Primary care networks face a growing list of responsibilities, from meeting the population’s health objectives to increasingly complex financing currents. In the heart of all this is an essential search: how well do the PCN understand their own finances?
With the increasingly intricate financial panorama, understanding the terms of key accounting is not just the work of its accountant, it is something that each PCN should feel safe to navigate. But where does it begin and whose terms are more relevant to the operations of your network?
I asked Natasha Payce, health accountant and PCN finance expert, to share the five most important accounting terms that each PCN should know.
This is what she had to say …
Corporate fashion words and financial jargon are everywhere. While everything has its place, this terminology often achieves little more than causing ambiguity and confusion.
However, as a health accountant, I consider that the fundamental accounting terms are beneficial for our PCN clients to understand. We are going to unpack this and dive these accounting terms deeply, giving some details to remove.
An income and expenses report is the most widely included method to evaluate performance in a given period. A State that shows all income owed for a defined period of less incurred costs, giving a final position is essential.
In a PCN, many funds, received by specific clinical provisions, with the expectation that they do not generate profits. However, the main financing is to cover the operating costs of the network. Any of the members or poor in this area will lead to a surplus or deficit due to/of the members.
Although income and expenses are performance measures in a given period, the general balance shows the financial position of a PCN at a specific time.
As illustrated below, this is driven by the simple formula.
Assets – liabilities = equity
The capital maintained is fundamentally repeated the amount of PCN financing that the practices of the members have left behind to allow the PCN to operate. It is similar to the “current account” of a partner within his own practice.
The basis of AFRALS is where income and expenses are presented in the period in which they are related. This improves the usefulness of PCN accounts, since it allows year -on -year comparison.
This is particularly relevant to a PCN as most financing relations with a specific period. The time of income receipts can be an incredible variable, and when the relevant period is not assigned, PCN accounts would have a limited meaning.
Consider Arrs claims by March 2025, for example, clinical services have been caused and, therefore, have been obtained within the financial year 2024/25.
We would like the cash received by the claim in May 2025, which falls in the financial year 2025/26. Therefore, it is important to ‘accumulate’ this income in accounts prepared for 2024/25, ensuring that it coincides with the associated costs.
A debtor It is an amount receivable; That is a person or entity that owes PCN money on the balance sheet date. Creditor It is a payable amount; That is an amount that the PCN owes another person or entity, on the date of the balance sheet.
Given PCNS specifically, debtors will generally include income, such as capacity and access improvement payments, IIF and Arrs reimbursements received after the balance sheet date.
The creditors would generally include distributions of funds, such as home or household capacity or capacity and access improvement payments paid to members of the members, and invoices of the additional roles reimbursement scheme of third third party roles, where payments have been made after the date of the balance sheet.
The concept of deferred income is commonly misunderstood due to its complicated complex rules and criteria. In a nutshell, in certain circumstances in which funds have been received in advance, PCNs can carry out income for recognition in a future period instead of the date of reception.
Income should not be deferred simply because they do not spend; In general, the appropriation to defer will depend on the potential recovery of these funds. For example, if the PCN had not provided the full service agreed, would the ICB have the right to demand money?
We would always admire your accountant about any plan to defer income to reduce the risk of unexpected fiscal involvement.
With luck, I have given you some key conclusions, but if you want to leave this out of line to obtain advice on any PCN account, do not hesitate to communicate and get through natasha.payce@mha.co.uk
In summary …
Understanding key accounting terms is not just about marking boxes: it is about training PCNs to make informed decisions and maintain financial clarity. These five terms are a great starting point to navigate the world often complex of PCN finances.
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