25d7beb1

The Social Care Pantomime....the Challenges of an Ageing Population have been Addressed........................Oh no they haven't

Thu, 29 Jan 2026 13:45:03 GMT

Please refer to posts from 5 years ago as basically nothing has changed

Funding, staffing, inconsistent and red tape Regulation and a lack of recognition.

Nothing really changes. Previous articles penned at the time of Covid still as relevant today as they were then.

Financial Model- the Key Business Document

Wed, 20 Oct 2021 20:57:49 GMT

Accountants come in many shapes, sizes and a variety of skills, but can they build financial models to support businesses?

The Importance of Financial Forecasting

Sustained business growth doesn’t just happen overnight. It is usually planned and requires a great deal of hard work and preparation, detailed insights, and a full appreciation of the finances involved. By analysing the past and current state of your financial affairs, along with an insight into future plans, it is possible to create accurate and meaningful financial forecasts. These act as a real-time benchmark for the growth and financial health of your business. They can also be used to develop “What if” scenarios.

While this may seem obvious, many businesses either find it difficult to compile accurate financial forecasts or, even worse, disregard them altogether.

The aim of the model is to reflect how the finances of the business will look going forward based on the existing business as well as the plans and expectations for the business from the Senior Management. If the model is to be useful it must be based on assumptions that are reasonable and supported by a well thought out business plan that can be delivered. The outcomes from the model can only be as good as the inputs and the assumptions that it is based on.

Do you need a financial forecast?

Do you regularly face unanticipated cashflow shortages or lack confidence in your financial position? Does your business struggle to plan ahead? If these are questions that resonate with your business, then it’s time to act. It can also give you valuable insights into the way your business performed in the past and the way it will compare in the future. It ensures that difficult management decisions are built upon solid financial figures, without compromising the financial integrity of your organisation. Above all, it gives you peace of mind in the financial stability of your business.

Typically, the need for a forecast is usually triggered to support an immediate issue, such as securing funding either for some form of working capital need or planned capital expenditure. Whilst these examples are important, as in these cases such a forecast may well be a requirement from a lender or grant funder in order to obtain the facility, having the ability to work through the implications of an investment decision, a marketing campaign or the employing of additional staff, enables forward planning based on some sort of informed decision.

A further consideration is that if a business is looking forward with an exit plan in mind then a well thought out forecast can be a key tool in underpinning the value of the business. If prepared in a positive but realistic manner, then the value in the multiple may be supported or the case for an increasing adjusted profit basis be justified.

……..more importantly it can be an excellent tool to give a business owner an insight (or reminder) into the dynamics and impacts of business decisions and how they work through the numbers. (e.g. dividends, capital spend, payment of tax, changes in payment terms, changes in margins)

Specialist insights and detailed analysis

A financial forecast always starts with a deep understanding of how finances work for your business. This includes a drill-down analysis of cashflows, incoming revenue streams, debts, potential threats, and market shifts, to name just a few. At the most basic level, a financial forecast predicts the state of your business finances. This gives you the opportunity to measure actual progress and anticipate potential problems before they arise. As a result, forecasts help you identify, set, and hopefully meet your most important business goals. (and understand their imoportance)

This is especially relevant for businesses undergoing significant structural changes or experiencing rapid growth. These elements have a huge impact on future cashflows and the overall financial performance of your business. Crucially, you should always be aware of the different factors that influence your future cashflows, even when business is booming. The importance of managing cash and debt should never be understated in a business as this is why businesses fail and not necessarily a lack of profits. Capturing the business knowledge and enthusiasm into a professional framework delivers a very powerful commercial document.

Observe, adjust, and analyse

Setting a financial forecast is difficult, especially because elements of your business finances can change overnight. Furthermore, your forecast must consider external factors, as well as internal ones.

Financial Forecasting is also difficult for newly established businesses, or for those that don’t have accurate financial analysis frameworks in place. As a result, constant adjustments and an awareness of changing dynamics is just as important as creating the forecast in the first place.

Investing in your business future

A good financial forecast is not just an investment in the longevity of your business. It’s also a sign that you’re approaching your finances from the right perspective. Understanding the various elements that impact your business is vital if you are to make the right decisions and investments. Following a hunch, relying on guesswork or taking a gamble with your business simply isn’t a good option.

Budgets and Forecasts

Budgets lay out the plan for what a business wants to achieve, while a forecast states its actual expectations for results, usually in a much more summarised format. (Although the 2 can be integrated to form an extensive budget/forecasting model)

In essence, a budget is a quantified expectation for what a business wants to achieve. Its characteristics are:

· The budget is compared to actual results to determine variances from expected performance.

· Management takes remedial steps to bring actual results back into line with the budget.

Conversely, a forecast is an estimate of what will actually be achieved. Its characteristics are:

· The forecast is typically limited to major revenue and expense line items. Depending on the complexity, projected balance sheets and forecasts can be incorporated.

· The forecast can be updated at regular intervals, perhaps monthly or quarterly.

· The forecast may be used for short-term operational considerations, such as adjustments to staffing, stock levels, debt management issues, dividend policy and investment impacts.

· There is no variance analysis that compares the forecast to actual results, although this may be done retrospectively to improve forecasts going forward.

In a budget the focus is on the P&L Account and performance whilst a forecast may have more of an emphasis on the balance sheet and cash projections and the wider strategic matters.

Realistically, the more useful of these tools is the forecast, for it gives a short-term representation of the actual circumstances in which a business finds itself. The information in a forecast can be used to take immediate action. A budget, on the other hand, may contain targets that are simply not achievable, or for which market circumstances have changed so much that it is not wise to attempt to achieve. If a budget is to be used, it should at least be updated more frequently than once a year, so that it bears some relationship to current market realities. An unrealistic budget is probably worse than no budget at all as it as variances can be so great that they do not really

Phil Talbot is a Chartered Accountant and a Director of PJT Consultancy and is based in Shrewsbury in the West Midlands. Previously the CFO for a large provider of Social Care and now working independently to help and support businesses who require the services of a part time /short-term Finance Director or a Non-Executive Director.

One feature of this is to design and develop financial models for businesses that form the cornerstone of business plans.

If you are interested, please email phil.talbot@pjtconsultancy.co.uk

or phone 07967 640082

Health and Social Care Businesses and the Role of a Part Time Finance Director

Tue, 25 May 2021 16:52:49 GMT

Why should a small business give the idea some consideration?

Many businesses may have a need for a Finance Director however not on a full-time basis and the thought of a part time solution may not really have been something that they have given consideration. For those businesses the concept may be new, but it could well be a positive addition to the business.

A business does not always have a need for a finance department with full-time staff and hiring a Part-Time Finance Director can be seen in the same as appointing a part time Wages Clerk. For many businesses if they were to require a Wages Clerk for 2 days a week then they would seek to appoint someone on a part-time basis to fulfil that role. However, for many businesses faced with a similar situation with regards to a senior finance role then a part-time solution is not an obvious one. For growing businesses, it is key to staff the finance team with the appropriately experienced staff, to not only maintain but support future business development. Therefore, appointing a part time Finance Director is a real alternative that can give a number of benefits to a small business.

The benefits of hiring a Part-Time Finance Director:

• Cost: hiring an FD on a part-time basis can be an affordable alternative for a growing business. A small business may see the cost of appointing a full time Finance Director as a cost that cannot be justified, however a part time alternative may be a viable proposition.

• Flexibility:

You can set out how much time you need them to work with you and you may be able to agree that times worked may change from one month to the next. It is potentially a pay as you go solution.

• Developing and utilising existing resources:

Many finance teams suffer from two inherent faults.

1. Processes tend not to be challenged and the primary reason for carrying out many day to day tasks are simply that they are done that way as that is the way they have always done.

2. Staff quite often have potential skills that are not currently being utilised

A fresh pair of experienced eyes can quite often review and improve processes as well as train and mentor staff that can make them more productive and allow them to develop, rather than simply process work without an understanding of the wider business. This is a Director directing.

• Focus and Planning for growth:

A Part-Time Finance Director may be able to help to raise finance and be involved in support or preparation for an investment; develop finance strategies; demonstrate forward thinking; and ensure that your business is financially controlled as grows. One of the key benefits is that such involvement will free up time for key individuals to do what they do best, grow and develop the business.

• Helping Support Specific projects:

An additional resource that may be used to look at the evaluation of potential acquisitions as well as supporting preparations for business sales. This may include financial modelling skills to support the overall process, a key tool in the negotiating process. It is highly unlikely that such resources will be available in house, and to have control over this is a strong and important factor in any proposed transaction.

• Provide a sounding board to business owners:

Many small businesses are run by individuals who are natural entrepreneurs, they are always looking for opportunities, but such enthusiasm doesn’t not necessarily mean that they will be successful. Sometimes a voice of reason is needed. Owner Managers quite often make decisions unilaterally but having a voice to challenge and play devils advocate can be important, giving an alternative view or support can be both reassuring and thought provoking.

Phil Talbot is a Chartered Accountant having worked in various senior finance roles in Health and Social Care for the last 30 years. Sixteen years of this as CFO of one of the largest providers of domiciliary care in the UK. He now works as a Consultant with an emphasis on supporting businesses within health and social care, looking to provide part-time FD type support for businesses that need help, but not the full-time reliance on such a person. This can involve any aspects of the business, but with a focus on accounting and control processes, reporting and the development of budget and forecasting models for business development, as well as helping owners in preparation for business exit.

