Inefficient finance processes is just one of the key challenges many care providers are facing, outlined in our comprehensive and independent Care Trends Report 2024.
50% of CFOs told us their finance employees spend 4 – 6 hours a month on average amending invoice discrepancies, with another 49% saying their team spends the same amount of time also amending payroll errors.
In this article, we’re looking at the hidden costs of financial errors, and the potential impacts these challenges can bring to your care organisation.
What are the hidden costs of financial errors in social care?
1. Paying for lost time
Your finance team can likely give you a list of tasks they could’ve completed had they not needed to focus on fixing errors or managing time-consuming processes. But do you know just how much that lost time is potentially costing your organisation? Let’s crunch the numbers:
Currently, the average salary for a Finance Assistant in the UK is around £24,602 per year. That would work out to £12.62 an hour for a typical 37.5 hour week. Say you have three people in your finance team, each spending five hours a month amending invoice discrepancies, that time correcting errors would cost you £2,271.60 a year.
And you can double this number if your team is also spending the same amount of time amending payroll discrepancies too.
3. Operational inefficiency
You know just how much time financial processes can take, especially when we consider all the complexities that often come with invoicing and payroll in social care. But when your team is constantly amending discrepancies, it likely impacts the rest of the workflow. That’s because instead on focusing on next steps, they’re having to fix past mistakes and then play catch up with incoming needs.
Whether it’s painstakingly inputting data from one system into another, communication breakdowns slowing processes down or simply making mistakes because of human error, all this takes time to complete, let alone to correct if it’s wrong. And this reduced productivity can eventually lead to financial losses because you just can’t work to your full potential.
3. Retention struggles
Retaining finance teams is a challenge in many industries, with 34% of finance professionals in our recent Finance & Procurement Trends Report 2024 saying attracting and retaining talent is their biggest challenge. It could well be a similar case in the social care sector, which continues to grapple with a high turnover rate of 28.3%.
And in the context of the hidden costs we’re discussing today - perhaps it’s your employee’s not being paid correctly, or a burnt-out finance team being tired of inadequate processes – dissatisfied staff may look for other opportunities in hopes of a better working experience.
But of course, the cost of hiring new employees is often notably higher than retaining your current workforce, with a fifth (21%) of care providers telling us the monetary and time cost of re-employment is a challenge for them when it comes to retention.
4. Compliance challenges
You may have seen recently that the National Living Wage has increased from £10.42 to £11.44 as of April 1st 2024. And Skills for Care found that in December 2023, around 94% of adult social care providers in the independent sector paid some of their employees below this new rate.
Now the changes are in effect, care providers will need to make sure they’re conforming to the new National Living Wage. That may mean things like additional calculations for wage uplifts need to be considered, which could result in more time and effort needed by your already stretched finance team to ensure accuracy.
Delays to processing payroll and invoicing may even result in disruption to your service, potentially putting your organisation in position where you’re unable to effectively provide the compliant, high-quality and timely care you work hard to deliver.
How can software help care providers manage these hidden costs?
At OneAdvanced, we pride ourselves on developing sector-focused software that meets the specific needs of your industry.
Our care business management solution that gives you visibility of all your key operations in one platform. Care Cloud is designed to consider complex payroll and invoicing needs for all types of care service, so you and your teams can confidently focus on your core service needs.
Our cloud-based finance management software designed by finance people, for finance people, so your team can manage all accounting processes in one place.
For more insights like this, download our latest Care Trends Report 2024 where we take a deep dive into the key challenges faced in social care today, as told by those working in the sector.