Budget Planning and Management Role in Health and Social Care
Managing Financial Resources in Health and Social Care
2.1 Power Point Presentation Discussion
This presentation shall discuss section 2’s Budget Planning and Management Role in Health and Social Care. Specifically, the speaker shall provide the Diverse Sources of Income that can be used in health and social care settings. Every budget planning includes internal sources and external sources, no matter what is the setting.
The organization shall use internal sources and external sources as diverse sources of income. Internal sources shall include Company Savings, working capital, retained profit, and sales of assets.
Company Savings or commonly known as the owner’s investment (can be used as a start-up capital or additional capital)
Another interesting source of finance is using the working capital. These are funds that are needed when conducting daily operations, like wages, purchasing of raw materials, covering some overhead costs and used for offering credit services.
Retained profit can be used within the organization, from a standpoint, this is an attractive source of finance because it allows investment projects without risking nor involving shareholders or any outsiders.
Sales of assets are one way of raising finance. Selling off the stocks or assets that are no longer in need. Such as equipment that is not in used can be sold off to buy new equipment.
The next slide is the discussion of the external sources of finance. These are finances that are commonly gained outside of the organization, such as from banks or creditors. This may include the short-term and the long-term assets.
Short-term assets are financial assets that need to be sold, converted to cash or liquidated to pay the liabilities inside one year. These assets include Loans, Trade Credits, and Debt Factoring.
Loans are usually long-term debt capital used by the company to provide a cash-flow cushion. Moreover, with bank loans, the organization can set repayments with spreading over a period of time which can be good for budgeting.
Trade Credits, shall cover the organization’s short-term finances. This is where suppliers can deliver goods and willing to wait for days before the payment. If this shall be included within the organization’s budgeting, this will provide more chance for the organization to prioritize the needed equipment or services that should be sold.
Debt Factoring or Factoring is where the organization can sell their invoices to the banks. Rather than waiting for 28 days of full payment, the organization can gain cash right away.
Now, Long-term assets are finances that can be paid over many years. This will include, mortgages, venture capital, retained earnings, debenture for long-term sources.
Now, if the organization wanted to secure a location, mortgaging is the best answer. This is advantageous since this can be repaid through installments over a period of time, mostly over 25 years. If we view the setting as a public or private institution, then it would be feasible to mortgage a specific location than renting it.
For a starting organization, venture capital can provide sufficient fund to the organization. Moreover, it is also feasible for new businesses with limited profits, especially with public health and social care setting.
Retained earnings are useful to finance new investments, either on new programs within the organization or new facilities. Moreover, it is believed that retained earnings are sources of funds that does not lead to payment of cash.
Having able to induce debenture as an external source of income, it will save the organization income tax since debenture is a tax deductible expenditure. Moreover, it is way cheaper than preference shares and equity shares.
Since we are imposing health and social care setting, the organization aims to provide more efficient but cheap services; the organization may also use Government funding, Bursaries, Grants, Rentals, and Company assets.
There is government organization such as Invest NI funds new and established businesses in their venture. Which is believed that since the organization, shall cater health and social care for elderlies and with special needs, the government shall heartfully fund this newly established institution. Moreover, there are also charities that can assist the organization in the further development of the institutions.
Leasing or renting an asset will allow the business to obtain assets without the need to pay a large lump sum. For example, the organization may pursue on letting their clients rent some equipment for the benefit of the institution.
2.2 Factors that Influences the Availability of financial resources
The organization may experience difficulties in achieving the desired resources through the identified factors such as funding priorities, agency objectives and policies, private finance, type of services, government policies, and etc.
Decision making on funding priorities is usually formalized, procedurally driven, sequential, and protected; thus, the size of the organization may affect the board’s decision on funding the organization’s needs.
Moreover, the agreements between association and local about funds, service contracts and authorities together with other home care agencies. Provision of the type of service, such as Nursing, residential and private services. Lastly, geographical locations of the organization, any geographical constraints may greatly affect the entire organization.
2.3 Different types of budget expenditure on the proposed health care organization
Budget Expenditures includes; Operational Budget, Cash Flow Budget, and Capital Budget. Wherein, the operational budget is recorded at the beginning of the year for different expenditures related to the organizations daily operations. Organization’s cash flow budget may include the budgets allocated for everyday outflowing and incoming services. Capital Budget, on the other hand, is a budget that is allocated to pay for exclusive purchases and specific projects allocated for the organization’s health and social care services.
2.4 Decision about expenditures made within health and social care organization
The expenditures of the organization can be determined through extensive budget preparation and how the organization will implement several expenditures. However, before budget preparation, the organization must determine the organization’s financial status. And after identifying the financial status, it is empirical for the company to prioritize its goals and objective.
The organization must assign specific roles and responsibilities of varied people for the purpose of the budget. Thus, the management must include the timely preparation and accurate budget for the income. Finally, health care managers and executives must include the process of specific budgeting to avoid unwanted errors. This may include draft the budget, reviewing points of the budget, presenting the drafts for approval and if approved, it is appropriate to document the budget for final implementation.
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