If you are interested in this service please feel free to contact by emailing phil.talbot@pjtconsultancy.co.uk or phone 07967 640082

Social Care “What does the future look like, same questions just dated a bit later”

Sat, 26 Sep 2020 11:31:13 GMT

Social Care, what’s that?

I wrote the following article back in March of this year and on reading it thought what has really changed.

· Additional funding has been made available but depending on where you are the access to funds ranges from very easy to ridiculously red tape burdened torture. For purposes of clarity additional funding to meet additional costs and not a simple giveaway.

· Some of the punitive billing models (per minute billing) have been switched off, but only to return when cost saving moves back up the priority list.

· Recruitment is flourishing due to the general employment situation; however the reality is this will be a short term impact and when normality begins to emerge underpaid and undervalued care jobs will once more tumble to near the bottom of the jobs people would like to do list.

· The importance of a modern IT solution has been highlighted and will prompt the reluctant to spend small businesses to look at what are now affordable solutions. If run properly these save money as well as reduce business risk.

There is some sort of natural desire for people to want to live well and independently at home for as long as possible. Preventing unnecessary admissions to care homes and hospitals, should be a priority in a modern civilised society and if it is to be delivered as a priority it needs to be recognised properly for what it achieves, and funded at a level that reflects this. Supporting people to live at home, as far as possible, would be an intelligent and cost-effective strategy for the nation’s health and well-being, however before this is possible there needs to be some sweeping changes to accommodate its role in society going forward. Some aspects are practical whilst others may be seen as more image and reputational management, moving from being the poor relation to being recognised properly as a key player in a wider integrated Health and Social Care is not going to happen overnight.

The practical would be a properly funded system as part of a wider integrated Health and Social Care framework, whilst a more full and accurate portrayal of its role may improve the perception about what it does.

However important the longer-term plan is, the question of the moment is “How will an already beleaguered service survive the Covid19 crisis?”

Ironically I first sat down nearly three weeks ago to write this article, as nothing contained within it is new, and for many people working on Social Care it will not contain any surprises, but for others it may give some insight and substance to the high profile media storm of the last few weeks concerning social care.

Ignoring the Covid19 crisis it has widely been recognised that some parts of social care sector were broken and on the brink of collapse. The ways in which it can be fixed have been discussed extensively, by health and social care experts, however ultimately it is all about money. Practitioners do not particularly like talking about the financial environment in which they have to operate, but it is the variable which enables the “What is to be done” to be delivered.

Funding is a wider social question as to who pays, the state or the private individual, or more likely a solution somewhere between the two. The political importance of this was seen clearly seen in the run up to the General election of 2017, when Theresa May tried to address the issue when she talked about the “Dementia tax”. This was seen as an electoral disaster and was soon managed out of the spotlight as it caused short term mayhem in the polls. This was and is still seen by many as key reason as to why the Conservative majority was unexpectedly reduced, by a Labour opposition that at one point was perceived to be unelectable. This ultimately caused the Prime Ministers demise as the reduced majority made the delivery of Brexit impossible. In fairness to her she was simply addressing a can that had been kicked that many times up the road that it was hardly recognisable as a can. However, talking about increasing taxes or people who have paid their taxes all of their lives having to sell their houses to pay for care, and deny their families what they see as their right of property inheritance is akin to political suicide. Since that election nothing has really changed, the challenges of an ageing population are still the same and the promises of review and reform continue. The inaction pre Covid19 was starting to become embarrassing, but with what has happened in the last couple of months many providers may not survive financially.

There is no doubt that post Covid19 many aspects of life will change; many businesses will disappear and people’s behaviour in terms of work and social activities will change. How that will pan out exactly no one can really say, but as part of this the debate on the whole area of health and social care will be taking place in a somewhat different environment. It is all well and good lauding the NHS and all of the other front-line care staff in Nursing Homes and Domiciliary Care in a time of crisis, but will that goodwill be maintained when it comes to addressing funding and the future of care in this country.

The Historical Background

As the poor relation, homecare is usually at the bottom of government and other decision-makers priority lists, perhaps also because it is less visible than services delivered in care homes and hospitals as well as being a very dis-aggregated business. The image is of low paid staff delivering a poor service by private companies only interested in making money. Of course, elements of that will be true but it is not really a fair reflection of how the service really works and the challenges it faces.

In the mid 1990’s I was working as an accountant with a large care home provider, and through an acquisition came across a domiciliary care business for the first time. It was really an add on to one of the homes in the acquired group, it was small, poorly organised, regulation barely existed and made no money. This was “Home Help”. At this time, such support was mainly delivered by in house Local Authority teams and the service was predominantly supporting elderly people in their own homes in need of shopping or some domestic tasks. The amount of “Care” was limited as that was the job of the District Nurse and the Health Service.

However the 1990’s was the decade of change for the care industry as the realisation of the ageing population was just starting to create a problem that the old style converted Victorian like care homes and the low level Home Help would not be able to cope with. Through government legislation Local Authorities would cease to be providers of care and become purchasers of care, as the future explosion of demand could never have been dealt with by the infrastructure in place.

The whole landscape would change, it would have to change. The Local Authority run care homes would not be able to cope with the numbers, the properties were generally outdated and in a poor state of repair. The Home Help services were poorly run and expensive and would not be able to cope with increasing numbers as well as having to look after people in their own homes with increasing care needs.

The facts and the fallacies

· The historical shackles of the image of Home Help needs to be dumped, Homecare workers deliver a wide range of support services from the preparation of meals through to personal care and support with medication.

· Equality with NHS – social care is the poor relation and until the time comes that carers can be employed on similar terms to the NHS (pay rates, holiday entitlement, pensions and sickness benefits) and receive similar recognition, then recruitment is always going to be difficult. Social Care needs to be brought within the care loop and not just seen as an external source of support when it suits.

· The role of the private sector. Simply mention the private sector in terms of healthcare and the reaction is profit taking and exploitation. There will be examples to support such a view, but they are in the minority, public sector services are not always good and private sector services are not always bad. In terms of social care if the service was moved back to the Public Sector it would be a little like the rail industry going back to British Rail, nostalgia is one thing but actually it was not very good, and to bring such a service up to quality would be a very expensive option.

· The providers of social care are mainly private companies, although there are many not for profit and charitable providers. This is understood by most people, however GP surgeries (seen by many as the backbone of the NHS) are not part of the NHS in the way that hospitals are. Most surgeries are still small businesses. In most cases the Doctors own or rent their own premises, they employ and pay their own staff and have all the usual responsibilities of running a business. As part of this they aim to make a profit. The truth is that GP services are probably more privatised than social care.

· Zero hours contracts- most of the provision is probably delivered by employees employed on zero hours contracts. Such employment contracts are generally seen in a negative light and as a means of employers exploiting their staff. In some sectors and with some employers that certainly is the case. However interestingly I have spoken with many carers on the subject and I was somewhat shocked when nearly 80% of those spoken to were happy with the arrangement as for whatever reason it suited their circumstances.

· Commissioning (mainly through Local Authorities) drives the service, it is Commissioning that requests 15-minute visits, it is commissioning practices that means that there is a predominance of zero-hour contracts in the industry. The media tends to relate and blame these negative factors to providers when it is down to those who commission the services.

So Where is the Domiciliary Care Sector now?

State-funded homecare providers entered the COVID-19 pandemic in a severely weakened state, after decades of under-funding by successive national and local governments. Funding by Central Government has been cut through the years of austerity, whilst Local Authorities have been facing ever increasing demands on their services, as not only have we an ageing population but the consequences of austerity are causing further pressures to the needs of social care.

The recruitment and retention of staff is a major problem, terms and conditions for the workforce delivering state-funded care are very poor, with at least 50 per cent of care workers on zero hour contracts and many receiving wages on, or just above, the National Living Wage (NLW).

Many care providers have handed back poorly funded Local Authority contracts, the rates paid being commercially not sustainable. New entrants to the sector tend to avoid council-funded care entirely, planning to supply private individuals willing to pay a sustainable price.

The industry was already at breaking point and the trauma of the Covid19 crisis could prove to be critical.

To help mitigate financial pressures due to the COVID-19 pandemic, central government gave £3.2 billion extra funding to Local Authorities in England. The expectation was that councils would use a substantial proportion of this to support social care providers. If this comes through to support providers only time will tell, and different Authorities will give different levels of financial support.

There are two key elements of increased homecare provider cost pressures during the Covid19 pandemic:

The costs of PPE. Generally, the costs of PPE in normal times in Social Care are low. Protective gloves are used but the need for aprons, facemasks etc. are relatively low. However, during the pandemic, the rules of the game have changed and suddenly the need for all forms of PPE has increased to a level never envisaged, and the unit costs (subject to availability) have multiplied 10 and 20-fold. For many businesses this has been an unfunded additional cost.
The additional costs of sickness and absenteeism. The government may have put in place some measures for businesses to recover statutory sick pay, but this does not apply to larger providers.

If these are not addressed in a fair and equitable way the reality is that providers will fail financially, this short term issue must be addressed and whilst some of the rhetoric of support is out there, the proof will be what remains of the Social Care system from a providers point of view post Covid19.

My fear is that if Local Authorities do not get funding to these companies they will fail, ADASS (Social Service Directors) have sent out the right messages to Local Authorities. They have asked for services to be paid on a planned hours basis as well getting monies to these companies to help them through the crisis. The response from Local Authorities will be varied and with so many small businesses not having the financial support and know how to help steer them through this will inevitably see many businesses fail.

