Financial Resources Management in Health and Social Care Report

This report delves into the critical aspects of managing financial resources within health and social care organizations. It begins by explaining costing principles and business control systems, emphasizing the importance of cost reduction and effective monitoring. The report identifies essential information for managing finances and explores regulatory requirements, including the Health and Social Care Act 2012. It then evaluates systems for managing financial resources, examining diverse income sources and factors affecting financial availability. Different types of budget expenditure are reviewed, along with decision-making processes. The report addresses financial shortfalls, fraud management, and budget monitoring arrangements. Finally, it identifies information needed for financial decisions, analyzes the relationship between service delivery, costs, and expenditure, and suggests ways to improve services through financial system changes. The report highlights the significance of financial control in maintaining and improving the market position of health and social care organizations.

Managing Financial Resources
in Health and Social Care
1

TABLE OF CONTENTS
Introduction..........................................................................................................................................3
TASK 1.................................................................................................................................................3
1.1explain the principles of costing and business control systems..................................................3
1.2 identify information needed to manage financial resources......................................................4
1.3 explain the regulatory requirements for managing financial resources.....................................5
1.4 evaluate systems for managing financial resources in a health or care organisation.................6
Task 2....................................................................................................................................................7
2.1 Discuss the diverse sources of income that may be encountered in health and social care.......7
2.2 analyse the factors that may influence the availability of financial resources in health and
social care organisations..................................................................................................................8
2.3 review different types of budget expenditure in health and social care organisations..............9
2.4 evaluate how decisions about expenditure are made within a health or social care
organisation....................................................................................................................................11
TASK 3...............................................................................................................................................11
3.1 explain how financial shortfalls can be managed....................................................................11
3.2 explain the actions to be taken in the event of suspected fraud...............................................12
3.3 evaluate budget monitoring arrangements in a health or social care organisation..................12
TASK 4...............................................................................................................................................12
4.1 identify information required to make financial decisions relating to a health and social care
service............................................................................................................................................12
4.2 analyse the relationship between a health and social care service delivered, costs and
expenditure.....................................................................................................................................12
4.3 evaluate how financial considerations impact upon an individual using the health and social
care service....................................................................................................................................13
4.4 suggest ways to improve the health and social care service through changes to financial
systems and processes....................................................................................................................13
Conclusion..........................................................................................................................................13
References..........................................................................................................................................15
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INTRODUCTION
Finance is act like a rescue ship which saves the life of owner from the financial crisis
incurred in the business. This provides unique name to an enterprise which helps in uplifting their
conditions in the external market. This report focuses delivering services in the health and social
care homes along with the usage of financial resources.
TASK 1
1.1explain the principles of costing and business control systems
Cost is regarded as important for every business as the major concern of the management is
to reduce all the expenses incurred in their business (Post and Byron, 2015). The cost will be
eliminated incurred in the business as this will decreases the total sales eared by an entity. There are
different principles of costing need to be taken into consideration in assessing the business costs is
given as below:
Cause- Cost incurred in the business needs to be associated with the cause as without which there
will be no cost incurred in the firm. The cost incurred by the owner to purchase products is one of
the causes of the costs.
Abnormal costs- The uncertainty will be occurred in every business such as fire and theft or any
kind of accidents which regarded as abnormal costs which will not be recovered by an entity. This
kind of cost will be charged to the production of product or service as it is financial expenses.
Controlling in business is important in order to regulate the expenditures incurred in the
business as this would decrease the ability of the business enterprise (Kaplan and Atkinson, 2015).
The monitoring will be done by the owner by delegating their powers among most of the employees
who are loyal towards the business in managing all the actions to be taken in the business. The
decisions taken by the owner should be in the favour of the business as every wrong action will ruin
the existing performance of an entity. Some of our business controls which every business aims for
implementing in their business are given as below:
Visual controls- Dashboards will be placed in the central location of an entity from which owner
will monitor all the working of all employees through CCTV cameras placed in each and every
areas of the firm (Grant, 2016). The defaulters can be tracked through this system as their
designated actions are marked in this system if they do undesignated work the cameras will spot
them easily into the eyes of the owner. This unique idea will prevent all the crimes in the firm which
indirectly decreases the brand image of an entity in relation to its customers and existing business
players.
