This post is solution of Managing financial resources Assignment, given in St. Patrick's College for Health and social care course.
Management of Finances has become the challenge for the day. Each and every field irrespective of its business model hires professionals, skilled experts for this task. Private as well as Public Sector all has been quite strict in the efficient management of Finances. In this report, being the manager of BUPA Care Homes, I will discuss on the various methods of controlling the expenses as well as the budgets for the Home. Finances have to be managed as the main income source for the home is fees paid by the service providers and there is very little support from the partner organizations. I will try understanding the processes or the ways through which the various expenditures could be managed. We will also mention resources which can help in the management of the budget shortfalls. Making predictions and accordingly allocating the financial reserves is also essential for the avoidance of the shortfalls and making effective use of the available resources. We will try understanding the concepts of costing and business control system. What are all requirements for the regulation and management of financial resources for BUPA? We will also suggest BUPA in the various ways, methods or processes that it can follow in its financial systems and processes for improving its health and social care services. We will also discuss on the various decisions that should be taken by the company for managing its resources.
- BUPA Care Homes is an international healthcare group which is covering 190 countries serving around 14 million customers. It is a private health care company. They do not have any shareholders so the profits earned are spent over the health and social care. The principles of costing and the business control system that the company adopts are:
- It develops consistent, clear and measurable objectives for the company – The targets, objectives and aims are developed which are measurable, specific, realistic, achievable and target oriented. This is done via the engagement of the stakeholders.
- It uses the essential tools and knowledge for the management of finances – For the management of the costs, it uses the software and customized tools for the management of the various costs and finances related to the company.
- It analyzes the true costs spent and consumed in the business – As per the overall budgets and the costing; the company invests and achieves the targets.
- It tries that the complexity in terms of hierarchy and designation is reduced in the company so that the decision making related to costing and budgets is not delayed – When the hierarchy and levels are less, the issues and problems are escalated faster and costing, budgets and business control systems are easily established.
- Costs are one of the key decisions that are taken during the starting of the financial year of the company – It determines and accordingly plans for the various costs and control systems in the beginning of the financial year so that there does not arise any problem in the mid of the year (Walshe & Rundall, 2001).
- The main heads/amount of income for BUPA in the last financial year are:
- Financial investments on current assets.
- Assets arising from insurance business.
- Cash and cash equivalents.
- Value of Assets like: Property, equipment or plants.
- Various liabilities like: Interest Bearing Liabilities, Deferred Taxation Liabilities.
- Taxation Liabilities.
- Trade and Other payables.
- Restructuring Costs.
- Foreign Exchange.
- The various regulatory requirements that need to be satisfied while managing financial resources in BUPA Are:
- It organizes internal as well as external audit committee – These audit committee
- In order to manage commercial risks it takes effective Insurance for the company as well as the service users so that expenses if extra could be managed easily.
- It trains, grows and develops its team in the financial department to take care of the projects and costs well without any increases in the expenditures.
- It has a process of monitoring and reviewing its processes, expenditures and the business control systems so that in case any deviation starts, then immediately it could be controlled.
- Based on the changes in the rules & regulations, the various operational risks are being managed well.
- The system for managing financial resources is a good one. They are assessing the various risks or the issues that had arisen in the last year so that accordingly the next year expenses, costs and the investments could be planned. They take the competitors policies in health and social care as such that what they do better, they apply the same in their care home as well. The processes are strong and even the employees working in the home care are trained well.
2.1 The diverse sources of income are:
- Internal Sources – These sources include Personal Savings, Working Capital, Sales of Assets and Retained Profit etc.
- External Sources – These sources can be long term or short term. Long term are Mortgage, Debentures, Retained earnings, Venture Capital, Investment from third party, ordinary shares etc. Short Term Sources are Over Draft Loans, Debt Factoring, Stock Control, Hire Purchase, Trade Credits etc (Borghi et al, 2006).
The major sources of income for BUPA are: Funding from the government, various grants and Bursaries received, Educational Grant Advisory Service, rental received from the leased property, gain from the revaluation of company assets.
In the nutshell we may say that BUPA gets its income from either the sale and revenues received from the health and social care services or the gains received from non-core operations or core operations from the company.
2.2 The various factors that influence the availability of the financial resources in BUPA are:
- The size of the organization and BUPA is a very large organization spread out in 190 countries.
- Association and Local agreements with the local funds, authorities and service contracts with other home care agencies.
- Economic Conditions of the countries where BUPA has its presence.
- It provides various kind and types of services like: Nursing Services, Residential and Private Services.
- The priorities of the funding by the health care systems in the countries where BUPA has its presence.
- The geographical location of the company or we may say that the country where BUPA is operating its branches.
2.3 The different types of Budget Expenditures in BUPA are (Stilwell et al, 2004):
- Operational Budget – This is the budget that is set at the beginning of the year for the various expenditures that would be related with the daily operations.
- Cash Flow Budget – This is the budget that is being assigned for the inflows and outflows that occur on the day-to-day basis.
- Capital Budget – This is basically the budget assigned for the income spent or received for specific projects that are assigned to BUPA for the health and social care of the people who are the service users of BUPA.
2.4 The decision about the expenditures that BUPA could make is through:
- BUPA determines the timeline of budget preparation and its implementation for the various expenditures.
- Prioritizing the various goals and objectives of the company.
- Determining and accordingly following the financial status of the company.
- BUPA assigns specific role & responsibilities for the various people in Budget.
- It prepares accurate and timely budget for the income.