However, it is the long-term funding and the framework that it operates in that is the real challenge, what will society want in the future in terms of social care and how will it pay for it?

Phil Talbot is a Chartered Accountant having worked in various senior finance roles in Health and Social Care for the last 30 years. Sixteen years of this as CFO of one of the largest providers of domiciliary care in the UK. He now works with an emphasis on supporting businesses within health and social care looking to provide FD type support for businesses that need help, but not the full-time reliance on such a person. This can involve any aspects of the business but with a focus on accounting processes, reporting and the development of budget and forecasting models for business development, as well as helping owners in preparation for business exit.
For any enquiries please contact Phil Talbot on 07967 640082 or email phil.talbot@pjtconsultancy.co.uk

Homecare “Where will it be when we come out the other side”

Tue, 05 May 2020 11:34:33 GMT

Social Care, Homecare, what’s that all about?

The problem that everyone knows exists and acknowledges is getting worse but cannot agree how to address

Social Care, what’s that?

However important the longer-term plan is, the question of the moment is “How will an already beleaguered service survive the Covid19 crisis?”

The Historical Background

However the 1990’s was the decade of change for the care industry as the realisation of the aging population was just starting to create a problem that the old style converted Victorian like care homes and the low level Home Help would not be able to cope with. Through government legislation Local Authorities would cease to be providers of care and become purchasers of care, as the future explosion of demand could never have been dealt with by the infrastructure in place.

The Facts and the Fallacies

So Where is the Domiciliary Care Sector now?

State-funded homecare providers entered the COVID-19 pandemic in a severely weakened state, after decades of under-funding by successive national and local governments. Funding by Central Government has been cut through the years of adversity, whilst Local Authorities have been facing ever increasing demands on their services, as not only have we an aging population but the consequences of austerity are causing further pressures to the needs of social care.

The recruitment and retention of staff is a major problem, terms and conditions for the c arers delivering state-funded care are very poor, with at least 50 per cent of care workers on zero hour contracts and many receiving wages on, or just above, the National Living Wage (NLW).

Many care providers have given back poorly funded Local Authority contracts, the rates paid being commercially not sustainable. New entrants to the sector tend to avoid council-funded care entirely, planning to supply private individuals willing to pay a sustainable price.

The industry was already at breaking point and the trauma of the Covid19 crisis could prove to be critical.

There are two key elements of increased homecare provider cost pressures during the Covid19 pandemic:

The costs of PPE. Generally, the costs of PPE in normal times in Social Care are low. Protective gloves are used but the need for aprons, facemasks etc. are relatively low. However, during the pandemic, the rules of the game have changed and suddenly the need for all forms of PPE has increased to a level never envisaged, and the unit costs (subject to availability) have multiplied 10 and 20-fold. For many businesses this has been an unfunded additional cost.
The additional costs of sickness and absenteeism. The government may have put in place some measures for businesses to recover statutory sick pay, but this does not apply to larger providers.

However, it is the long-term funding and the framework that it operates in that is the real challenge, what will society want in the future in terms of social care and how will it pay for it?

Phil Talbot is a Chartered Accountant having worked in various senior finance roles in Health and Social Care for the last 30 years. Sixteen years of this as CFO of one of the largest providers of domiciliary care in the UK. He now works with an emphasis on supporting businesses within health and social care looking to provide FD type support for businesses that need help, but not the full-time reliance on such a person. This can involve any aspects of the business but with a focus on accounting processes, reporting and the development of budget and forecasting models for business development.

For more information please phone 07967 640082 or email phil.talbot@pjtconsultancy.co.uk

Financial Due Diligence in Social Care

Mon, 16 Dec 2019 15:25:52 GMT

Financial Due Diligence in Social Care - It's just not Cricket

Financial due diligence for an external consultant in a business sale environment is a two-sided coin, and to use a cricketing analogy as an accountant, you are either a batsman or a bowler, the aims of your role are very different but there is an appreciation of that the other has a job to do. Being an allrounder is even better as you probably get a more rounded appreciation of the game.

The Batsman (the role in selling) , prepares well, looking to deflect awkward questions and respond on the front foot trying to achieve a high score and be successful.

When a company is up for sale it needs to show an in-depth report on its financial health to potential buyers. The company will want to show its performance in the most positive way, but this must be supported by evidence and well-documented information as this is going to be challenged by the financial due diligence of the buyers. In order to get this right, good planning is required and working alongside company management and other advisers, ensure that opportunities and issues are understood, and that potential issues are addressed at the earliest opportunity.

If done well it provides vendors with greater control over the sale process and the timing of sale, which can, in turn, help secure a higher price for the business.

The benefits of financial due diligence are not limited to the acquiring party. For the target company, the financial due diligence report paints a clear picture of their key strengths and weaknesses. This in turn allows them to be sufficiently equipped for probing from the buy side. In such cases, responses are put forward in advance to speed up and keep control of the negotiations.

A well-planned finance DD for a sale may;

· Provide vendors with greater control over the sale process and the timing of sale, which can help secure a higher price for the business

· Reduce disruption to the business as the sale process is more controlled

· Help add credibility to the facts, figures and information provided in the sales memorandum

· Remove the necessity for a buyer to have substantial access to do their own due diligence work as they will be able to rely on the vendor due diligence report

· Vendor assistance specialists can ensure that the vendor retains pace and initiative throughout the sale process

· Early identification of value critical issues, providing the option to "regroup and fix".

· Reduces uncertainty risk for finance buyers, potentially justifying higher offers

This is the vendor due diligence.

For many small businesses they may only sell a business once and therefore do not have experience of the wider process. In one of the first deals that I ever worked on this was the case, and the business involved simply went to an Agent who had the company that I worked for already lined up as a potential buyer. The Agent simply did the introduction, had met the vendor twice and had no more than the last 2 years statutory accounts to hand. The business was in no way well prepared for sale, and certainly had not been packaged in order to maximise consideration. I found this quite puzzling at the time, as if the business had been better prepared with good sales due diligence, I think a price of some 25% more than the final sale price could have been achieved quite easily.

Whilst reflecting post completion with a more experienced colleague he simply said to me, “Well it’s simply a case of the partially sighted leading the blind”, and those words are so true. Being well prepared has no guarantees but if nothing else it improves the odds.

The Bowler (the role in buying) , trying to suss out the opposition and look for weaknesses in the defence.

Financial due diligence is the procedure a potential buyer of a company undertakes to assess the financial health and stability of the assets up for sale. The assistance is to provide transparency and comfort to the acquiring party, financial information is scrutinised and any mitigating circumstances or areas which could potentially pose a risk are highlighted. It is not necessarily advising on if the deal should be done or not but provides information for a decision to be made, as well as evidence to help any negotiations with regards to price or the structure of the deal.

Financial due diligence is a crucial part of the acquisition process which enables parties to make informed decisions relating to the purchase.

Once the acquiring party has reviewed its own business strategy about instigating an acquisition, the following process is initiated before negotiations on the sale begin:

· The buyer formally expresses its interest in acquiring the target company

· Both parties conduct initial discussions on purchase terms

· Outline terms are established, and following this both parties are then required to sign confidentiality agreements

· Financial due diligence work begins once the target company provides related materials to the buyer

· Forecasting work can be carried out to look at the post acquisition issues of the larger enterprise and highlight potential challenges with regards to business integration.

Financial Due Diligence Benefits

The main benefit of a financial due diligence report is for the buyer to establish an understanding of historic and actual financial performance, as well as forecasting its financial solvency. The result of which allows for an informed valuation of the company.

Apart from the main objective of underlining any financial or tax risks, financial due diligence also has the advantage of providing buyers with an understanding of the target company’s assets, liabilities, and operations management structure. When combined with other forms of due diligence, a solid basis is established for informing strategic investment decisions related to the acquisition.

Financial Due Diligence Checklist

The financial due diligence report is a comprehensive document outlining the findings from a third-party. The contents vary between industry; however, contents found in a report that will cover:

Profitability and Sustainability

· Review historical financial documents.

· Review of financial policies, asset quality and profitability as well as the roles of key staff and their role and terms post acquisition.

· What is the financial structure of the target company?

· What is their current credit situation and current contractual situation with regards to ongoing work?

· Questions relating to motivation of target company’s acceptance of acquisition.

· Highlight the risks and challenges around post acquisition trading and business integration.

· Identification of possible synergies for the combined business.

· Impact of any restructuring in the post completion period.

· Any organisation considering a deal needs to check all the assumptions it is making about that deal. Financial due diligence provides peace of mind to both corporate and financial buyers, by analysing and validating all the financial, commercial, operational and strategic assumptions being made. It uses past trading experience to form a view of the future and confirms that there are no 'black holes'.

· The components of the service are revenue and market due diligence, synergy validation, maintainable earnings, future cash flows and all operational issues, as well as deal structuring.

Financial Forecasting

· Forecasts of earnings, cash flow and capital requirements for both the target company and the combined group post acquisition. This will involve extensive work not only on the target company but a good understanding of the acquiring business.

· Evaluation of the impact of interest and exchange rates, where appropriate, as well as potential tax changes and a regard for an outlook for that industry.

Internal Control

· How is the target company currently being operated? (people, systems and IT)

· What financial procedures are currently in place?

Tax Affairs

What is the current tax status of the business and are all tax matters up to date? This will normally be reviewed by a taxation specialist who will make sure all documentation in the final sales agreement is covered with all the necessary guarantees.

How can the external consultant help?