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Procedural controls- This emphasises of monitoring the whole procedures which is regarded as
audit trail in which whole business transactions are regulate in order to find out any kind of error in
them. Singular items of all the procedures will be checked in order to prevent all the legal
consequences to be incurred in the same business entity in the near future. This would safeguards
the performance of an entity from all the intruders who intends to affect the current performance of
an enterprise. Overall movement of cash will be checked to prevent them before going into wrong
hands as cash is regarded as sensitive component in the firm which needs to be cared with extra
care.
1.2 identify information needed to manage financial resources
The primary objective of auditor is to examine all the financial statements in order to
express their opinion related to true or fair view (Chong, 2014). The reliability of the financial
statements denotes that all facts and figures included in it are accurate and valid as auditors are
assessed it in order to give their opinion while checking all the books of accounts of the business
entity. The financial information gained by an individual from the audited financial statements
prepared by an entity in which all business transactions are recorded over the years. There are
various ways from which an individual can gather financial information which is given as below:
Income statement- Sales earned by an entity after operating their business in a particular year are
recorded in this statement. Expenses such as operating and non-operating are deducted from the
total sales achieved by the firm in a particular year. The amount determined after excluded the
expenses from the sales earned in order to determine the amount of profit which is regarded as the
final outcome earned by an enterprise.
Particulars Amount Particulars Amount
To purchases XXX By sales XXX
To wages XXX By closing stock XXX
To GP XXX
Particulars Amount Particulars Amount
To depreciation XXX By GP brought down XXX
To PBD XXX By commission
received
XXX
To NP XXX
Balance sheet- The amount of capital invested is shown as equity in the balance sheet along with
all other assets and liabilities are shown under this head (Post and Byron, 2015). The financial
position of an individual will be determined with the help of these statements. An entity are required
to maintain their status in overall external market after meeting various standards and targets
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personally set b the owner in improving the existing market conditions. The changes can be
reconcile by observing the valance sheets prepared by an entity that current business entity is
capable in order to handle the pressure of external party. Capital held by an entity should be strong
enough in order to repay all the expenses currently imposed on the business which needs to be
repaid in designated time period.
Horizontal format
Liabilities Amount Assets
Capital XXX Cash XXX
Trade payable XXX Inventory XXX
Debentures XXX Trade receivables XXX
Bank loan XXX Land and building XXX
Secured loan XXX Plant and machinery XXX
Total XXX Total XXX
Vertical Format
Equity and liabilities Amount
Shareholder’s fund
Share capital XX
Reserves and surplus XX
Non-current liabilities
Long term debt XXX
Current liabilities
Trade payable XXX
Total liability XXX
Assets
Non-current assets
Plant and machinery XXX
Current liabilities
Cash XX
Inventory XX
Trade debtors XX
Total assets XXX
1.3 explain the regulatory requirements for managing financial resources
Regulatory requirements and legislation sis that tools used b an entity owner in order to
enhance the skills and capabilities of their firm in order to compete with most of the players in the
same market (Epstein and Buhovac, 2014). An individual currently working in the health and social
care needs to adopt various legislations and patients are on sake as the business offers variety of
products or services to them. The financial transactions of the business need to be regulated by
enclosing all the regulations in the business in improving the efficiency in order to deliver right
amount of services to all the customers. Government as devised various controls for all the
individuals working in health and social care entity who intends to conduct social welfare activities
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in order to grab large number of attention of all the users currently working for the beneficial of the
enterprise.
Health and social care act 2012- The government of United Kingdom came up with this in order
to safeguard the interest of lots of the users in this particular steam. The current acts come into force
in order to rebuild the national organisation service of England in offering social welfare activities
to all of the clients. The current act emphasises on health services offered to all the clients exist i the
current stream (Kaplan and Atkinson, 2015). The cost of several diseases is planned and estimated
in order to aware all individuals so that they can save for paying their hospitals bills in order to treat
their disease and be healthy and fit. The current organisation also medical relief to all the people’s
who are in need of money as they are unable to pay off their bills. Donation scheme will be
launched by this institute which gathers different amounts of money from various users who can
donate money to the fund in order to help all the person is in need.
