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Financial resources are the funds that are used by an organisation to run its operations. It is very important for a business to manage its monetary resources in order to enhance its performance and financial strength. Finance is essential to run a business whether it is an established or a start up (Financial resources, 2018). Businessman needs to look out that organisation should have sufficient funds to operate business activities effectively and efficiently. Good management of financial resources can help an enterprise to grab opportunities and attain organisational goals. Company taken in this report is CareTech Holdings, which is ba
This project report is focused on principles of costing, business control system, information and regulatory requirements for financial resources, sources of income, factors that may influence the availability of funds, different types of budget expenditures, the way in which expenditures decision are taken, managing financial shortfall, actions that needs to be taken at the time of fraud, evaluation of budgets, information required to make financial decisions, relation between health and social care service, impact of financial considerations and ways to improve health and social care services.
1.1 Principles of costing and business control system
Costing and business control system: Costing helps to maintain financial information accurately. Following are costing and business control system that are followed by health care companies:
Cost is a monetary value of a service which is a combination of various expenditures such as labour and overheads. It is the total value that occurs while delivering a service. In CareTech Holdings it is paid by the customers to company to acquire their employment. Income is the total amount which is received by the organisation from their customers in form of consideration (Bonomi Santos and Spring, 2013).
Cost benefit analysis is a technique which is used to analyse costs and benefits of a particular project. This is used by CareTech Holdings to find out that which option will result in higher profits from different plans. Budget is a plan in that carry all the information of possible future expenditure and revenues. In CareTech Holdings budgets are generated to estimate upcoming events that may affect organisation positively or negatively. Capital is the total amount which is invested by shareholders in a business to run its operations. Cost control is the process of identifying ways in which expenditures and other overheads can be reduced in order to increase profits. Cost centre is a department of the company to which costs are allotted as the members are related to investment decisions and profitability.
Outsourcing is a type of agreement in which an organisation hires another company or individual to perform organisational activities and operations. Competitive tendering refers to that process in which companies are invited to take tender which is done for the government. Forecasting is the process of estimating future events, revenues and expenditures that may take place. Profit is the difference between cost and income of the firm (Boyne, 2013). Break even is the situation in which company earn no profit and bear no loss and recovers all the costs form the revenues.
A basic software which can be used by Care Tech Holdings to monitor its financial information, is Financial Force Accounting that guides businesses to perform their accounting work accurately.
Cost of principles can be defined as the basic underlying guideline in the process of accounting which is also called historical cost principles. According to this the assets needs to be recoded in the final accounts on the principle or cash amount when it has been acquired by the owner. The rule for the cost is also same for liabilities, equity and investments that are recorded in balance sheet.
1.2 Information needed to manage financial resources
In a company various information is needed to manage financial resources which can be gathered from financial statements that are balance sheet, income statement and cash flow statement. In Care Tech Holdings it is identified from these resources. Following information is required to manage financial resources:
Business cost is the combination of various different expenses such as fixed, variable and semi variable that may take place while running organisational activities. In CareTech Holding different business are faced by the company that are workforce, equipments that are used to provide services to the customers, finance and building of the organisation.
Income stream is the money which is generated by the company on daily basis. It is vital for CareTech Holdings to have information of external influences that are changes in policy, competitive factors and legal requirements to manage financial resources (Caplan, 2014). These factors may help to get information of market, competitors and other consequences that may affect profitability of the company. The information can be gathered from various sources that are as follows:
1.3 Regulatory requirements for managing financial resources
Regulations are the controlling and monitoring frameworks that are imposed by government of a country in form of legislation to analyse all the activities that are performed by individuals and organisations. Such regulations helps to reduce financial frauds, promote equality and honesty while formulating financial reports, consumer protections, effective structure, accountability etc. In health and care sector various regulations are introduced by government for legislations, code of practice, audit, policies and accountability (Chrisman and et. al., 2013). All of them are followed by CareTech Holding and described below:
Legislation and code of practices: HMRC is related to tax authority of a country, who is liable to collect tax from sole proprietors and business corporations. It is a responsibility of CareTech holdings to file accurate and fair tax returns and pay proper taxes that are required to be paid.
