Cost and Cash Control Environment June 27, 2011 Presented by: Mr. Rahim Khawaja (FCMA)

 The planning, directing, monitoring, organizing, and controlling of the monetary resources of an organization with an overall aim to achieve financial objectives.  For a social organization, the key objectives of financial management would be, ◦ Financial Planning (medium and long term funding plans); ◦ Financial Control (cash management and effective cost control); and ◦ Financial Decision-making (investment and financing decisions). Financial Management

 The most vital part of Financial Management, Financial Control, mainly includes:  Cost Control - The process or activity on controlling costs associated with an activity, process, or company.  Cash Management - A way that a company will manage all aspects of the financial end of the business, such as the collection of revenue as well as the investing of the company's cash and other assets. Financial Control

Cost Control

 Cost Control aims to improve Medical care at less cost. This can be achieved by a simple process, phases of which may include; ◦ Identifying the factors that can promote cost saving. ◦ Influencing the identified factors that affect the cost baseline. ◦ Regular monitoring of cost performance. ◦ Make it a continuous process.  However, every cost saving strategy should be targeted on non-value adding process, and therefore should not effect the quality of service provided. Cost Control Process

Value Chain Analysis – Health Care Detailed analysis of each part of value chain can be done with an aim to highlight non-value adding process. These process should either be re-engineered, alternated or discontinued.

Benchmarking – Health Care Benchmarking is a systematic method to self assess an Organisations’ process against that of other, resulting in; 1.Cost Savings; and 2.Improvement in quality of services Benchmarking, usually followed by Business Process Reengineering will help us improve Quality as well as reduce cost of process. / cost

Cash Management

Cash Management includes collecting, maintaining, and disbursing funds in a way that minimizes the risk of misuse, maximizes profitable cash flow, and supports the entity's operations and mission.  Cash is both a fundamental resource and the means by which the entity acquires other resources.  To manage cash is to manage the entity's ability to purchase assets,  service debt, pay employees, and control operations.  Thus, effective cash management directly correlates with the entity's ability to realize its mission, goals, and objectives.

The cash management process combines:  Cash management tools, such as cash budgets and cash forecasting, for controlling cash availability and maximizing the investment of idle funds  Procedures for collecting, disbursing, and investing cash  Internal controls for safeguarding, recording, and reporting cash This process must comply with existing laws and regulations, both federal and state, and applicable professional and ethical standards. The cash management process has three major subsystems:  Collection  Disbursement  Investment These subsystems have very different control objectives. For example, the collection subsystem should reduce the time between point of collection and actual deposit. The disbursement subsystem, on the other hand, should increase the time from point of disbursement to actual reduction of cash balances. Therefore, compatibility and coordination between subsystems is necessary for overall cash management objectives to be met.

Cutting Costs brings Diminishing Returns. Pursuing a cost control strategy only gives diminishing returns. The largest cost savings are captured early on and after that additional savings are smaller and harder to come by! How can you Improve Margins Faster? Increase the efficiency of patient processes allowing more patients to be treated. This leverages existing beds and fixed expenses to generate higher operating margins. Other Factors to Consider