Industry sector:

Care home: Cash from debtors

In a care home business, 'Cash from debtors' means all income you receive in arrear. When you receive it, payment in arrears is referred to as Cash from debtors.

It may be that your standard payment terms allow weekly, monthly or even quarterly fees to be paid in arrears (this would, however, be quite unusual). All of this income should be entered in your cash flow under Cash from debtors.

Even if your terms normally require payment of fees in advance, you may still accept some payments in arrears. This might happen because:

  • the local authority pays fees for supported residents on its own terms (each local authority is different in this respect - it might, for example, pay one month in arrear, or even pay in the middle of the month)
  • a resident needs time to raise money, perhaps from the sale of a house, and you agree to make special arrangements

If you have several residents who are supported by the same local authority (including those who only receive partial funding), you will normally submit an invoice for a 'block' of residents and receive a single payment.

Estimate how much income you will receive each month in arrear and enter it in the cash flow. It would be helpful to contact your local authority to find out what their payment terms for care homes are.

Sometimes a resident may have difficulty paying and you will be faced with the problem of deciding what to do. Try wherever possible to work closely with the resident and his or her family to reach a solution that is acceptable to everyone. You will need to handle such situations sensitively and tactfully. The eviction of non-paying residents in care homes is understandably a highly emotive topic, and something which needs to be approached with the utmost sensitivity and with regard for individuals' legal rights.

Your business stationery

Have some invoices printed for sending to local authorities and private clients who require a paper invoice. A good printer will be able to advise you on layout and style.