Why regular financial reconciliation benefits your business
Home care providers will face challenges posed by the new reforms and funding structure, with reports of a decline in revenue and profitability. The accumulation of unspent funds can be a financial burden and must not be confused with profit! In this day and age, to excel as a viable home care business requires timely information and compliant systems that support management decisions. Undertaking regular financial reconciliations is a vital step in maintaining a positive financial position.
Financial reconciliation – Why is it so important in Home Care?
Put simply, financial reconciliation is the process of validating financial data across data sources to verify if balances match. The process highlights any discrepancies, e.g. receipts against claims and provides you with the opportunity to resolve any discrepancies to ensure you receive the correct amounts within a specific financial period.
In Home Care, it is an extremely important practice, as it helps identify if your claims data matches receipts received from the Government. Many businesses struggle to undertake this process on a regular basis. This can clearly have an unfavourable effect on the financial position of your business if the correct receipts are not received from the Government.
The challenges in reconciliation
Understandably, reconciliation is a process that can be confusing and frustrating. Without an effective procedure or system, some of the challenges you may face as a provider include:
Difficulty comparing source data to ensure accuracy in reporting and funds received
Not being able to check the progress of multiple reconciliations/claims/payments etc.
Being prone to errors during the process of reconciliation
The process can be time intensive and resource hungry, especially if staff are not well trained or fully understand the process
Basic tips on managing your reconciliation process
With the right system or software application, you can manage reconciliations with confidence and proficiency.
Find a simple, time saving system that you and your staff will feel comfortable using.
Ensure you have a system that tracks the status of all reconciliations, as the system may identify multiple discrepancies.
Ensure the staff members responsible for the process receive proper training. You may want to limit the number of staff members with permission to access and/or edit data.
Schedule a regular time to perform reconciliations. We recommend the end of each month as a minimum. Remember, your purpose is to identify gaps in your data early, within a specific financial period, to stay on top of your payments and to allow any review to be undertaken whilst the information is current.
eREC software is purpose-designed to handle financial reconciliation
The electronic Reconciliation (eREC) application by e-Tools Software is designed specifically to help you reconcile your Government payment statements with your data. It links and fetches data from the eHCP application (electronic Home Care Package), or you have the ability to upload your data into eREC via a spreadsheet. It then carries out the reconciliation process electronically.
This is how eREC works to help you complete your payment cycle:
- Displays gaps in your payment data
- Identifies mismatched data and dates accordingly
- Provides a stepped process to complete a reconciliation
- Tracks the progress of all reconciliations
- Highlights reconciliations that have not been completed
eREC will be extended in the near future to also assist in residential care funding and also NDIS.
eREC is a simple, effective and affordable tool for your home care business. You also have the added support of the experienced consultants at e-Tools whose specialists can assist in the area of compliance and financial viability. Find out more at www.e-tools.com.au or call e-Tools Software on 03 9573-3277.