Audit and accountability: Company house is liable for the audit and accountability activities of health care companies. It is a regulatory authority who examines and checks all the financial statements of a company and it s very important for the organisations to provide accurate report of final accounts to company house.
Policies: CQC is Care quality commission that keeps an eye on policies and strategies that are adopted by CareTech Holdings to assure that these are according to national standards and legislation. It is a liability of the company to follow all the health and safety regulations.
1.4 Systems for managing financial resources in health and care organisations
In an organisation it is very important to manage all the financial resources to evaluate accurate available funds. Proper management of funds can lead an organisation toward success and poor management can decrease effectiveness and profitability (De Bosscher and et. al., 2013) To maintain financial resources accurately CareTech Holdings have to follow different systems that are described below:
Organisation can raise funds form various sources that are government grants, donations, interest on debentures, dividend and capital gain. It is vital for CareTech Holdings to use these resources appropriately and specifically.
Budgets are formed by board directors, and other concerned members of the company who are administration of budgets. In budgeting firstly the budget formulated by departments of a company than they have to present it in front of budget committee. Than approval is provided and budget is executed in order to manage all the activities.
It is very important to analyse all the information which is recorded in the financial statement this process is known as accountability. It assures that all the recorded information is appropriate (Drucker, 2012).
It is essential for a company to conduct an audit in their company to examine actual position and performance of the business. Audit can help to analyse that all the recorded information is appropriate or not and also guides the investors and shareholders to analyse that organisation is using all their money effectively or not. Some times audit and accountability can be termed same sometimes as both are done to analyse the transparency of all the data which has been recorded in the financial statements.
2.1 Diverse sources of income:
Following are some sources of income for CareTech Holdings that are identified from financial report of the company.
Public: There are various public sources to generate income these are dividend and earnings from equities. In Year 2017 company has gained income from public resources which is 17849. This is divided in two parts these are basic and diluted. Both are 25.48 per share.
Private: Company can also generate income from private resources these resources are interest on debentures and investment and dividend on preference shares.
Both the above mentioned resources can be used by CareTech Holdings in order to attain income. This income can be used in operational activities to reach higher level of success and performance.
Information needed to identify
Current assets + non current assets
Non current liabilities
Profit for the year 2017 (6 months)
Adult learning disabilities (one year)
Specialist services (one year)
Forster care (one year)
Young people residential services (one year)
2.2 Factors influencing availability of financial resources
Following are the factors that may influence availability of financial resources:
Funding priority: It is the favourable modification to review scores when applications meet the specific criteria. The care tech holdings can raise funds from social insurance contribution, by providing free health care seminars for charities and so on. If company is not utilising the funds properly than it may result in lack of monetary resources.
Agency objectives and policies: These are the purpose that generally helps the CareTech Holdings to take the future decisions in specific areas and to address the particular services in more direct way .
Private Finance: It is a process where the funds were provided for the major capital investment, where the private organization are contracted to manage and accomplished the public projects. Care Tech Holdings can invest their funds in London stock exchange market, if funds are not properly invested or gained than it may lead to insufficiency of funds (Effah Ameyaw and Chan, 2013).
Inter-Agency Partnerships: It is the system were two or more agency were involved. The CareTech Holdings do the inter-agency partnership to solve the interdependent problems and to connect children and families with comprehensive services.
Government Policies: It is a course of action or principles which intends to change a particular situation. This company follows the UK government regulations. The policies were made by the governments to improve the quality and safety of the healthcare.
2.3 Different types of budget and expenditure in health and social care
Budget is the plan prepared in monetary terms, in the beginning of financial period in order to predict the expected income and expected expenditure incurred during that period. Main body of budgeting process pertains three main elements that are Objective, Planning and control. The budget officer with an accountant prepares the budget framework. After that controlling process starts which identifies the difference between the budgeted and actual costs during a particular financial period. There are some budgets prepared under the organisations (Wuttke and et. al., 2013).
