Making working capital work


Posted on June 1st, by editor in Caring Times. No Comments

Recently the managing director of an expanding homecare business employing more than 60 people received a note from the local authority treasury department stating that an internal error had resulted in all invoice payment being delayed by up to four weeks. The result was panic and sleepless nights. This homecare business had recently secured a block contract, hired new carers, invested in new premises as turnover grew by almost 100 per cent in a matter of months. This sounds like the epitome of a thriving entrepreneurial business – indeed it is that. The challenge, however, was that no provision had been made for any material delay in invoice payments, resulting in a severe cash-flow problem. This may be termed “over-trading” or even “under-capitalisation”. “A bloody mess,” was term the business owner used. “I have to pay the carers I employ weekly and cover office overheads weekly. I submit invoices fortnightly but they take up to six weeks to get paid. Bridging that gap keeps me awake at ni





Comments are closed.


Latest blog posts

The NHS and all that jazz

By Caring Times editor GEOFF HODGSON

Last week the National Health Service marked its 70th anniversary. The irony is that, when this all too human institution...

The bland leaving the bland?

By guest blogger JEF SMITH

The headline for an interview which Sir David Behan, the Care Quality Commission’s departing chief executive, gave to The Guardian...

IT comes to CQC

By guest blogger JOHN BURTON

This month, IT is coming to CQC in person. David Behan is leaving, and DB’s replacement is IT, Ian Trenholm...