“Over the past six years of rolling out the NDIS in the Hunter region, organisations have had to make change, adapt to change and be innovative to succeed. Successful organisations have done this quickly,” NDIS six years on speaker David Hubbard from CINCH Financial Services tells us.
“Organisations that have not been able to change, move slowly or have not taken any steps to analyse costs and strategy have been left behind, merged with other organisations or liquidated.”
Understanding how culture and change management affects your numbers is what makes or breaks an organisation operating in the NDIS. But how do you effectively implement new strategies for your organisation and keep staff engaged? We have the inside information from an expert for you.
As part of the NDIS six years on: insights from the Hunter event, CSIA brings you an expert from the Hunter region.
CINCH Financial Services Director and Chief Financial Officer David Hubbard will talk about strategies that have worked, key performance drivers and share key learnings in a presentation and interactive session at the end of the day.
CSIA sat down with David to talk about what successful and not so successful organisations are doing in the NDIS.
Accounting for the change
With the introduction of the NDIS came the reality that organisations would need to account for not receiving income in advance.
“In the first instance, we recommend organisations know the cost of services being delivered – really something any business should understand,” David informs us.
“Under a fixed fee or block funded program income was a known factor that set organisation’s budget and expenditure.
“It was less important for organisations to understand the cost of services because revenue was known in advance, more importantly it was often received in advance before incurring service delivery costs.
“NDIS revenue varies and is dependent on a number of factors including the number of hours of service approved in the plan, client availability, staff availability, claiming all hours delivered (efficiency), and delivering the required number of hours as agreed with the clients plan.
“These financial issues didn’t exist before under a fixed fee/block funded model.
“From a cost perspective organisations under the NDIS pay staff to deliver services in advance of receiving NDIS revenue. Cash from the services delivered is delayed until after the data and transaction is processed. It may take some services a week to two weeks to accurately make the claim. If payroll is fortnightly the claiming process is often fortnightly. You see issues start to appear with planning cash flow and budgeting,” explained David.
Culture and change management
As the NDIS continues to roll out David has seen first-hand that successful organisations are not only working on financial analysis they are also working on the organisation’s culture.
“Successful organisations measure the cost of service delivery, changes in demand, changes in staff utilisation and capacity,” he said.
“We have found organisations who understand the impact of staff utilisation and operate flexibly to deliver services have lower unit costs than organisations who are less flexible and do not understand the impact of staff utilisation. It is important to note here the lower your unit cost the more people you can support for the same amount of funding.
“Staff leave (sick and holidays) have an impact on costs because the funds received from delivery of services need to cover a lot of other things in the organisation such as staff training, insurances, software, administration time (time spent on non-billable activities), looking after client enquiries, quality assurance, work place safety, audits and so on,” David tells us.
Changing the mindset of staff to operate under an NDIS framework takes leadership, accountability and time.
With the impact on financial planning and change management, having a board that can respond and be flexible is imperative to your organisation’s success in the NDIS.
“Successful organisations have an educated board of directors on the NDIS and understand the financial and non-financial impact of the NDIS,” said David.
“The NDIS has increased the governance risk for boards and successful boards actively participate in making informed decisions, asking questions and spending time analysing the data in line with the overall business strategy.
“The focus has shifted from boards being too operational to a more of a governance role.
“We have found where boards really understand the analysis of financial information and operations, they can support management in achieving outcomes and take advantage of opportunities which support more people in the local community,” explained David.
Last year David’s team at CINCH Financial Services were involved in three liquidations within a six-month period and have heard of a number of others verging on initiating the process.
David has seen first-hand the impact of change on people with disability, their carers, families, staff and the community. Not to mention the costs associated with winding-up an organisation, the impact of transferring services, transferring people and the communication with clients and staff.
You can avoid this by putting the time in now to do the work and take action to understanding how your business operates under the NDIS.