- Service cost centre:In this type of cost centre service is provided to another department from one department of CareTech Holdings.
- Project management:It includes planning, monitoring and analysing efforts of teams and individuals to complete a project with high level of success. Main challenge for CareTech Holdings in project management is to attain all the planned goals.
- Outsourcing contract: It is mainly used to analyse service level agreements, time frames and measurements, penalties and rewards, daily basis reviews and exit strategies for a business. In CareTech Holdings various individuals are hired under outsourcing contracts to perform organisational activities.
2.4 Decisions about the expenditure
In CareTech Holdings decisions are taken with the helps of following factors:
Environmental analysis: It is a strategic tool which is used to analyse external and internal elements that may affect operational efficiency of an organisation. These factors are mainly based on business trades, changes in climate and customers reaction. It is vital for CareTech Holdings to consider environmental factors while formulating specific decision (Julian and Oforiâ€dankwa, 2013).
Short, medium and long term planning: Planning refers to the process of estimating and reserving funds to possible future events that may take place. While making a decision it is very important to plan for each type of expenses that may occur in short, medium and long term.
Financial risk: It is mainly related to the possible risk that may affect capital structure of the company. It includes loss of monetary resources and less sources to deal financial problems. For CareTech Holdings it is essential to analyse financial risk while making decisions.
3.1 The way in which financial shortfalls can be managed
Dealing with financial shortfalls is not easy, it can be managed by reducing expenditures, reserving funds, virements and generating income from external sources. It is very important for a company to reserve funds in earlier years so that financial shortfalls that may take place in long term can be managed easily. If company is reserving finance than all the finance related problems can be resolved in less time. Virement is also a good method to manage such type of problem as it can be used by CareTech Holdings to transfer item from one account to another. It is also very beneficial in budgeting as budgets can be transferred from one part to another.
These shortfalls can be managed by generating incomes from external sources that includes interest on investments that are made by company, dividends and other sources income. These resources can help CareTech holdings to manage shortage of monetary resources. It can also help to generate more and more funds that may be sued in organisation's operational activities in order to maximise profits and market share (Ledgerwood, Earne and Nelson, 2013).
3.2 Actions to be taken in the situation of financial fraud
Financial fraud is the situation in which one or more employee of the company may record wrong financial transaction for personal benefits. It is a responsibility of executives of the organisation to take strict action when it is identified. Following are the actions that needs to be taken by CareTech Holdings in the situation of financial fraud:
Analysing financial information to check reliability: The first and major action which needs to be taken by the company is to check reliability of recorded financial information. It is possible that right amount of a transaction is not recorded in the final accounts.
Reporting: The account department of the company is required to assure that right reporting system is used to record every information.
Evidence for fraud: It is essential for the managers of the organisation to find evidences for the fraud, so that actual cause of that fraud can be identified (Maimbo and Melecky, 2014).
All the above mentioned action needs to be taken by CareTech Holdings in the situation of financial frauds this may help to identify the origin of the problem.
3.3 Evaluation of budget monitoring arrangements in health or social care organisation
Budget monitoring is the process of analysing all the financial activities of the organisation by examining the information which is recorded in different statements such balance sheet, income and cash flow statements. It also helps to to identify problems and errors that are recorded purposely or by mistake. In CareTech Holdings budgets are monitored to manage financial resources effectively. Managers of the company use spreadsheet data, evaluate different processes and progress of organisation, analyse cash flow data to determine problems in applied strategies or plans and control cost in order to monitor budgets of the organisation (Taylor, Doherty and McGraw, 2015). Spreadsheet is a computer software which is used to record all the data of an organisation which is related to its activities and all the revenues for a specific time period. Cash flow statement shows all the information related to cash inflows and out flows of a company for a particular time period. It is very important for an organisation to monitor its budgets to control over spending of funds in different activities. All these factors are considered by CareTech Holdings while monitoring budgets of the organisation.