Sometimes strategic decisions are made at a high level in the business that an acquisition should be made. The danger is that it can be difficult for internal sources to go against this even if on an informed basis. The external consultant can challenge and provoke discussion on an informed basis if they have a good understanding of the sector and the operational challenges that it faces.

The process helps combine comprehensive information and an intuitive set of features that allow any team to uncover opportunities and understand risks.

Phil Talbot is a Chartered Accountant and Business Consultant, specialising in the provision of business and accounting advice for small business offering part-time FD services.

With over 28 years in Senior Finance roles including 16 years as Finance Director in one of the UK’s largest and most successful Social Care Businesses he has specialist knowledge and experience of the Health and Social Care Sector.

For more information please contact phil.talbot@pjtconsultancy.co.uk

Phone: 07967 640082

The Importance of Financial Forecasting

Wed, 14 Aug 2019 13:19:05 GMT

Forecasts aren't just for Weathermen

While this may seem obvious, many businesses either find it difficult to compile accurate financial forecasts or, even worse, disregard them altogether.

Do you need a financial forecast?

Typically, the need for a forecast is usually triggered to support an immediate issue, such as securing funding either for some form of working capital need or planned capital expenditure. Whilst these examples are important as in these cases such a forecast may well be a requirement from a lender or grant funder in order to obtain the facility, having the ability to work through the implications of an investment decision, a marketing campaign or the employing of additional staff, enables forward planning based on some sort of informed decision.

Specialist insights and detailed analysis

Observe, adjust, and analyse

Investing in your business future

Budgets and Forecasts

The key difference between a budget and a forecast is that a budget lays out the plan for what a business wants to achieve, while a forecast states its actual expectations for results, usually in a much more summarised format.

In essence, a budget is a quantified expectation for what a business wants to achieve. Its characteristics are:

· The budget is a detailed representation of the future results, financial position , and cash flows that management wants the business to achieve during a certain period of time.

· The budget may only be updated once a year, depending on how frequently senior management wants to revise information.

· The budget is compared to actual results to determine variances from expected performance.

· Management takes remedial steps to bring actual results back into line with the budget.

Conversely, a forecast is an estimate of what will actually be achieved. Its characteristics are:

· The forecast is typically limited to major revenue and expense line items. There is usually no forecast for financial position, though cash flows may be forecasted.

· The forecast can be updated at regular intervals, perhaps monthly or quarterly.

· The forecast may be used for short-term operational considerations, such as adjustments to staffing, stock levels, and investment impacts.

· There is no variance analysis that compares the forecast to actual results, although this may be done retrospectively to improve forecasts going forward.

Thus, the key difference between a budget and a forecast is that the budget is a plan for where a business wants to go, while a forecast is the indication of where it is actually going.

In short, a business always needs a forecast to reveal its current direction, while the use of a budget is not always necessary.

Phil Talbot is a Chartered Accountant and a Director of PJT Consultancy Services Ltd based in Shrewsbury in the West Midlands. He previously was the CFO for one of the largest providers of Social Care in the UK. He is now working independently to help and support businesses who require the services of a part time /short-term Finance Director or a Non-Executive Director. A feature of this is to design and develop financial models for businesses that form the cornerstone of business plans.

If you are interested in the development of Business Models and Business Plans please email phil.talbot@pjtconsultancy.co.uk or phone 07967 640082

Social Care: Is Artificial Intelligence the answer when current processes are not very Intelligent at all. (Silver bullet or a blank?)

Wed, 26 Jun 2019 17:24:20 GMT

The Tale of the Golden Generation

I must admit I do fear for Artificial Intelligence in the world of Social Care, and yet what it can do is impressive. For some it will be a godsend and will bring life changing aspects to their quality of life, but alas I believe that this will be for the fortunate few and not the many.

Despite the hype it reminds me a little of England’s Golden Generation of footballers. The abundance of potential talent looked like it would be the answer to all England supporters’ dreams, all those years of hurt etc. but in fact it never quite worked, and no one ever really could explain why. I guess that players got injured, they never worked together as expected and the challenges that they faced (the other teams) also changed. In a similar way the potential of AI looks impressive, but I fear other forces will overwhelm it as the silver bullet that will solve the Social Care puzzle. I genuinely hope I am wrong and do believe that it will help but the scale of the challenge feels insurmountable when you look at the current problems.

The examples that you see on social media are in some instances fantastic, but they are not a magic wand, and will they solve the problems that they are up against. The AI may well be a strong swimmer but the tide it is swimming against would seem to be of a far greater force.

The Knowns – Demand going up and the number of trained carers going down

The facts are quite simple as there is an unprecedented growth in the percentage of aging population throughout the world, particularly in growing economies such as Europe, Japan and China, something that we in the UK rarely give any thought to.

I read last week that from 2000 to 2050, the percentage of the world’s population who is 60 years of age and older is estimated to approximately double from about 12% to 22% (from 605 million to 2 billion).

This rapid aging demographic will directly affect social, economic and health outcomes for these growing economies. How will such demands be met, keeping in mind the prevalence of chronic diseases and the requirements of the elderly and geriatric patients. Geriatric diseases such as osteoporosis, cardiovascular diseases, obesity, diabetes, dementia and osteoarthritis require quick diagnosis and continuous supervision by a professional caregiver.

This is coupled with the fact that we are not training enough Doctors and carers to account for the increased demands of healthcare. The problems are obvious, but the solutions are not.

Given the situation, healthcare providers are starting to offload certain parts of the care-pathways to artificial intelligence (AI). AI can now be found in healthcare, starting from intelligent tracking of biometric information to early diagnosis of diseases. AI is helping patients and their families understand the treatment pathways. AI is also helping clinicians to treat the conditions more efficiently.

Artificial intelligence is a key component of the future of healthcare. Indeed, the era of the AI doctor seems to be unavoidable. Today, we see AI in hospitals helping clinicians identify medical risks; predict when to provide targeted, life-saving interventions; form treatment plans for patients with rare diseases; and deliver precision medicine.

However, this is AI being used mainly in a medical environment and by professional staff, where it is fully resourced and professionally managed, however the care at home scenario is somewhat different, where to a certain degree much of it will be managed remotely, which in itself will bring many challenges. The other challenge faced is that the elderly cared for at this point in time are not “IT friendly”. This is a fact that cannot really be changed but will hopefully reduce as an issue as the IT generation become the users.

My cynicism is unfortunately born out of experience and knowledge of the sector. The quality and available resources for administrative support for most businesses is generally poor and therefore the chances of the theory becoming reality are somewhat limited as implementation and ongoing maintenance will create challenges that will be very difficult to maintain. In addition to this the question of potential liability may become an issue for providers, as if you have systems with alerts and warnings and these are not acted upon then there may be a potential liability due to the inaction. If this was to be the case then what funding would be needed to fully support such a system with adequately trained staff 24 hours a day, 7 days a week.

The historical underfunding of the sector pervades throughout the businesses, from the inability to recruit carers at or around minimum pay levels to the resources available to administer and support the day to day business. Funding has been and will remain the key issue to the Care crisis.

At one of the National Care Shows several months ago I bumped into a former colleague who now is the CEO of one of the Care Sectors largest providers of Care Management software. Whilst I appreciate that Care Management software is not AI the conversation that we had painted a picture of the challenge to be faced by introducing change into the care system. Following a brief chat about how we managed 25 years ago he gave me a great insight into where the Care Home Management systems market is today and what the modern cloud-based solutions can offer. I was impressed, and it all made sense. Easy to use, safe, GDPR compliant and appeared to be affordable. The solutions are on a single platform and are integrated and relatively easy to use, and in a care home environment can be controlled well.

Now that all made sense to me, however he then told me that only in the region of 10% to 12% of all care homes use such systems and the rest still rely on antiquated or in many cases paper-based systems with historical processes that are not integrated. Being honest I was initially shocked but having time to think about it afterwards I thought that I should not really be shocked. If you then bear in mind that Domiciliary care businesses are more difficult to manage due to the remote nature of the client base and the workforce, then introducing change will be even more difficult.

In the last 6 months I have spent a great deal of time looking at the Care Management solutions for Domiciliary, Complexed and Supported Living care, and whilst as ever in the wake of the Care Home sector, the products are developing quickly. However, the greatest hurdle is not financial, as the solutions are now affordable, but it is the reluctance to change and the lack of resources to enable successful implementation, a message clearly echoed from the Care Home sector.

If you then consider the introduction of a new generation of technology into social care, then it is not all about robots I’m afraid because somewhere in the process there are still going to be a lot of humans.

Phil Talbot is a Chartered Accountant and Business Consultant, specialising in the provision of business and accounting advice for small business offering part-time FD services.

With over 26 years in Senior Finance roles including 16 years as Finance Director in one of the UK’s largest and most successful Social Care Business he has specialist knowledge and experience of the Health and Social Care Sector. Any businesses interested in Non-Executive Director Support, advice with regards to Care Management systems or part time FD Support then please contact.

email : phil.talbot@pjtconsultancy.co.uk

Phone : 07967 640082

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A Finance Directors lot

philjtalbot@outlook.com (Phil Talbot) — Fri, 07 Dec 2018 15:39:05 GMT

…it’s more about people than numbers

In 16 years as a Finance Director of a growing dynamic business, despite what the stereotype may suggest, the life of an accountant was not always a dull and boring one. Of course, it did have its moments, but no more than any other job and on reflection when speaking with friends in other jobs, it would at times be positively dynamic. To be successful it is more about people than numbers, you can understand numbers most of the time, but understanding and managing people is not quite so easy and yet it is so key to overall success. I firmly believe that the box of tissues stationed on the corner of my desk as a means of listening and consoling upset staff were equally as important as the loyal calculator sat next to it.

