Management Account Information For Nursing and Care Homes

Despite the economic climate over the last few years, nursing and care home operators have generally been more likely than other businesses to secure the necessary funding from the banks that they require to maintain and grow their business.

This is due to a combination of the ‘recession proof’ nature of the sector and the banks’ knowledge of, and experience of lending to, nursing and care home businesses which has, over the years, led them to develop strict parameters which they can use to make funding decisions.

However, despite these factors in its favour, the banks remain cautious when it comes to lending to nursing and care homes. This has led to many of the banks now insisting on the production of monthly or quarterly management accounts, particularly in the event of an acquisition, to allow them to measure business performance against certain covenants on a regular basis.

This insistence on management accounts has been a big change for a sector that has historically been a little reticent to provide this level of detailed and regular financial information.

However, rather than just viewing the production of management accounts as a means to satisfying the requirements of funders, at HSKS Greenhalgh we encourage our nursing and care home clients to use this information to help them monitor the performance of their business. Our management accounts format includes profit and loss, balance sheet and cash flows measure against forecasts, so that trends can be assessed, any issues addressed promptly and, perhaps most importantly of all, allow cash flows to be closely monitored. We also include covenant compliance in the accounts, so that any issues can be easily and quickly identified by funders, many of whom have commented favourably on the detailed, yet easy to read, format of our management accounts.

Other circumstances in which clients have benefited from the production of management account information include those for whom we have been able to secure changes to covenant measures in their favour, thereby avoiding increase in bank interest rates, and for others who were quickly and easily able to meet Local Authority requests for management information as part of the tender process.