The Importance of Aged Care Financial Management Tools
Managing finances for an aged care organisation is a tough task. Dealing with funding restrictions, changes to government legislation, staff issues, and general business pressures doesn’t exactly lack in the challenge department.
It is important to understand that improving financial success is not a destination reserved solely for large aged care organisations.
The Australian Government Aged Care Financing Authority’s 2015 report on Factors Influencing the Financial Performance of Residential Aged Care Providers, highlights that better financial results can be achieved by a significant portion of the industry. Such improvements can be derived from stronger governance, improved financial management, better asset management, and administrative efficiencies.
The reports key findings summarised that, in most cases an effective level of financial performance can be achieved by providers with any combination of size, location, ownership, and resident care profile.
Essentially, it is the organisations which have strong disciplined management that have a greater likelihood of higher financial performance.
So, how can you leverage the right technology tools to help put time back into your day, and generally make your life easier?
Important aged care financial management functionality
There is a lot to consider when it comes to financial management tools and in every case, regardless of what application your organisation uses, it is important to determine what functionality best meets your needs.
To help discuss financial management functionality which could aid your business, here is a summary of some of the valuable elements of the Epicor Financial Management platform, broken down into four key pillars.
The General Ledger (GL) sits at the heart of financial management. While the other departments in your organisation are unlikely to access the GL, its impact is organisation wide.
It is therefore imperative that your aged care software contains a strong GL as it needs to enable accounting controls and system security so that the integrity of your financial data is not compromised.
For example, your aged care software needs to be able to do the following in order for you to operate efficiency and effectively:
- Enable flexible financial accounting representations through multiple book functionality
- Create different chart of accounts by book
- Post transactions to different accounts within different books simultaneously
- Post entries to any period in the current year, following year, or any subsequent year
- Automate allocation of funds across multiple accounts without manual entry
- Define the frequency at which balances on accounts are captured and stored
- Consolidate from different books and/or companies within a defined relationship
Having an effective Accounts Payable (AP) function is critical for both cash flow and supplier relationships. Therefore, the AP functionality in your financial management software needs to allow for this function to operate fluently.
Through using AP functionality where the system can generate payments for all invoices due, those for a particular supplier, or only for specific invoices, you will be able to generate economies of scale in your AP function.
Additionally, if your software allows for user friendly functionality for dealing with purchasing variances, then you can make easy adjustments. It is functionality such as this which can undoubtedly add time back into the finance teams’ day.
Similarly, Accounts Receivable (AR) also plays a key role in the financial health of your business and your stakeholder relationships.
From invoice entry capabilities allowing you to enter multiple services on a single invoice, to progress billing deposits, billing miscellaneous services, and dealing with credit memos, harnessing effective AR functionality is key to operating a nimble finance department.
When agility and flexibility are required, having AR functionality that allows for a finance department to utilise features such as those below, can allow for significant productivity gains.
- Authorised users can update and define the GL account on each line of a miscellaneous invoice
- Issue system generated reminder letters for overdue invoices
- Set alternative bill-to contacts (i.e. son or daughter)
Effective cash management functionality should also be at the core of your finance management tools.
User friendly, and even automated AR and AP bank reconciliations are a great example of the type of functionality that can make a significant improvement in finance processes.
Control measures are also important in cash management, which is why functionality such as supplier approvals is so important. If you can define relationships that prevent staff from ordering from the wrong supplier, then it can save the finance team time and heart ache later down the line. When this functionality works in-sync with sophisticated purchasing management tools, then your organisation can reduce cash tied up in larger than required inventory levels,
improve on-time deliveries, and increase your profit levels.Summary
Effective aged care software in today’s business world is driven by effective integration
. If your organisation can adopt the right financial management tools as part of your wider aged care software application, then you stand a much better chance of adapting to a changing market in a way that facilitates growth. Posted by Lee Robbins, Senior Product Manager, Senior Living Solutions, Epicor Software