Business is ultimately simple and tends to be complicated by people, and my philosophy was always, set up processes that are simple and logical, and delegate them down the team with the appropriate level of support. The finance process I always likened to that of the old circus spinning plates scenario, as soon as you addressed one problem area, something different would pop up elsewhere. That in my view was not necessarily a weak system, it simply was just what happens. The business world is a dynamic process and therefore the challenges will change on a daily basis, but the challenge of managing staff will always be there.

There are several key features which in my view underpin this

· Understanding the basics of a business should never be lost , it gives a good understanding of the business dynamics but also an appreciation of the day to day issues faced by members of your team. If the processes are robust and the team is good, the levels of risk are low and ultimately the financial integrity of the business is maintained. Even when working at a senior level never lose sight of the basics and do not take them for granted.

· Such an understanding builds credibility and respect with the team and spending time with young and new members of staff should not be underestimated. Treat your staff as you would like to be treated, look after good, hardworking loyal staff and address those that don’t fit in to the team as early as possible not to upset the balance. This not only helps the FD, but builds respect amongst the team, and respect should not just be a given as it must be earned.

So, bearing this in mind what does the FD of a SME need to concentrate on in order to be successful, and what is success?

1. Don’t forget the basics and know where the dangers lie.

My old boss used to say to me on a regular basis “Do not underestimate the power of analytical review young Philip”. He was right, in fact he was nearly always right, he understood the numbers and he understood the risks. As a result of this his experience homed in to the key areas and he always had the ability to ask the right challenging questions at the right time. This was not luck, as I used to suggest, it was experience born out of a good understanding of the business.

2. An FD needs to be able to do the basics, such as accurate cashflows & management accounts and understand what is in the company balance sheet. They always need a good appreciation of the working capital requirements of the business, businesses do not fail due to a short-term fall in profitability, but they do fail if there is a shortfall in cash. An FD does not need to be a tax or a legal expert but should know enough so that they realise when additional knowledge is required, whether that is from their network, research or tax expert.

3. An MD/CEO always requires an impartial sounding board to discuss various matters, such as staffing and strategy/tactics as well as someone who they trust to have the business’s best interests at heart. The person who should have the best oversight of the company is the FD, who not only knows the numbers and the business inside out, but also has an appreciation of the wider business community and the environment in which the company operates.

4. With reference to a wider appreciation of the business the FD needs to be a Jack of all trades, but a master of none (other than the company finances of course). The FD needs to be able to take an objective and common-sense view of the strategy that the company is employing to achieve its goals, and in order to do this has to have a proper understanding of the challenges faced by Sales, Operations, Recruitment, IT and any other of the significant departments from within the business.

5. SMEs frequently seem to work on the basis that the MD, Sales and Operations Directors have clearly defined roles, so any tasks outside these areas fall, by default, to the FD. Having IT issues or employment tribunals is not what any business wants and having a major contract go wrong and then finding that there are holes in the terms and conditions could prove fatal, such issues tend to fall on the desk of the FD and this simply comes with the territory.

6. An FD needs to be able to communicate effectively with not only financial staff, but also non-financial staff; from directors down to junior staff. They need to be both persuasive and diplomatic. There will be times when an FD disagrees with another director or the MD and needs to be able to get their message across in such a way that it does not alienate the other individual but will result in them changing what they currently do. This may take some period of time, so patience is essential.

7. Business quite often assume that anyone over 50 is counting the days until retirement and has no drive or energy. This may be true for some people, but the majority still have a lot to offer any company and remain motivated to help businesses grow. Of course, on the plus side, older FDs bring experience. An FD who has worked in business for 25+ years has probably seen many of the issues that SMEs encounter and knows what does and does not work and bring a measured approach to the problem. They will have worked with many other directors and picked their brains for what works, and what does not work in their own areas of expertise.

The FD is not just a number cruncher. An experienced FD is someone who has an all-round approach to the business and so should be involved in the commercial and strategic areas, using their knowledge of the financials and their experiences within other businesses to shape their views all with the aim to improve the business performance.

Success is ultimately keeping everybody happy and that can be difficult. There are shareholders, customers, suppliers, banks, employees and other authorities. In some ways the skill is to convince each and every one of them when you deal with them, that they are the most important.

That is fine but just don’t encourage them all to be in the same room at the same time!

Phil Talbot a Chartered Accountant and Business Consultant. He specialises in the provision of business and accounting advice for small business offering part-time FD services. With over 25 years in Senior Finance and Director roles he also has specialist knowledge and experience of the Health and Social Care Sector. Any businesses interested please contact phil.talbot@pjtconsultancy.co.uk

The Part Time Finance Director

philjtalbot@outlook.com (Phil Talbot) — Tue, 25 Sep 2018 17:41:15 GMT

The Part Time Finance Director, part time or short term…. every little helps.

Why should a small business give the idea some consideration?

Its sound obvious that businesses need directing, but not necessarily all of the time in all areas, quite often they need a little bit of guidance in putting the systems and people in place and empower them to use resources and processes in the best possible ways. Once this has been established from that point in time onwards they may only require periodic or part time support, which in many cases can be done remotely. This help would be on a part-time basis but would have the flexibility to be tailored to the needs of the business. The idea of a part time FD solution may not really have been something that many businesses have given consideration however it is a growing area giving businesses flexibility in their staff resourcing. For many businesses the concept may be new and not one they immediately think of, but it could well prove to be a positive alternative for many companies.

What are the benefits of hiring a Part-Time Finance Director:

• We can’t afford one.

Cost: hiring an FD on a part-time basis can be an affordable alternative for a growing business. A small business may see the cost of appointing a full time Finance Director as a cost that cannot be justified, however a part time alternative may be a viable proposition.

• We don’t need one all of the time

Flexibility: you can set out how much time you need them to work with you and you may be able to agree that times worked may change from one month to the next.

• Developing and utilising existing resources:

Many finance teams suffer from two inherent faults.

1. Processes tend not to be challenged and the primary reason for carrying out many day to day tasks are simply that they are done that way as that is the way they have always done.

2. Staff quite often have potential skills that are not currently being utilised

• Helping support specific projects:

• Focus and Planning for growth:

A Part-Time Finance Director may be to raise finance and be involved in support or preparation for an investment; develop finance strategies; demonstrate forward thinking; and ensure that your business is financially controlled as it moves into growth. One of the key benefits is that such involvement will free up time for key individuals to do what they do best, grow and develop the business.

• Provide a sounding board to business owners: Many small businesses are run by individuals who are natural entrepreneurs, they are always looking for opportunities, but such enthusiasm doesn’t not necessarily mean that they will be successful. Sometimes a voice of reason is needed. Owner Managers quite often make decisions unilaterally but having a voice to challenge and play devils advocate can be an important, giving an alternative view or support can be both re assuring or thought provoking.

If you are interested in any way please contact phil.talbot@pjtconsultancy.co.uk

Social Care, Anyone Can Identify the Problems but Who Can Sell the Solutions to the Voting Public

Thu, 10 May 2018 14:10:40 GMT

Dementia Tax, Taxing of Pensions and Dramatically Reformed Inheritance Tax.....

Another interesting debate took place in the House of Commons on Tuesday May 8th, 2018, which if nothing else, enlightens more people to some of the problems faced by the Social Care sector. It is not all encompassing but it does give a flavour to something that will occupy an ever-increasing amount of time in the public spotlight over the next few months.

It is quite ironic that at the same time the key debate about the future funding of Social Care rolls on, this week it is the turn of the ideas of the Resolution Foundation and the ideas of re-distributing wealth between the generations. The ideas that may have some merit, unfortunately as with any changes in taxation, because that is what the various funding options are, there will be winners and losers. Politically this is dangerous territory as the lead up to the last election showed. The so called “Dementia Tax” was muted but disappeared just as quick as it had appeared when the public reaction was seen as a Public Relations disaster, which could have cost the Conservative Government an embarrassing electoral defeat. The reality is people don’t like giving up something that is theirs (albeit mainly gained on the back of historical property boom), and when it comes to property the impact is multiplied, as the younger generation expecting the inheritance benefit are not keen on giving up something that they see as going to be theirs.

A difficult prospect with no easy answers but it is interesting that the public appears to be being softened up for what will be some unpopular decisions.

The Headlines and the Summary of the Parliamentary Accounts Committee are set out below

The Public Accounts Committee report warns urgent action also required to reverse care work's poor public image and boost recruitment and retention.

The Headlines

· Adult social care sector underfunded

· Brexit causing uncertainty over workforce sustainability

· Concerns that Department sees Green Paper as "cure all"

CONCLUSION: NOTHING NEW THERE THEN!

The Summary

The adult social care sector is underfunded, with the care workforce suffering from low pay, low esteem and high turnover of staff. The care sector is in a precarious state but the Department of Health and Social Care (the Department) has not yet said how it intends to put in place a long-term, sustainable funding regime to meet the ever-increasing demand for care. The Department does not know whether the ways that local authority’s commission care, and the prices they pay providers, are contributing to the problems within the care workforce. We are not convinced that the lack of regulation within the care sector workforce and the balance of regulation versus a market-based approach, is supporting the care sector to provide the best care possible. The UK’s departure from the EU is causing uncertainty over how the workforce will be sustained, particularly in areas that are more reliant on non-UK workers. There is an urgent need to reverse the poor public image that care work has to boost recruitment and retention across the care sector. We are also concerned that the move to supporting people with substantive and critical care needs only is contributing to growing levels of unmet need for people with moderate care needs. These moderate needs may well grow into substantial or critical needs if support is not given. The Department has committed to addressing all these issues through the health and care workforce strategy that it is currently consulting on, and the promised Green Paper on funding of care for older adults. But given the pressures on the sector, we are concerned that the Department sees the Green Paper as a cure all and underestimates the scale of the challenge. The Department must ensure that its delivery partner, Skills for Care, is properly supported and funded to implement the workforce strategy.