Budgetary circle: It is used by organisations to manage all the budgets in an effective manner. The below budgetary circle consists four different elements. All of the are ad follows:
Budgetary review: In this step all the budgets are reviewed by the managers in which effectiveness of budgets is also determined.
Budgetary forecasting: This stage is related to forecasting possible future events that may take place and affect organisational situation.
Implementation budgetary: In this step the budget is implemented by the managers in order to enhance organisational strength and monetary funds.
budgetary evaluation: it is the last stage in which it is evaluated that budget is appropriately managed by the departments of the company or not.
4.1 Information required to make financial decisions
Higher authorities, managers and board members of an organisation make strategic decisions in order to achieve predetermined goals and objectives. These decisions are taken with the help of recorded data or information of previous years and sources of income which facilitates the decision making process. Such decision are made to enhance performance and strengthen financial position. In CareTech Holdings strategic decision are successfully implemented by senior management with the helps of financial data which is recorded in the books. Various information is required to reach any types of judgement or conclusion (Oberthür and PoÅ¼arowska, 2013). These informations are as follows:
- Detailed information of balance sheet that includes assets, liabilities, equities, payables, receivables, investments and others.
- Information of purchases and sales which can be collected from trading account of the company.
- Broad data of cash inflows and outflows in an accounting year and where it has been spent by the company to acquire assets or any other transaction.
- Accurate information of inventory at the end and starting on financial year.
- Data of various expenditures and incomes, cost related information and location of business, interest of customers in services provided by CareTech Holdings.
All these informations are required to make any type of decisions in CareTech Holdings that are made for various purposes such as cost reduction, sales increment, increase profitability, accurate time to purchase assets and to identify good sources of funds.
4.2 Relationship between services delivered and cost and expenditures of CareTech Holdings
CareTech Holdings provide social services and all the services are different from each other and separated on the basis of cost and expenditures. It is a responsibility of an organisation to deliver qualitative services that are cost friendly and affordable by customers. If a company is providing services with less cost and generating high profits it means that its business is running smoothly and customers are showing interest in their services (Malmström, Wincent and Johansson, 2013).
The relation between both these elements can be analysed with the help of cost benefit analysis and pricing policies. In cost benefit analysis CareTech Holdings analyse the cost and benefits of each services provided and than select the best service that can result in higher profits for the company. Pricing policy is depended on the quality of the service if quality is good than cost will be high if it is not good than cost will be lower. Cost or expenditures related to a services vary according to the nature and quality of services. Hence, it is suggested to the companies to rationally reduce the cost so that its quality wont get affected. On the other side, it cannot be assured that if company is spending more on a service than it will result in good quality of service. It is very important for CareTech Holdings to manage both, quality of service and cost or expenditures.
Cost: It is the total amount which needs to be paid by the service user to the service provider. Every client will always try to figure out the actual cost of the service which is going to be acquired by him or her.
Quality: It is the feature of a service that help to attract large number of customers for the organisation. If quality of a service is not good than it is not possible to attract and retain customers for a long period.
Services provided by CareTech holdings are cost effective and are of good quality that help to attract large number of customers. Sometimes the quality depends upon the money which have been invested by the organisation while enhancing the quality of a particular service. A diagram for quality assurance is as follows:
The above diagram is a combination of five different components. These elements are energy monitoring, corrective actions, energy saving implementations, energy saving and verification reporting. All of them are used by CareTech Holdings in order to improve the quality of the service. Energy of the services is monitored by the Health care professionals so that quality can be measured. Corrective actions are taken if the quality is not good. Energy saving implementations are used to implement all the relevant action. Energy saving is used is used if energy is invested more then the actual requirement. Verification reporting is mainly related to the analysis part of service in which it is analysed that service is good or bad.
