FACTS: The best way to ensure that debts are paid on time is to develop and consistently apply a policy of credit control. This will ensure that you customers clearly understand your terms, and make sure they are enforced.
"When Commercial Credit
Control began working with
us, our debts over 60 days
were in excess of £300 000,
by carefully implementing
procedures this was quickly
reduced to £1500."
Credit control in the care home sector
17 November 2018
It is vital that the care home sector is efficient and that it continues to attract investment to meet the needs of our growing population. The Office for National Statistics predicts a 36% growth in people aged 85+ between 2015 and 2025, which is an extra 0.5 million people. The current model of service provision seems to be bursting at the seams and is not sustainable without additional funding.
It has been reported that many care homes are not in a financially sustainable position. The average fees paid by the local authorities are up to 10% below the full costs of meeting the needs of the residents. Care homes that are predominantly reliant on local authority funded residents will struggle in the long term, unless there are significant changes to the funding model. Unsurprisingly, many are suggesting that the social care sector is at a tipping point and there have already been some high-profile failures.
Furthermore, with constantly changing fee scales and funding partners, which are time-consuming to deal with, many care homes struggle to keep on top of their ledgers. A care home with a large proportion of 45 to 60 day old debt will soon start to feel the pressure. A structured and methodical approach to credit control is vital and can make all the difference to the survival or indeed saleability of a care home.
If the sector is to survive and to invest and grow to meet the needs of our ageing population, fundamental changes to the funding arrangements will need to take place.
For a confidential discussion about how improved credit control processes can increase your care home's working capital, contact Cath Howe on 01142 509 769 or at firstname.lastname@example.org