CONCLUSION: WISE WORDS INDEED

The Green Paper may or may not be the answer but based on the last 20 years in the words of the Minister himself several months ago, by his own admission there has been plenty of talking and very little progress.

“Now no-one could accuse this or any government of not talking about the issue. In the past 20 years there have been 5 Green or White Papers, numerous policy papers, and 4 independent reviews into social care. So, it would not be unreasonable to expect scepticism about yet another one this year - and as the new Health and Social Care Secretary I do rather feel the weight of stalled reform programmes on my shoulders.”

The fundamental issue is that the demands on Social Care has changed beyond all recognition in the last 20 years with the ageing population creating a whole new set of problems, which unfortunately have by and large been addressed with the same solutions and structures that have historically been in place. What may have worked 20 years ago is no longer relevant and therefore some quite dramatic changes are needed to address the modern day and future needs. A fundamental change in the demands of a service requires a fundamental change to the approach and the framework that delivers it. If it is to be successful it will, as with any major change in policy leave winners and losers, the winners you would hope would be the vulnerable members of society, but who the losers will be and how that is managed is probably the key to the overall success of the solution.

So Where are the Real Challenges for Government?

1. Funding

It is blindingly obvious, and the consensus is that Health and Social Care is underfunded and undoubtedly at points in time it is reaching crisis point, however recognising the problem and addressing the problem are two very different issues. The funding must be in place if the overall system is to work, without proper funding the key issue of staff recruitment cannot be addressed, and without staff we have no service.

However, whilst the admission that greater funding is needed seems to be widely accepted, the means to achieve it are politically challenging. The bottom line is that the public don’t like money being taken from their own pockets, be it an increase in income tax rates, vat, national insurance etc. However, whilst to target the property-based wealth of the older generation has a certain logic it is politically risky, and whilst politicians want to solve the problems of Health and Social Care they may not want to do it if their political future is threatened by it. The view may appear to be cynical, but it is simply the truth, as we are dealing here with human nature.

2. The structural framework and the integration of Health and Social Care

I have worked in Health and Social Care for the last 27 years and in all of that time the idea that the only answer to the problem will be by means of integrating Health and Social Care has remained a constant. However, the reality is that the two remain apart and to a certain extent entrenched with a degree of self-interest and self-righteousness. Historically social care was “Home Help”, it was low level support and generally linked to housing and other social services delivered through the Local Government network. At that moment in time it probably made sense, but in the modern day the services delivered to residents in their own homes have changed dramatically with personal care and challenging medical conditions in reality making the service more Health than Social.

That is a fact and mainly the result of an ageing population and the advances in medicine, however to change the machinery of the Health Service and Local Government to develop an infrastructure fit to deliver a modern service is a challenge that nobody really wants to address. Administration is quite often about power, and people do not like giving it up, the cultures of the Health Service and Local Government are very different and neither group wants to give up control. This can only really be addressed by Central Government who ultimately hold the purse strings, however the control of funding can be persuasive it cannot guarantee success or buy loyalty.

Where does this leave the providers of Social Care?

The providers are so often seen as the baddies, portrayed as simply in it for the money at all cost and they are to a large extent ignored in the debate. This seems to be somewhat short-sighted in my view, and actually not true, but in the world of Health and Social Care, truth, knowledge and evidence seems to fall someway below that of maintaining personal and organisational reputation. This is something that providers have learned to live with but what will be thrown in their direction in the future?

The providers are in fact to a certain extent simply the product of the environment in which they operate, they react to the demands of their customers and the legislative landscape in which they must deliver care. Given that changes to the Health and Social Care landscape are inevitable what will this do to the market for providers?

As Authorities for the publicly funded provision put more money towards Health and Social Care, they will inevitably demand more, and the only way in which providers will be able to do this will be by consolidation of provision to deliver economies of scale and the introduction of new technology. The sector is just beginning to embrace digital technology but has been held back by the lack of funding with the products being somewhat limited, again due to the lack of money in the sector. However, this is beginning to change as the digital products and expertise from other developed sectors and products are starting to become utilised in the care environment.

Ironically for privately funded providers their main challenge will remain the recruitment of staff but operating in a true market these providers at least have the ability to control their pricing. If staffing remains a problem, then these businesses will look towards new technology as a means of reducing costs and enabling more resources to be put towards improving pay and conditions and attracting the best carers. The “Uber” like technology is very interesting and the companies that can encompass this along with a quality of care model will see a land of opportunity.

PJT Consultancy Services Ltd based in Shrewsbury is run by Phil Talbot a Chartered Accountant. A former CFO for a large Social Care provider now specialises in the provision of business advice with regards to the Health and Social Care Sector as well as general accounting and strategic support.

Part Time Finance Director? it just might make sense

Fri, 20 Apr 2018 14:18:05 GMT

Why should a small business give the idea some consideration?

A business does not always have a need for a finance department with full-time staff, and hiring a Part-Time Finance Director can be the same as appointing a part time Wages Clerk. For many businesses if they were to require a Wages Clerk for 2 days a week then they would seek to appoint someone to fulfil that role. However, for many businesses faced with a similar situation with regards to a senior finance role then a part time solution is not an obvious one. For a growing businesses, it is key to staff the finance team with the appropriately experienced employees to not only maintain current business needs but also support future business development. Therefore, appointing a part time Finance Director is a real alternative that can give a number of benefits to a small business.

The benefits of hiring a Part-Time Finance Director:

• Cost: hiring an FD on a part-time basis can be an affordable alternative for a growing business. A small business may see the cost of appointing a full time Finance Director as a cost that cannot be justified, however a part time alternative may be a viable proposition.

• Flexibility: you can set out how much time you need them to work with you and you may be able to agree that times worked may change from one month to the next.

• Developing and utilising existing resources: Many finance teams suffer from two inherent faults.

1. Processes tend not to be challenged and the primary reason for carrying out many day to day tasks are simply that they are done that way as that is the way they have always done.

2. Staff quite often have potential skills that are not currently being utilised

• A fresh pair of experienced eyes: A new view on existing issues that may be used to look at the scope for potential acquisitions as well as preparations for business sales, where appropriate.

• Focus and Planning for growth: A Part-Time Finance Director may be to raise finance and be involved in support or preparation for an investment; develop finance strategies; demonstrate forward thinking; and ensure that your business is financially controlled as it moves into growth. One of the key benefits is that such involvement will free up time for key individuals to do what they do best, grow and develop the business.

• Provide a sounding board to business owners: Many small businesses are run by individuals who are natural entrepreneurs, they are always looking for opportunities, but such enthusiasm doesn’t not necessarily mean that they will be successful. Sometimes a voice of reason is needed. Owner Managers quite often make decisions unilaterally but having a voice to challenge and play devils advocate can be important, giving an alternative view or support, can be both re assuring or thought provoking.

Phil Talbot is a Chartered Accountant and a Director of PJT Consultancy Services Ltd based in Shrewsbury in the West Midlands. He previously was the CFO for one of the largest providers of Social Care in the UK. Now available for part time Finance Director and Non-Executive Director roles for businesses in Shropshire and the West Midlands.

Where will the next body blow to Health and Social Care Businesses come from?

Tue, 10 Apr 2018 13:11:28 GMT

As the focus on the sector increases so do the expectations, but what next for providers?

For many providers of services in the Health and Social Care sector the mindset these days must simply be what can Authorities throw at us next to make life even more difficult than it already is? For all the effort is it worth it? Simply consider some of the recent changes;

· Increasing CQC fees and the demands of regulation

· Increasing staff pension costs

· The Apprentice Levy and the implications on training

· Increasing insurance costs

· The difficulties of recruiting staff

· Implications of the National Living Wage and HMRC

But what else?

Of course, there are the obvious financial reasons , many Local Authorities do not understand the costing of the services that they procure and want providers to take all of the risk. This can survive in the short term, but eventually it will fail. It is a difficult job for any Local Authority trying to meet both increasing demand and its legal obligations without the proper funds being in place, but it is unfair for the providers of care to carry all of the burden. It is an old debate, which despite periodic flashes of Government interest, has not really made any progress towards a longer-term solution. But ignoring the direct funding question what else frustrates providers and what will it be next?

Bureaucracy

Whilst large providers are handing back unsustainable contracts on financial grounds, smaller providers are feeling to a greater extent the impact of ever increasing bureaucratisation. As small businesses they don’t have the resources and skills to meet all of the ever-increasing demands of the likes of the CQC, HMRC, Data Protection, Health and Safety etc. It is a slow torture, but it does wear small businesses out.

Zero Hours Contracts

The topic of zero hours contracts is often an emotive one, and clearly one that is portrayed in the media as a negative exploitative tool used by greedy employers. In many cases that is undoubtedly the case and the treatment of staff is unfair. In view of this zero hours contracts are seen in a very negative way, and as a result some Local Authorities have jumped on the bandwagon and are demanding as part of contracts that they procure, that they be limited to a small number of staff or not used at all. Unfortunately, whilst from a Council point of view it is a nice soundbite, they are not willing to pay for it to be funded. However, what do carers themselves actually want with regards to contracts?