1.4 evaluate systems for managing financial resources in a health or care organisation
Finance is uttermost resource in an organisation in uplifting the organisation’s market status
in order to gain competitive advantage over its variety of all the customers (Chong, 2014). The
financial resources are used in the business entity in improving their business conditions. The
financial systems will be executed in an entity whose primary motive is to gain higher market share
in gaining higher expectations of all the customers in offering different products or services to its
variety of customers in improving their business entity.
Financial control system is that approach in which existing financial resources are used in
improving their business in gaining higher market share (Post and Byron, 2015). Operating
activities of the business will be improved as primary objective is to gain higher market share.
Objectives set by an individual are categorised into two aspects such as monetary and non-monetary
techniques. Financial perspectives emphasises on financial resources which determines the returns
to be generated by an enterprise over the years. Non monetary aspects focus on qualitative aspects
such as factors to be considered in improving customer satisfaction. Motivation will be provided to
all the employees in the organisation in retaining all the employees in the same business as
employees will represent the business in front of all the customers existing in the external business
environment.
Budgets are prepared by an individual in order to compare the expenditures of the current
year from its previous year (Chong, 2014). The different forms of budgets are prepared in order to
determine its goals and the objectives in a given time span. Sales budgets, cash budgets are prepared
in order to ascertain the overall efficiency of all the resources in improving the business in gaining
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competitive advantage over its variety of customers.
TASK 2
2.1 Discuss the diverse sources of income that may be encountered in health and social care
The source of income to be evaluated by an entity owner by categorising them overall
business transactions and the income into two major aspects which is given as below:
Internal sources- This kind of sources of income emphasises on earning revenue from internal
sources of an entity. The owner of the firm utilised business monies in order to get higher market
benefit to utilise them in improving their business conditions. Personal savings is on of the
important part of this internal source of income in which owner will saves money out the total profit
earned by them. This savings will further utilised by the firm in accomplishing their business
requirements (Hanlon, Hoopes and Shroff, 2014). Personal savings of an individual have full
possession of the owner on their amount which can be used for capital of the business. Working
capital is that source of income which is the final difference arises out of total current asset and
liabilities. The determined difference amount will be calculated in order to use for meeting daily
routine expenditure incurred in the business. Working capital are utilised in paying all the short term
expenses such as stationery expenses, postage and telegrams, telephone bills in an organisation as
all these expenses are also regarded as petty expenses in the business enterprise.
External sources- The amount lend by the owner from the external party in fulfilling their market
and business responsibilities. This kind of amount will be categorised into two categories that is
short term or long term. Mortgages are commonly used approach in which business entity usually
mortgaged their idle house property in order to generate higher revenue in meeting their financial
funds requirements (Joshi, Grebner, Munn and Grala, 2015). The amount generated from the
mortgage will in turn utilises by the owner in accomplishing all kinds of gaols and the objectives as
primary motive of business is to start their business with less number of obligations. Retained
earnings is another source in which own capital of an entity are used by the owner in accomplishing
their desired aims and targets. Investments is also important source of revenue generated by an
enterprise in gaining higher market share in the external market generally in front of all the
competitors who intends to harm the current market status of the firm. The interest generated by an
individual from all the investments will be fruitful for the firm as every month an entity gets fixed
sum of revenue in order to get higher competitive advantage.
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2.2 analyse the factors that may influence the availability of financial resources in health and social
care organisations
There are factors which influences the existing financial resources to be used in the
organisation in improving the current market conditions which is given as below:
Size- The availability of the financial resources is highly affected with the overall business size of
an entity (Popescu, 2014). A large entity requires higher resources as compared to the small
business so the application of financial resources should be optimal in order to provide higher
benefit by utilising less number of resources in the organisation.