- It follows the specific budget process that is draft preparation, review of essential points of budget, getting the final approval of the budget, documentation of the budget and final implementation.
3.1 In case BUPA face the financial shortfall then the situation could be handled by:
- Effective management of the inflow and outflow of the cash flow process.
- Controlling the various resources on financial front.
- Doing the market analysis and accordingly fixing the various target areas of expenditures.
- Making control over the over drafts, credit cards and liability making sources of getting the income.
- Control over the loans taken from other companies or in-house banking.
- By taking the short term loans and making equity injections.
- Making better and optimum utilization of assets and resources.
- Making the maximum number of negotiations.
3.2 In case Financial Fraud has occurred in the company, the following Risk Assessment Process could be used to prevent the company from losing the control over the situation:
- Risk Identification – First of all it is essential to determine or identify the areas of the situations that have led to the risks or the fraud to take place.
- Risk Ranking – Assessing that where the risks could occur more with respect to the current scenario.
- Risk Mitigation – Response to be given to the risks that are likely to occur.
- Access Residual/ Outstanding Risks
Once it has been assessed that the fraud has occurred then we may follow the following:
- The immediate note over the various concerns should be done.
- Appropriate authority should be informed and his intervention should be brought in.
- The matter should be dealt promptly and politely.
- Various letters, documents and notices should be considered carefully.
3.3 The various Budget Monitoring arrangements done by BUPA are divided into five budgetary control cycle steps:
- Forecast of the current period of the Budget – BUPA has specified the period which should be followed for the preparation of the budget.
- Preparation & Approval of the Budget for the next financial year – Based on the last year status of the budget, the budget for the next year is made in such a manner that all expenses and incomes that were not considered last year are considered accurately for the next year.
- Measuring the actual performance against the current budget – The performance of the last year expenses with respect to the budget should be done so that wherever loopholes could be found out.
- Investigating the differences between actual and budgeted performance – Once BUPA establishes the difference between the actual performance and the budgeted performance it will come to know on the various sources of income and expenditures neglected last year.
- Taking corrective action to control the performance – Based on all the above steps being followed, automatically BUPA gets involved in the corrective action that could be taken for the managing of the company finances.
This process as made by BUPA helps it to compare the actual performance of the company with the budgetary performance so that it could take the required steps to overcome the problems next year (Hyman, 2001).
Get solution of role in communication in health and social care organizations
4.1 Financial Decisions in health and social care service cannot be taken without the availability of the necessary information. The information that required for making the decisions are:
- Information on the various costs – It is quite essential that the various costs involved in the health and social care are considered. The various costs can be daily fixed costs related to the medicines, equipment repair and maintenance, salary paid to the staff, maintenance of the cafeteria etc. The variable costs that may arise are: Cost of the buying of new equipments, additional serious and heavy surgeries expenses etc.
- Balance Sheet – This gives us the details on the movement of the money creating the various business assets, various liabilities and extent of liquidity of funds in business. When we take the balance sheet of BUPA Care Homes then we can easily plan for the next financial year accordingly for the reduction of costs and elimination of unnecessary expenses.
- Purchase or Sale of various liabilities and assets – There are several assets and liabilities that exist for the BUPA Care Homes. Unless we know what all has to be paid against the liabilities and in purchase of assets then how can we plan further.
- Information on the various other expenses like: Payment of Wages or salaries to the staff – These are said to be the fixed costs that BUPA Care Home has to pay every month. The home can manage its expenses in the form of fixed and variable expenses when it will plan it well and that will only happen when it is aware of all its costs. It should know the various areas that involve the expenditures for effective business management and control over them (Curtis, 2012).
- Which all selling techniques the company is employing?
- What quality and quantity is required for a particular service in the health and social care projects.
- Which all services that have to be offered to the service users and related expenditures? This will help in gaining an insight on the costs and expenditures linked with these services.
4.2 There is a very strong relation between the two: Care Service Delivered and Cost & Expenditures. In order to deliver various services in health and social care for the patients and people staying at BUPA Care Homes there are various costs and expenditures involved. We may take example to explain this. Like a patient has acute lung cancer then the service and care of the patient will involve various tests on daily basis to be done, medicines to be given, Various exercises and programs for his growth and recovery to be planned. These all activities involve the expenditures on the machinery, tests, medicines etc. If the service users will pay more, they are undoubtedly be getting the better quality of services. Not only this; there are several costs that may have to be spent in order to get him recovered. Hence we may say that the care service in health and safety cannot be achieved without any costs or the expenditures involved in various activities.
4.3 Service Users who are taking the health and social care services would be impacted from the various financial considerations. There are a lot of considerations that they have to take into account before taking the services like:
- The cost of the service.
- Choice of the priority service that has to be taken.
- In case better alternatives available at lower costs.
- Level of income of the service User.
- Return on Investment by the Service User.
- Coverage of Insurance for the Service taken.
- Various indirect costs involved in the service.
- Quality of the service obtained.
BUPA can bring about the following changes in its financial systems and processes in order to improve its health and social care services:
- It can get funds and support from the governmental and private individuals and agencies aids.
- It can ring about innovation and creativity in providing the various services to the service users.
- The payment to the service providers as per their quality and performance.
- The payment systems established should be clear, transparent and stable.
- A comprehensive approach to be developed for the service user to discuss on the various financial concerns with the services.
- Giving the benefit cap. This will help the service users as well as company.
- Associating with the other agencies which could help the company in growing its revenues and effective management of the resources of finances. By tying up with these companies, BUPA will not be left with any kind of financial constraint (Swayne et al, 2012).
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