of
the health care in the current budgeted year (Broadbent and Cullen, 2012). It helps in keeping
track of all the sales.
The health and social care organisation have to prepare the budgets to control and
monitor the financial resources movement.
2.4 Expenditure made within the Health and Social care organisations
In every business there should be a expenditure to perform there task. With out the
expenditure no body can start there business. In the business there are need of capital in start of
the business but if the business has been started then there well be another thing that have to bee
needed that is expanses. For performing the work in the organisation there are several things
need. These things are known as the expanses of the company. In performing the task every one
should need the expanses. In making the decisions for the Health and social care decisions there
should bee needed of some financial help that financial help is for the expanses of performing
that decisions in the environment. While making a effective decisions, there should bee analysis
of expanses need in that strategy implantation. These well affect the organisation performance.
TASK 3
3.1 Managing the financial shortfall
There are many methods which can be used by managers for managing any financial
short-comings. According to Becker, Financial shortfalls arises due to the failure of business
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activities. When ever a firm fails to achieve its goals and objectives in a proper time frame, there
are financial shortfalls. They are of two types, temporary and persistent, this needs to be
identified by the manager.
For managing these shortfalls in a effective manner, a manager has to ensure that the
strategies which are being used for achieving goals are feasible and viable. There are different
measures which can be taken by the management as to manage, reduce and eradicate the
financial shortfalls. They are as follows:
Priorities: Silloth nursing management has to manage the shortfalls in a proper manner and for
that they need to prioritise the tasks which needs to be completed before any other.
Virement: The organisation also need to transfer funds in a way that caters to the needs of all
departments.
3.2 Action taking during Suspected fraud
In an organisation there are lots of operations which takes place but situation arises when
board of directors are unable to manage these important tasks. For making sure that any frauds in
the company can be caught, a suggestion of new department is given. The function of this
department is to research and analyse the working of the organisation and will look for any
unethical practices taking place at the workplace. In the process of this, it has been observed that
severe cases of frauds has been identified and these cases has badly hit the working of the
company. With the help of investigation department the performance of the firm will rise as they
will assist them in finding all the individuals who were involved in any kind of scams. At the
same time they will try to make strategy, so that in future these loopholes can be covered.
3.3 Evaluating the Budget monitoring
Budget monitoring procedures are used in the health and social organisations like Silloth
Nursing and Residential Care Home as to monitor and document all the activities taking place
within organisation. It is a method which assist firm in analysing the financial records and
identify irregularities in the balance sheet (Renz, 2016). Managers are able to cross check all
inventories, expenses, stock for any issue or discrepancies. This in turn aids management in
resolving different types of issues that needs to be addressed for enhancing organisation
productivity.
Monitoring budget is an effective method for managing various financial resources that
exist within organisation. Managers have multiple tools to manage budgets, such as,
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spreadsheets, cash flow data, evaluation of progress, identification of loopholes and planning. It
assist organisation in overcoming different issue that are there in the system and overall
productivity.
TASK 4
4.1 Information need for taking the effective financial decisions
In many organisations, the board, senior management, and managers use strategic and
critical thinking to take decisions regarding investment, direction and future growth to the
organisation. They take advice from the departmental heads of company as to ensure that all
aspects are covered within the plans (Simonovic, 2012). The strategic decisions are based on the
analysis and interpretation of data that was taken out from financial statements, cash flow,
budgets and inventory. Also there are multiple factors like pay back of debts taken by
organisation which needs to be considered.
Decision making process is not something that is exclusive to strategic level but it is used
on daily basis by managers and supervisors to complete task in a efficient way. For Silloth
Nursing, decision taken by management are based on the information that is compiled by the
departmental heads from the financial accounts.
4.2 Relation between delivery cost and expenditure in health and social care services
In order to make sure that quality of services offered by organisation is at par, few factors
needs to be analysed, such as; safe and conducive environment, qualitative services which will
lead to better customer satisfaction and happiness, consumer centred approach for patients that
live far away.
Quality is must in health and social care as to maintain and enhance customer
satisfaction. It only happens when the consumer is given all products and services as per their
needs and wants (Stevens, 2010). According to apple by- Kings fund, spending bigger amount on
new equipments and staff do not make sure that the quality of products and services will be the
same.