Local agreements- the use of various resources in organisation especially financial resources
require licence in legalised the existence of the resources to be used in the business. In the current
health and social care industry there are special agreements which needs to be approved in order to
apply the higher amount of finance n the business entity (Ávila and Amorim, 2016). Opening home
care agencies required approval of higher authorities who inspect the home cares according to the
prescribed standards as low standards of home cares ruin the lives of disabled and ill patients as
they got infected with several viruses and bacteria’s. Standards of service will be tested before
granting permission of operating the home care agencies.
Economic conditions- The economic and market situations of the whole economy needs to be
observed before using the fiancé in the business (Custódio and Metzger, 2014). The cyclical
variations need to be observed by the owner by devising flexible policies in order to provide higher
market benefits. The good and stable condition of the country is essential in which the company is
operating in order to maintain the survival of the business entity for long time. An entity will not
gain profit in the period of recession as this would be suppresses their skills and the capabilities of
the existing owner. The owner tries to minimise the external market pressure by emphasises on
8
Factors
influencing
Financial
resources
BUSINESS SIZE ECONOMIC
CONDITION
LOCAL
AGREEMENTS

proactive strategies in avoiding this kind of situations.
2.3 review different types of budget expenditure in health and social care organisations
Cash flow budget- Primary motive of this kind of budget is on ascertaining the cash flow
movement in the organisation as this stresses on cash inflow and outflow in the business (Sui and
Baum, 2014). Cash expenses are eliminated by increasing cash flow in form of income generated by
the business enterprise. The difference in the budget will be denotes as deficits or surplus in cash by
the organisation.
Particulars Jan Feb
Marc
h April May June July Aug Sept Oct Nov Dec
Initial cash 50000
Bank loan 55000
Income from
online
medical
sales 32000 40000 35000
3800
0
4100
0
4200
0
3600
0
2800
0
2700
0
2750
0
2800
0 33000
Income from
in-store sales 22400 56400 56800
5710
0
5880
0
6200
0
6640
0
6870
0
6540
0
6000
0
6080
0 64400
Sales income
from Non
prescribed
medicines 10000 10000 10000
1000
0
1000
0
1000
0
1000
0
1000
0
1000
0
1000
0
1000
0 10000
Sales income
from hair
and beauty
products 12000 12000 12000
1200
0
1200
0
1200
0
1200
0
1200
0
1200
0
1200
0
1200
0 12000
Receipts
from
disposal of
old store
building
3000
00
Total interest
receivables
3000
0 30000
Total cash
income
18140
0 118400
11380
0
1171
00
1218
00
4560
00
1244
00
1187
00
1144
00
1095
00
1108
00
14940
0
Cash
disbursement
Store and
warehouse
building
lease rental
14400
0
Purchase of
office and
fire
Equipment 80000
Purchase of
delivery van
15000
0
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and cars
Shelves and
store
furniture 50000
Purchase of
fork lift for
warehouse 70000
Store
worker’s
wages 11000 11000 11000
1100
0
1100
0
1100
0
1100
0
1100
0
1400
0
1400
0
1400
0 14000
Heating and
lighting 2000 2000 2000 2000 2000 2000 2000 2000 2700 2700 2700 2700
Council
taxes 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500
Purchase of
cloths 40000 40000
4000
0
4000
0
5500
0
5500
0
Insurance 5000
Fuel and
maintenance 1800 1800 1800 1800 1800 1800 1800 1800 1800 1800 1800 1800
Total cash
outflow
55030
0 21300 56300
1630
0
5630
0
1630
0
5630
0
1630
0
7500
0
2000
0
7500
0 20000
Net cash
balance
-
36890
0 97100 57500
1008
00
6550
0
4397
00
6810
0
1024
00
3940
0
8950
0
3580
0
12940
0
Opening
cash balance 0
-
368900
-
27180
0
-
2143
00
-
1135
00
-
4800
0
3917
00
4598
00
5622
00
6016
00
6911
00
72690
0
Closing
cash
balance
-
36890
0
-
271800
-
21430
0
-
1135
00
-
4800
0
3917
00
4598
00
5622
00
6016
00
6911
00
7269
00
85630
0
Capital budgeting- In this kind of budgets are projects in which an entity will invest in present in
order to produce return on the same in the future. Different technique will be used by the owner in
assessing the variability of the projects on the basis of different technique such as NPV and IRR.
