CARE PROVIDER BOOKKEEPING · UK
Bookkeeping for domiciliary and residential care providers.
Care businesses are paid by many different people in many different ways: council remittances covering dozens of service users, private fees, family top-ups and direct payments. Costs are just as busy, with agency staff, rotas and suppliers. Wenzo keeps all of it recorded in the software you already use, every UK working day, for home care agencies and care homes alike.
Why care bookkeeping needs extra care
In most businesses, one invoice leads to one payment. In care, that is rarely true. A single council payment can cover many service users across several weeks. A care home resident's fee may be split between the council, the resident and a relative paying a top-up. A home care client may pay from a direct payment, from their own savings, or both.
If the books only follow the bank, these payments become hard to place. Money owed by one payer gets credited to another. Short payments go unnoticed. Fees invoiced but never paid sit in the ledger for months. Our job is to match every payment back to the invoices it covers, so you can see who has paid, who has not and why.
Local authority remittances
Councils usually send a remittance advice that lists what each payment covers. It may include several service users, part weeks, backdated rate changes and deductions for missed visits or hospital stays. The bank only shows one total.
We read each remittance and allocate the payment line by line against your invoices. Where a council has paid less than you invoiced, we record what was paid, leave the difference open and flag it, so you can query it while the detail is still fresh. Where a payment arrives with no remittance, we ask for one rather than guess.
- Short payments. Each shortfall is listed with the service user and period, so nothing is quietly written off.
- Rate changes. When a council changes its rates, we note backdated adjustments against the right invoices.
- Several councils. If you work for more than one authority, each is kept as its own customer, with its own balance.
Private fees, top-ups and direct payments
Self-funding residents and home care clients are invoiced directly. We record each invoice from the details you or your care system provide, match payments as they arrive and follow up anything overdue with you.
Top-ups need clear records. Where a relative or another third party pays part of a fee, we set them up so their share is tracked separately from the council's share. That way, a missed top-up shows up straight away instead of hiding inside a larger balance.
Clients on direct payments may pay from a dedicated account, sometimes managed by a family member or a support organisation. We match those payments to the right client, whoever sends them.
Residents' personal money. Many care homes hold small amounts for residents, for things like hairdressing or outings. That money belongs to the residents, not the business. If you hold it, we keep it out of your income and record it separately in the way you or your accountant have set up.
Agency staff, rotas and payroll costs
Staffing is usually the largest cost in care, and agency staff can make it hard to track. Agency invoices often arrive weekly, list many shifts and use different rates for nights, weekends and bank holidays.
We record each agency invoice against the right home or branch, and check it against the shifts you have approved when you share them. Invoices that do not match, or arrive twice, are flagged before they are paid. VAT is recorded exactly as shown on each invoice.
Payroll itself is quoted separately. If another provider runs your payroll, we record wages, tax, National Insurance and pension totals from their reports, so your staff costs and liabilities match what has actually been paid.
VAT and welfare services in general terms
VAT works differently for many care providers. GOV.UK guidance in VAT Notice 701/2 says that welfare services can be exempt from VAT when supplied by a charity, a public body or a state-regulated private welfare institution or agency. Welfare services include care for elderly, sick, distressed or disabled people that meets their medical, physical, personal or domestic needs.
A private provider is state regulated when it is registered with, or regulated by, the relevant regulator, such as the Care Quality Commission in England. GOV.UK says a provider becomes state regulated when the regulator approves its application, and it cannot exempt its welfare supplies before then. The guidance also says care from a regulated provider stays exempt even when a council or another third party contracts and pays for it.
Exemption has knock-on effects for the books:
- No VAT on exempt fees. Exempt sales are invoiced without VAT.
- Limited VAT recovery. GOV.UK says a provider is generally not entitled to reclaim VAT on costs used to make exempt supplies. VAT on agency staff, for example, is often a real cost.
- Mixed businesses. If you also make taxable sales, the partial exemption rules in VAT Notice 706 decide how much VAT you can reclaim. GOV.UK sets a de minimis limit: exempt input tax of no more than £625 a month on average, and no more than half of all input tax.
- Registration. You must register for VAT if taxable turnover for the last 12 months goes over £90,000, or you expect it to go over £90,000 in the next 30 days. Exempt sales do not count towards it.
Whether a particular service is exempt depends on the facts, so the treatment should be agreed with your accountant. Once it is, we post every sale and purchase consistently, keeping exempt and taxable items apart so your VAT records are ready when needed. Read our guides on the UK VAT threshold and reclaiming VAT for the basics.
A made-up example. A hypothetical home care agency invoices a council £18,400 for a four-week period covering 23 service users. The council pays £17,960 with a remittance showing £440 deducted for visits cancelled during a hospital stay. We allocate £17,960 across the 23 invoices, record the £440 shortfall against the one service user concerned and flag it. If the agency agrees the deduction, it is credited. If not, it stays open to chase. This is an invented example, not a real business.
Running more than one home or branch
Groups with several homes or branches usually want to see each one separately. Where your software supports it, we post income and costs to the right location using tracking categories, classes or departments. That shows you which homes or branches are covering their costs, and where agency spend or short payments are building up.
What is included, and what is quoted separately
Every package covers the same daily work: bookkeeping every UK working day in your existing software, bank reconciliation and receipt matching, finance inbox monitoring, missing invoices and receipts followed up, and a monthly financial summary in plain English.
We work in Xero, QuickBooks, Sage, FreeAgent, Dext, VT Transaction+ and others. You keep your software and your subscription.
Some work sits outside the monthly packages and is quoted separately: catch-up work on older records, tax returns, payroll, VAT return submission and statutory filings. If your books are behind, start with catch-up bookkeeping so old council balances and unpaid fees can be cleared first. Running a limited company? See bookkeeping for limited companies.