4.3 Impact of financial considerations
Financial consideration of services provided leave an impact on the users or individuals. It is very important for CareTech Holdings to analyse the ability of customers to pay for the services. Reaction of the individuals totally depends upon the quality of service and access to service (McDonnell and Burgess, 2013). A customer will be able to pay higher amount if quality of the service is very good, but if quality is not good and company is charging higher amount for that service it will leave a negative impact on users and next time they may not prefer CareTech holdings to take services. While choosing any service providing company a user will always try to figure out that organisation is providing good quality services on low cost or higher cost. If do not find the cost relevant to the service than they may switch to another company who is providing the same service on low cost and good quality.
Services that provided by CareTech Holdings should be easy access for the individuals. For example, company should provide instant services on customer's demand. If customers are getting services on time, than this will help to attract more and more customers. Consumers of services will not consider CareTech Holdings, if they have to wait for a service for a long time. Both these factors affect interest of individuals to make decision of choosing the organisation to acquire services.
4.4 Suggestions to improve services provided by CareTech Holdings
It is suggested to CareTech Holdings that it can improve its services that are provided to its customers with the help of improve financial system and processes. The company can provide options, support evidences and provide informations that are provided for discussion by financial decision maker. It can also guide the managers to analyse that what customers are willing acquire and what are their expectations from CareTech Holdings. It can help the organisation to provide options to the customers so that they may have various services to choose best service to acquire (Oberthür and PoÅ¼arowska, 2013).
It is suggested to CareTech Holdings that it should evidence its service quality, cost and staff. In which it can mention that it is providing best quality services and charging low cost as compare to others. It can also evidence that its staff is well educated and skilled. It can improve its services by appropriately using all the available financial resources. Another way to improve services is to analyse all the information which is provided by the financial decision makers of the company this will helps to identify that company is performing well or not. It also guide CareTech Holdings to make modifications in its services so that maximum customers get attracted towards the organisation (Pearlson, Saunders and Galletta, 2016).
D1 Evaluation of systems for managing financial resources
It is very important for CareTech to manage financial resources effectively which is possible with the help of budgeting, sources of incomes, budget administration, cost centres, auditing requirements and accountabilities. All these systems can help to manage all the financial resources effectively because budgets can help to reduce over spending as it can estimate them in prior years, sources on income can help to gain it from different sources like government grants, dividend and interest. Accountability and auditing can assure the accuracy and transparency of financial statements. These system are used by CareTech Holdings to effectively manage funds.
D2 Analysis of factors and relation between services and cost and expenditures
There are various factors that can affect availability of financial resources that are funding priorities, private finance, government policies, agency objectives and policies. All these factors can influence financial resources because they directly affect funds of an organisation. There is a close relation between services provided by CareTech Holdings and its cost or expenditures, this relation can be analysed with the help of cost benefit analysis and pricing policies. The organisation set cost according to the nature and quality of services. If company is proving low quality service than cost and expenses will be lower and high quality will have higher cost and expenditures.
D3 Evaluation of budget monitoring arrangements and suggestions to improve services
In CareTech Holdings budget monitoring is done to maintain all the financial resources that are used to perform all the activities. It is essential for the company to monitor and control budgets to ignore situation of overspending. There are various factors like cash flows and spreadsheet that are used to monitor budgets. All of them can provide accurate information that's why company use them to monitor expenses. It is suggested to the organisation to provide options and evidences to its customers in order to acquire more market share. Services can be improved with proper utilisation of financial resources.
From the above project report it has been concluded that financial resources are vital for an organisation to operate its activities and achieve goals. It is very important to maintain all the monetary resources in effective manner in order to achieve organisational goals. Service providing companies can improve their services by providing more options to their customers and appropriate evidences for their services. There are two main factors that may affect individuals interest that are quality of service and easy access. If quality is good than it may attract more and more customers and low quality services can decrease the interest of services. If an organisation is providing easy access for the services than it will help to enhance interest of individuals.
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