Year Cash flow Pv@14% Present value
Initial investment 8.6
1 1.6 0.877193 1.403509
2 2.8 0.769468 2.154509
3 3.4 0.674972 2.294903
4 3.6 0.59208 2.131489
5 4 0.519369 2.077475
6 4.2 0.455587 1.913464
Total 11.97535
NPV 3.375348
Year Cash flow Pv@14% Present value
Initial investment 4.4
1 0.8 0.877193 0.701754
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2 1.4 0.769468 1.077255
3 2 0.674972 1.349943
4 2.4 0.59208 1.420993
5 2.3 0.519369 1.194548
6 2.6 0.455587 1.184525
Total 6.929018
NPV 2.529018
2.4 evaluate how decisions about expenditure are made within a health or social care organisation
Silloth nursing and residential home care need to emphasise on some of the factors which
helps in making important decisions related to the expenditures in the firm is given as below:
Timeline- Deadline in organisation is most important just like budgets prepared without any time
frame are ship without compass as they don’t have any kind of direction to move in the future. An
individual need to focus on budgets of various kinds along with given time frame in order to
regulate the performance of business (Popescu, 2014). Time frame is important as this would help
in its overall implementation in order to attain all the objectives.
Prioritization of goals- Worst and best category is important in every business as overall business
transactions are further categorised into these two criteria in improving the business of an
enterprise. The goals of an enterprise are prioritised into long term and short term in order to
allocate tasks and duties among various users as this enhances the efficiency of the business in
relation to its customers.
TASK 3
3.1 explain how financial shortfalls can be managed
Using financial resources in the business an entity may face shortfalls which will be rectified
by improving the efficiency of the entire systems in different ways given bellow:
Effective cash management-The overall cash management is essential in order take any decisions
as future uncertainties can be avoided by securing enough amount o cash within the business
enterprise. The cash efficiency will be improved by determining the cash outflows and cash inflows
in an entity.
Market analysis- It will be conducted which will results into all the current trends and patterns
currently running in the market.
Controlling loan- It can be done by taking borrowing from friends and relatives and other in house
firms who lend money without charging interest to the business.
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3.2 explain the actions to be taken in the event of suspected fraud
 Fraud suspection in an entity is biggest information which needs to be supplied by an employee
to its immediate boss to bring information to knowledge of them.
 Matter of fraud will be sent to the arbitrator who resolved the matter after listening to both the
parties.
 Monitoring the performance of the defaulters in order to find evidence against them in order to
blame them in front of all the employees.
 Daily changing of their duties in order to control their actions in the same entity
3.3 evaluate budget monitoring arrangements in a health or social care organisation
Forecasting- current performance of an entity are compared with its past performance in order to
determine any kind of gaps (Sui and Baum, 2014). Current trend are taken as bas in the process of
forecasting whose results will be followed to the preparation of budgets for the next year.
Advantages
 It helps in analysing current performance of an entity
 Determining future market trends
Disadvantages
 Wrong estimation deflate an entity's desired aims and the objectives
Preparation and approval- Preparation of budgets is not the final step as the Approval of the
authority is essential who recognises all the facts covered in the budgets with the actual standards of
the firm. Expenses of firm are especially regulated in order to minimise them by inducing the total
amount of sales earned by an enterprise.
Advantages
 Owners keep on check on current business practices
 Every tasks and duties completed y the owner with high level of reliability
Disadvantages
 Negligence of authority in checking will decrease the reliability of data
Measuring- Shortcomings of the budgets are compared with the standards in order to improve their
overall efficiency.
Advantages
 Improves existing efficiency of the business concern in performing all actions
 Achieving aim and targets as per various standards
Disadvantages
 Inappropriate estimation measure will deflate an entity's aims and the objectives
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