Interestingly for many employees in Health and Social Care, zero hours contracts are actually preferred, this is not based on dramatic newspaper headlines about exploitative employers but on actually talking to carers. This is based on my own personal experience when a clear majority of carers when quizzed on the topic were very much in favour of retaining zero hours contracts as it suited their own personal circumstances. The reality is that if new legislation was introduced around the use of zero hours contracts, it would undoubtedly benefit many who are exploited, but it may well have a negative effect on some parts of the care industry, as for many of these people this is the way they prefer to work.

The Sleep-in fiasco

If this was not such a serious issue it would be laughable. The legal challenges are ongoing and what the eventual outcome will be anybody’s guess. The whole process quite frankly has been shambles.

Once again, the historical practice of the industry has been based on the circumstances of the majority and the legal claims have been based on the modern opportunistic claim culture and the minority. Historically “Sleep-ins” commissioned by Local Authorities were paid at flat rates for a night, at levels that would pay carers some £30-£40 a night. Obviously at these levels of cost LA’s were paying say £50 a night, in line with the costs of the service. For many years this has been the accepted practice with additional wages being paid where certain night time disturbance criteria were met. Again, based on personal experience I don’t think in over 25 years of working I ever encountered a complaint with regards to the pay for sleep-in work, because it suited most employees and it was seen as relatively easy and the number of actual disturbances were quite few and far between.

However, funding pressures have had an impact on the service, with commissioning bodies trying to impose sleep-ins (in order to save money) on large packages when the circumstances really require 24-hour care. In these cases, providers are put in a difficult position, but they should still meet the legal responsibilities with respect to their staff irrespective of the commissioning practices. The funding situation has undoubtedly helped to crystallise a problem which for the clear majority of cases of genuine sleep-ins was not really a problem.

Travel time and the gaps between calls

If the sleep-in issue was caused by some differences in the law and how HMRC regulated employers, then this is going to be the next chapter from the same book, as it has the same problems, with employers not sure where they stand legally and how they are treated by HMRC. This issue will make the sleep-in clarification look easy.

By its nature, domiciliary care is generally procured in units of time, but because new packages start, service users go into hospital or die, the work pattern of a carer will be ever changing, and until the whole commissioning process is re designed this is always going to be the case. Because of this, from a business sustainability point of view with current funding levels, zero hours contacts are the employers contract of choice, not because they exploit employees but because they are consistent with the way in which care is commissioned.

Therefore, with staff rotas being so dynamic how can employers be sure that they are meeting all of the rules with regards to paying staff? The simple answer is they cannot as there are no clear rules, and just like the sleep-in saga this at some point is going to descend into a mess for many providers. If providers are not to breach HMRC rules with regards to National Living Wage legislation, then the rules with regards to this must be made clear and more importantly be consistent with the law. Then and only then will employers be able to operate confident that they are meeting all pay obligations to employees in both the eyes of HMRC and from a legal claims point of view.

PJT Consultancy Services Ltd is based in Shrewsbury and run by Phil Talbot ACA, a Chartered Accountant and Glenn Foster ACMA, a Chartered Management Accountant.

Both specialise in the provision of business advice with regards to the Health and Social Care Sector. Other services range from basic accounting advice to part time Finance Director or Non-Executive Directors roles. If you have a business in the Health and Social Care Sector and are considering selling, then please feel free to give us a call for a no obligation discussion.

Changes to Employee Pension Contributions

Tue, 03 Apr 2018 14:04:17 GMT

How long will it take for employees to notice the changes to auto enrolment pension contributions and what impact will it have?

The introduction of the auto enrolment pension was irrelevant for many businesses as their existing schemes meant that the terms of their schemes are above the minimum levels set out in the auto enrolment legislation, however for sectors at the lower end of the salary scales it has added to business costs and the administrative burden.

About 6 or 7 years ago I attended a seminar organised by a firm of Solicitors setting out the implications of the introduction of an auto enrolment pension system. After about 10 minutes it became obvious that out of about 30 employers in attendance, for 25 this was a non-issue as they already had occupational schemes with contributions well in excess of the levels set out in the auto enrolment proposals, and therefore for them it was of interest but interest only. For the others it would be an issue but relatively straightforward, with a stable workforce and predominantly salaried staff.

However, for one attendee it did not appear to be quite so simple, that one was a large Domiciliary Care provider……When the scenario was put to the so-called experts they re-coiled in horror, the administrative challenges were immense and there were no obvious solutions as the nature of the workforce meant that the implementation was challenging in so many ways.

Initially the solutions put forward were that an administrative team of about 4 people would be needed with software costs in the region of £200k. This was partly due the fact that the legislation was changing on what would appear to be a monthly basis and the actual solutions were impossible to create as the final specification was yet to be determined. Eventually the software providers were allowed to address the payroll and pension provider software issues and the actual process turned out to be a lot less scary than initially anticipated.

That was phase one, and whilst it may have caused some challenges, I think it is widely accepted that it has probably gone as well as could be expected, many are contributing to a pension that did not previously and for employers the implementation was not as painful as it could have been. However, what will phase two and the introduction of increased contributions mean.

The aim of Government was to encourage the wider population to contribute into a pension, albeit even in small amounts. The previous generation of Stakeholder Pensions for the lower paid, where employees had to opt in had pretty much failed. The idea of mandatory enrolment and having to positively opt out independently of the employer was a different approach to the same problem, that undoubtedly would, by the nature of the process, result in higher take up rates. However, for many employees the subject would almost pass them by unnoticed.

In my experience this has very much been the case, with opt outs being very much in the minority. That said will an increase in the employee contribution from 1% to 3% make many employees sit up and take more notice of the deductions. The current system does play on the employee’s lack of understanding, of that there is no doubt, however it will be interesting to see if the levels of understanding are increased when employees realise that their pension deduction on their payslip has suddenly trebled. For many lower paid employees, a deduction of £10 a month might go almost unnoticed however if that increases to £30 and potentially £50 next year I am not so sure that the opt out rates will remain at the levels currently seen. Only time will tell.

How minimum contributions increase in stages

Beginning on 6 April 2018, employers may be required to increase the amount of their contributions into their automatic enrolment pension. Staff members will have to make up whatever shortfall remains of the new total minimum contribution.

The contribution levels continue to rise until the employer is paying a minimum of 3% towards the pension and the total minimum contribution reaches 8% - with the member of staff making up the rest.

If the employer pays the same as the minimum total contribution then the member of staff will not need to pay any contributions, unless the scheme rules require a contribution.

Both the employer and staff member can choose to contribute greater amounts to the pension if they wish.

If the employer contributes more than their required minimum amount - but less than the total minimum amount - then the staff member only needs to make up the shortfall between the total minimum and the employer contribution.

The table below demonstrates the phases of contribution increases, with the employer paying only their minimum, and the staff contribution shown in brackets (the difference between the total minimum and the employer minimum):

Date effective	Employer min contrib	Staff contrib	Total min contrib
Until 5 April 2018	1%	1%	2%
6 April 2018 to 5 April 2019	2%	3%	5%
6 April 2019 onwards	3%	5%	8%

PJT Consultancy Services Ltd is based in Shrewsbury and run by Phil Talbot ACA, a Chartered Accountant and Glenn Foster ACMA, a Chartered Management Accountant. Both specialise in the provision of business advice with regards to the Health and Social Care Sector.

Where is the Provision of Social Care Heading?

Wed, 28 Mar 2018 18:39:34 GMT

The Residential Market might just give some clues as to where Social Care is going.

In 1990 as a newly qualified Chartered Accountant I walked out of the world of Public Practice into the world of “Commerce”. I had no idea what lay ahead, but I had just got a new job as the Management Accountant with the UK’s largest Nursing Home provider. Career progress indeed.

Now this career progress must be put into context as it wasn’t quite as grand as it might first appear. The company was Takare plc, and it was the largest privately-owned Nursing Home Group in the UK. However, at that point the company had a mere 11 Nursing Homes with about 1,200 beds, and whilst I did head up the accounting team, it was made up of 1 Sales Ledger Clerk, two Payroll Clerks and myself.

Add to this, occupancy rates were in excess of 98%, regulation was almost non-existent, recruiting Nurses and Carers was not a problem and the use of Agency staff did not exist. These facts alone highlight how the market in Nursing and Residential care of the elderly has changed in the last 25 years or so.

The office, based at Telford was to be the source of key personnel for many of the main operators and Industry commentators in the years to come, but none of them could have foreseen what the future would bring. Over 10 years up until the year 2000, the development of the market had come a long way as the first signs of recognising the forthcoming ageing population problem was beginning to be reflected in both the nature of provision, as well as the funding model and the introduction of the first real signs of regulation.

Takare were the first company to design and build ground floor, single room accommodation for elderly residents on a large scale. It was a model, whilst not universally liked, gave a modern facility for a growing problem which was at the time both economically sustainable and at a cost seen as affordable. The business model evolved and as with many things money was the driver. Investors looking to maintain or improve their stakeholding as the funding of care changed, (primarily the introduction of the Community Care Act in 1993) had to find a new solution. The whole funding model changed, and this saw the inevitable consolidation of provision as the answer. As times got tougher businesses sought efficiencies, and for efficiencies economies of scale meant that business profitability could be maintained.

