MANAGING FINANCIAL RESOURCES

Managing Financial Resources

Managing Financial Resources

Introduction

Management of financial resources is essential for effective and efficient running of the organisation. However to illustrate the notion further, understanding is required as to how in health and social care financial resources can be managed with the aid of systems, and the significance of planning and monitoring budgets to manage social and health care budgets (Coombs and Jenkins, 2002, pp. 21-25).

Understanding how financial resources can be managed by systems in social care and health

Business control systems and costing principles

To manage financial wherewithal in social care and health, doctrine of cost and income need to be understood. Silloth Nursing has several types of costs which require different treatments. There are refurbishment costs which are onetime costs. Principles of costing split the costs on basis of their behavior. In Notes to accounts (Note. 6) a breakup of cost has been given. There are direct costs that are comprised of staff wages, maintenance, establishment costs, clerical costs and deprecation. Then there are other costs that are fixed in nature and comprise of Sundry administrative costs, interest charges etc. Other types of costs faced by Silloth are fund raising costs and governance costs (Audit fees) which cannot be directly attributable to the operation of business. All the sources of costs are called cost centers and a cost benefit analysis is performed. Business control systems deal with cost control, competitive tendering, break even analysis, forecasting etc. Business control systems in Silloth also deal with changes in policy. Relevant example is the change in government policy increasing home care support. Such a control system monitors financial information in Silloth. Business control systems will also take into account the revenue streams of Silloth.

Information needed to manage financial resources

In order to manage financial resources effectively managers and the management committee of Silloth Nursing will require information that is relevant, reliable, clear, accurate, complete, timely and cost effective (Brian, 2012). If relevant information is provided, but falls short of other attributes management of financial resources will be ineffective. The management committee of Silloth will require a clear picture of the liquidity position of the charity. Liquidity position can be interpreted by the audited balance sheet of Silloth Nursing. To manage the financial resources, the management committee and the Board of trustees will have to contemplate and asses the current assets section of the balance sheet. Current assets show that there has been a fall in the value of debtors which is a positive sign as it indicates that the there is less capital tied up in customers. Financial resources are being managed pretty well as the cash flow position has significantly improved since 2007.

Further information that will be required to mange financial resources is the amount Silloth Nursing has to pay its creditors. This is indeed a very useful piece of information as it provides a useful insight as to what level of liquid assets Silloth must have at all times, in case payment is demanded by the ...