Running a successful homecare agency is an intricate dance between delivering compassionate care and maintaining sound financial health, requiring that. Agency leaders keep a close eye on day-to-day operations while  also looking ahead to anticipate challenges and opportunities. This means understanding which financial metrics matter most, when to review them, and how to avoid the common pitfalls that can derail even the most dedicated organizations.

In our experience, homecare agencies are eager for the short list of best practices in financial management, the metrics they should be tracking to manage their business and how often to perform them. 

Best practices for homecare agency financial management

Here are the best practices, based on our experience in financial management at the intersection of homecare and supporting technology. Implementing these best practices requires disciplined weekly, monthly and quarterly tracking and analysis of critical information.

• Prioritize client care and maintain transparent, and best practice-driven financial policies. 
• Develop a realistic budget in collaboration with your team, and review it regularly to reflect changing circumstances and actual performance. 
• Set aside contingency funds to prepare for unexpected expenses. 
• Optimize your revenue cycle by automating billing processes, collecting payments promptly, and diversifying your payor sources. 
• Control costs by analyzing operational expenses, optimizing caregiving staffing, and investing in caregiver retention to reduce turnover. 
• Leverage technology to streamline scheduling, billing, payroll, and reporting, and use data to track KPIs and inform decision-making. 
• Maintain compliance by staying up to date on regulations and implementing robust internal controls. 
• Embrace continuous improvement by adapting to industry dynamics and investing in caregiver training.

Weekly check list for financial health

On a weekly basis, agency leaders should:

• Check bank accounts to confirm there’s enough cash on hand
• Follow up on overdue invoices 
• Ensure all completed visits are billed and claims are submitted without delay
• Compare actual expenses to the budget to identify unusual spending, 
• Reconcile bank statements to  ensure that accounting records are accurate. 
• Confirm hours worked and overtime to  avoid costly mistakes.

Monthly deep dives for greater insight

Each month, a deeper review is warranted, and agencies should:

• Analyze the profit and loss statement (P&L) for insight into business results  
• Review the balance sheet for a snapshot of your overall financial position 
• Calculate your gross margin to  understand if your operations are sustainable
• Identify late billings to ensure you don’t miss out on revenue
• Compare actual financial results vs budget to  spot variances 
•  Track revenue by payor, days sales outstanding (DSO),. 
• Forecast cash flow for the coming month 
• Ensure all documentation is up to date with respect to regulatory compliance

Forward looking metrics for future-proofing the business

On a quarterly basis, homecare agencies should pay attention to forward-looking financial metrics. 

• Cash flow projections help anticipate future needs and plan for growth or challenges 
• Budget variance analysis highlights areas where spending or revenue may be off track.
• Monitoring your pipeline of new clients gives insight into future revenue potential and helps anticipate  staffing and resource needs. 
• Tracking trends in days sales outstanding (DSO) can alert you to problems in billing or collections 
• Forecasting your gross margin helps you anticipate whether your operations will remain profitable. 
• Keeping an eye on late billings (also known as A/R Aging Report) helps avoid lost revenue from bad debt risk, 
•  Focusing on caregiver and client lifetime value encourages long-term relationships and investments in retention and quality care. 
• Diversifying your revenue sources by working with multiple payors and service lines reduces risk and helps stabilize your agency income.

How Mariposa Helps

Mariposa is the modern choice of homecare software platform and is designed to equip homecare agencies with the tools and technology needed to reduce the burden of every aspect of agency financial and operational management. Mariposa’s HIPAA-compliant platform assists homecare agency operators by providing: 

• Streamlined scheduling and shift management, including automatically applying the right break time and overtime rules to shifts that lead to accurate data for both invoicing and payroll
• Automated billing and invoicing, including integration with third party billing software
• Simplified payroll, including integration with third party payroll software and compliance with state labor and employment regulations
• Real-time reporting and dashboards of key financial metrics that provide visibility of the health of the business and help you make data-driven decisions
• Payor-ready, clear and detailed documentation of care activities, ready to be submitted to payors for reimbursement and/or audit 

Using Mariposa, you can collaborate seamlessly with your team and clients, track new business opportunities, and always know the financial health of your homecare agency.

By integrating these practices and tools into your routine, you’ll keep your agency financially healthy and well-positioned for growth. Tracking traditional as well as forward-looking financial metrics will help you anticipate challenges, seize opportunities, and make proactive decisions for long-term success.

Ready to take your agency’s financial health to the next level?  Sign up here to request a demo and see how Mariposa can help you achieve your goals.