CASE STUDY: Knowing your numbers for financial resilience
When knowing their numbers led to growth and resilience
A regional NDIS provider of community supports and centre-based activities was facing challenges. Their initial projections showed that within two years they would be in liquidation.
They were not financially sustainable or resilient. With expert help, they took the steps towards understanding their numbers to have the financial clarity to know what was happening in their organisation.
This included reviewing their business costs, identifying funding gaps, calculating staff capacity, financial modelling, target setting with a three-year strategic plan and six-month operational plan, a budget with key performance indicators and streamlined reporting and analysis.
THE OUTCOMES OF KNOWING THEIR NUMBERS
This organisation is now looking at new opportunities based on being in a secure and resilient financial position. The projections of liquidation changed to show an increase in revenue, better business operations and overall growth.
- Understanding the cost structure and unit costs, the organisation was able to measure and report on key performance indicators. Everyone understood the numbers and how they were tracking.
- The organisation increased staff efficiency through key targets for the frontline workforce and supports in achieving them.
- Reporting (financial and non-financial analysis) improved.
- The organisation has seen improved performance thanks to monitoring key drivers, they are supporting more people and projecting surplus funds.
- The organisation has taken advantage of market opportunities and grown revenue by more than seven times, helping more people and employing 333 more people in the organisation.
Read more about this case study from Cinch Finance and Operations at www.cinchfinance.com.au They have a suite of case studies based on their work.
UNDERSTAND WHAT DRIVES THE NUMBERS
There is a way to improve the story that numbers tell about organisational sustainability and resilience. Ultimately, understanding the key drivers of sustainability can help community organisations achieve their purpose in an effective and efficient way that in turn generates surpluses for reinvestment.
Key drivers of financial sustainability include an understanding of:
- Productivity – a measure of the time you spend producing outputs relative to the cost of doing so. Productivity is fundamental to sustainability as it helps to highlight how we use the resources to deliver a service (inputs) and if they are sufficient to deliver output. An example of increasing productivity is using technology to cut down administrative processes and maximise direct support (output) to service users.
- Workforce utilisation – an approach that attempts to maximise the efficiency of a company’s employees. An example of how this can be achieved includes training an employee in multiple areas so that they can switch from one role to another with ease.
- Workforce capacity – your organisation’s ability to ensure sufficient staffing levels to accomplish its work processes and to successfully deliver your services to your customers, including the ability to meet varying demand. An example of addressing workforce capacity at a service user level would be individualised planning. At a whole of organisational level, it would include workforce planning. These plans would identify a mix of full-time, part-time and casual staff to meet regular and surge demand over time.
- Optimal mix of services – refers to the variety of services being offered to service users. The optimal mix of services maximises the uptake of services while maintaining the appropriate level of surplus or profitability in the delivery of those services. An example of this would include offering complimentary services to service users which as a package is profitable overall.
Do you want to find out more about how to know your numbers?
CSIA, with funding the Department of Social Services, NDIS Jobs and Market Fund Round 1, has developed this Building Financial Resilience Resource toolkit.
You can download a copy of this resource for you and your organisation to use to build your financial capacity and resilience, as well as gain an understanding of sources of capital. The content was developed after a series of Industry workshops around the key topics covered in the chapters of this resource.