Cash flow worries for care providers – what next?

As was reported in the media over the summer, it has become an increasing issue for domiciliary care providers that Local Authorities and the NHS are leaving huge sums owing to them unpaid. The Institute of Health and Social Care Management (IHSCM) identified more than £679m of care provider invoices which have been outstanding for more than 30 days.  With the unrelenting pressure on the NHS and Local Authorities, it is difficult to see how this issue will be easily resolved.

Against a backdrop of an industry which is already under significant pressure from an ongoing recruitment crisis, rising energy bills and challenging insurance costs, these additional cash flow issues will be one step too far for some providers. More than one in five surveyed have said that they fear collapse of their business within six months.

Whilst there is not a one-fix solution, there are some steps that providers can take to try to minimise cash-flow issues and the level of debt in the business which may help navigate this challenging time.

Navigating cash flow issues

First, it is key to monitor your balance sheet and cash flow forecast frequently. You can then anticipate problems and act before they have an impact.

Consider speaking to your bank or HMRC for payment plans if you have any bank debt or outstanding PAYE and VAT liabilities. If this isn’t possible, you might want to consider refinancing options for debt or an invoice finance facility which could alleviate cash-flow stress.

See whether your own suppliers will agree to longer credit periods or instalment arrangements to take the pressure off cash-flow.

Are there any steps you can take to recover private-paying invoices more quickly? Think about whether to shorten payment terms and chase debts more regularly.  Do you need formal debt recovery assistance to recover unpaid debts?

Ultimately, anything you can do to bring cash into the business more quickly will reduce pressure on your overall cash-flow position.

If, however, you feel that your debt levels are no longer manageable, you should seek specialist advice on the options available to you. It is vital to seek early advice in this respect as the options open to you will reduce as the position worsens.

It is also key for directors to protect their own personal positions by taking specialist advice rather than continuing to trade past the point where insolvency becomes inevitable. If you could benefit from an initial discussion about the position of your business, please do not hesitate to contact a member of our R&I Team who would be more than happy to help.