In 2000, after extensive investment as well as several mergers and takeovers I left the business, as the finance function was being re-located to Leeds. By this time the Takare portfolio had become the largest part of BUPA’s Care Home division, which by now had some 14,000 beds. Having been in senior positions throughout the 10 years I had developed a good feel for change management and knew what it looked like.

Following on from this I took up the role of Finance Director in another care business, this time not Residential care but Domiciliary care. Businesses so often linked, and yet so different.

After an initial period of introduction, I was hit by a sense of deja-vous, the world of domiciliary care in 2001 felt somewhat similar to the residential care market some 10 years earlier. Regulation was almost non-existent, and up until that point a majority of care had been delivered by Local Authorities and their own in-house teams, and was still referred to by many as “Home Help”. Councils had only recently gone down the outsourcing route, becoming a purchaser rather than a provider. It was all new to the purchasers, as they had not done that role before, and it was all new to the providers, as most were fledgling businesses. The financial savings for Local Authorities were significant and their exposure to risk somewhat reduced and for the new providers there was opportunity.

In these times providers were operating in a new business environment, where, like the Residential care sector before, the rules were yet to develop. However today, austerity, the higher public profile of the sector and the increasing demands of the service and a modern regulation regime, make the job of a modern day Domiciliary care provider unrecognisable from 16 years ago.

Once again, I had seen growth and changes which could not have been foreseen even by the most optimistic. In addition to the market changes, I had been the Finance Director of a business which had grown from 2 offices to over 50. Growth, development and change just seemed to be all in a days work.

In many ways the parallels of the two sectors and their evolvement, as society has attempted to address the ageing population, are quite strikingly similar. If that is the case, “What next for Domiciliary care?”

Interestingly as the debate regarding the funding of Social Care continues the residential sector appears to have seen a growth in privately only funded businesses. The patience of some care groups seems to have been exhausted as they refuse to take on publicly funded residents, which were, in many cases, being subsidised by the privately funded residents. Instead they are developing quality brands and targeting those with the ability to pay. The result of this, if reasonable occupancy rates are maintained, is that they are able to run a successful sustainable business where they have the ability to better control quality and manage income levels to support the business properly.

Will the Social Care market follow a similar route?

As a business specialising in supporting businesses in the Health and social Care Sector we believe that the market for domiciliary care will continue to consolidate and business intelligence does support this.

We have business interests that are actively looking to buy good quality domiciliary care businesses which are focussed on the provision of privately funded care.

If you have a business that is in this category and are potentially interested in the selling of your business, then please feel free to contact us and we will be happy to have a no obligation discussion. We can help in both the preparation of your business for sale, as well as helping and guiding you through the transaction.

Jeremy Hunt and the Refreshed World of Social Care

philjtalbot@outlook.com (Phil Talbot) — Fri, 23 Mar 2018 09:59:51 GMT

If and when the Green Paper appears, where will your business be?

As an avid reader of all things Health and Social Care, with an eye on the business impact aspects, I saw an interesting reaction to Jeremy Hunt’s speech from earlier in the week which did make me smile.

“I was refreshed to read the 7 points set out in the speech…..” was a comment I read.

“Refreshed”, now my initial reaction was a positive, refreshing, in that this may mean real signs of reform and action rather than the same old debate from the same old protagonists, with the same result, that is nothing really changing.

However, on further reading “Refreshed” actually meant revived or reinvigorated, i.e. more of the same. Or in his own words…….

“Now no-one could accuse this or any government of not talking about the issue. In the past 20 years there have been 5 Green or White Papers, numerous policy papers, and 4 independent reviews into social care. So it would not be unreasonable to expect scepticism about yet another one this year - and as the new Health and Social Care Secretary I do rather feel the weight of stalled reform programmes on my shoulders.”…………a fair point and a great deal of responsibility.

There were 7 principles set out in the speech, these were

quality and safety embedded in service provision
whole-person, integrated care with the NHS and social care systems operating as one
the highest possible control given to those receiving support
a valued workforce
better practical support for families and carers
a sustainable funding model for social care supported by a diverse, vibrant and stable market
greater security for all – for those born or developing a care need early in life and for those entering old age who do not know what their future care needs may be

…….as Mr Hunt said we have heard it all before.

As everybody is aware the current situation is challenging to say the least, and the demographics and advancements in medicine mean that the current broken model has to change. With the sustainability of the publicly funded provision coming under scrutiny, as large providers hand back many Local Authority contracts, where is going to end.

The CQC has itself expressed serious concerns about the state of the adult social care market and the risks of provider exit.

That pressure is feeding through to the NHS with A&Es becoming overcrowded because hospitals find themselves unable to discharge patients who cannot access social care support packages. What commentators fail to recognise repeatedly is why do we have this capacity issue with providers? In a word it is recruitment, and ultimately that is about funding, although it is not the sole reason.

Green paper or no green paper the market will inevitably have to change, the emphasis on privately funded care will continue as the constraints on public funding will not simply go away. Access to publicly funded care will be spread thinner and therefore by one means or another, families will have to care for themselves or access the private pay market, there simply are no other alternatives.

We believe that the market for domiciliary care will continue to consolidate, and we have business interests that are actively looking to buy good quality domiciliary care businesses which are focussed on the provision of privately funded care.

Having spent the last decade buying businesses for a large domiciliary care provider we can take this practical knowledge and apply it to your sale. We understand the requirements of buyers and will assist you to have your business in the best possible shape, this will help to ensure the transaction is as smooth as possible minimising the stress that such a big event like this has the potential to cause.

PJT Consultancy Services Ltd based in Shrewsbury, Shropshire is run by Phil Talbot a Chartered Accountant and Glenn Foster a Chartered Management Accountant. Both specialise in the provision of business advice with regards to the Health and Care Sector.

National Living and Minimum Wage

Mon, 19 Mar 2018 10:19:53 GMT

National Minimum and living wage, rate increases coming April 2018

Recently the latest round of naming and shaming of businesses found to not comply with national minimum wage and national living wage legislation was issued. 179 businesses were found to have underpaid a total of £1.1m to 9213 employees.

While it is obvious that all employers should meet the requirement to pay the legal minimum wage and that HMRC provide this information to deter non-compliance in our opinion it is a slightly blunt instrument when you look at the detail of the list.

If you download the list, you are also provided with the period that the non-compliance relates to. One of the employers at the higher end of the list underpaid each employee by an average of just over £2 each per year when a business around 50 places lower underpaid employees on average £1,500 each per annum. It shows that a small error, large numbers of people and a long period of time can add up to a significant issue and generate headline grabbing sums of money.

Included in the recent list were 7 care sector businesses, there are several areas within this sector that have the potential to cause problems. Specifically, in domiciliary care the largest factor for failing to comply with legislation is travel time when this element of working time has been included in the main hourly rate. We have spent a great deal of time working on this issue and therefore are proficient in analysis of business records and data to check compliance and report to owners of the business. In our opinion the best solution to this is to ensure the business uses a reliable time recording system to record employees working time, remember the company is responsible for producing the records to prove compliance.

From April 2018 national living wage and national minimum wage are due to be increased again so don’t forget to review your employees pay in line with this. Also remember to deal with pay increases required because of an employee’s birthday.

From our experience of the application of minimum wage legislation in a demanding sector we would be pleased to offer you advice and assistance to ensure that your business is compliant with legislation and remains compliant into the future. Please contact us for a free no obligation initial consultation.

PJT Consultancy Services Ltd is an accountancy practice based in Shrewsbury, Shropshire. The business is operated Phil Talbot a Chartered Accountant and Glenn Foster a Chartered Management Accountant.

Making Tax Digital

Tue, 06 Mar 2018 12:10:35 GMT

Making Tax Digital - Overview

Making tax digital is part of government strategy designed to make it easier and more efficient for businesses and individuals to keep up to date with their tax affairs. Each individual and business has access to their own digital tax account and these are continually expanded upon and improved by HMRC.

We believe that Making Tax Digital for Business is the right approach by HMRC for the future. In our experience the move to more online based provision by HMRC has been a positive step, making dealing with many areas of taxation more efficient.

Businesses will now be mandated to use the Making Tax Digital for Business system from April 2019 to meet their VAT obligations. This requirement will apply to businesses who have a turnover above the VAT threshold which is currently £85,000 pa - the smallest businesses will not be required to use the system, although they can choose to do so voluntarily.

For those businesses required to use the making tax digital business system quarterly updates will need to be generated and submitted using the accounting software the business uses to keep records or an HMRC app.

We can prepare you for the requirements of making tax digital and reduce the burden of the administration of your business. We can supply accounting software or work with the software of your choice. Cloud based accounting solutions mean that we can provide support across the UK. Please feel free to contact us for a free initial consultation.

PJT Consultancy Services Ltd based in Shrewsbury is run by Phil Talbot a Charted Accountant and Glenn Foster a Chartered Management Accountant.

PJT Consultancy become Xero accounting partner

Tue, 27 Feb 2018 14:35:35 GMT

PJT Consultancy become Xero accounting partner

Following completion of the Xero certified advisor training by Glenn Foster one of the Directors of PJT Consultancy the company has become a Xero partner. Having selected and used Xero for several months for one of our new clients we liked the software so much we decided to become a Xero partner, we are even using Xero to maintain our own records!

Xero is business accounting software that runs in the cloud. This means all your financial data is stored online - so you can access it anywhere, anytime, from any device with an internet connection.

If you'd like to change the way your business does accounting, PJT Consultancy can help you set up a free trial of Xero.