For managers in Silloth nursing, they need to identify various issues that exist within
organisation as to make sure that they can be resolved with increasing the quality of services.
However, they need to make sure that the total cost of whole activity remains positive for
organisation and do not impact its productivity.
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4.3 Financial consideration give impact on health and social care
The impact of financial consideration on health and social care is significant. There is a
decision which is made within organisation as to boost employee effectiveness and efficiency.
The management wants to focus on employee professional development as to ensure that they
serve customers in a better way (Swayne, Duncan and Ginter, 2012). That is why they have
made an investment for continuous professional development, appraisals, supervision, and more
emphasis on recruiting and selecting better individual for the job.
With the above mentioned decision Silloth Nursing will be able to reduce the staff
turnover that is going on since last year. It will be able to retain and motivate the existing staff
while improving their skills and competencies to whole new level. But this will add new cost and
expenditure to the organisation and make recruitment and selection process lengthy. It needs to
be conducted in a comprehensive way to improve the level of quality of services.
4.4 Suggesting the way to improving the financial system and process
Silloth Nursing managers needs to understand the financial system and the process that
will assist them and the organisation in making changes as well as transformations in the
business process and services offered. According to Guruswamy, A financial system is made up
of inter-relationship between various financial institution and their own separate business
process.
The following way is the proposed methods which can be adopted by Silloth nursing
organisation for improving the quality of services:
Payment by Results: This is a model which states that government will not be liable for
the risk and responsibility and it will be transferred to health care providers. They need to
improve the services on their own and get the best value for their investment in return.
Li berating NHS: Equity and Excellence, The NHS needs to keep on updating its polices
as to ensure that the quality of services offered by healthcare providers constantly increases
(Remund, 2010). It is very important for the country and patients. The regular updating and
standard implementation will assist organisations in integrating change in smooth manner.
CONCLUSION
Today the world is changing and with it the environment is getting more dynamic in
nature. The health and social care sector are going through high changes which is coming due to
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the technology change, new methods and terminologies introduction, etc. the health and social
care organisations have to keep their finances strong as they have to keep their services running.
These organisation cannot afford to get hampered by the market shocks. Better financial
management and planning will help the organisations in turning into better equipped and
efficient organisation.
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REFERENCES
Book and Journals
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Culture, institutions and context.
Altenburg, T. and Pegels, A., 2012. Sustainability-oriented innovation systems–managing the
green transformation. Innovation and Development. 2(1). pp.5-22.
Aras, G., Aybars, A. and Kutlu, O., 2010. Managing corporate performance: Investigating the
relationship between corporate social responsibility and financial performance in
emerging markets. International Journal of productivity and Performance management.
59(3). pp.229-254.
Broadbent, M. and Cullen, J., 2012. Managing financial resources. Routledge.
Conway, J.B., 2013. A course in functional analysis (Vol. 96). Springer Science & Business
Media.
Coombs, W.T., 2014. Ongoing crisis communication: Planning, managing, and responding. Sage
Publications.
Epstein, M.J. and Buhovac, A.R., 2014. Making sustainability work: Best practices in managing
and measuring corporate social, environmental, and economic impacts. Berrett-Koehler
Publishers.
Lusardi, A., 2011. Americans' financial capability (No. w17103). National Bureau of Economic
Research.
Remund, D.L., 2010. Financial literacy explicated: The case for a clearer definition in an
increasingly complex economy. Journal of Consumer Affairs. 44(2). pp.276-295.
Renz, D.O., 2016. The Jossey-Bass handbook of nonprofit leadership and management. John
Wiley & Sons.
Simonovic, S.P., 2012. Managing water resources: methods and tools for a systems approach.
Routledge.
Stevens, R.H., 2010. Managing human capital: How to use knowledge management to transfer
knowledge in today's multi-generational workforce. International Business Research.
3(3). p.77.
Swayne, L.E., Duncan, W.J. and Ginter, P.M., 2012. Strategic management of health care
organizations. John Wiley & Sons.
Online
Financial Management. 2016. [Online]. Available Through:
<https://www.nibusinessinfo.co.uk/financetips>. [Accesses On 4 May 2017].
Managing Financial Resources. 2016. [Online]. Available Through:
<https://www.nao.org.uk/report/managing-financial-resources-to-deliver-better-public-
services/>. [Accesses On 4 May 2017].
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