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The hidden drain: how inefficient payments hurt uk care providers

The care sector is under immense pressure –providers face tight margins, chronic workforce shortages, and complex funding streams. Yet within the push to do more with less, one critical process is routinely overlooked: payments. From delayed invoices to time-consuming manual tasks, inefficient payment processes are quietly draining time, money, and morale from care organisations.

Fragmented systems sap time and morale

Instead of a unified approach, providers navigate a patchwork of payment systems and stakeholders –each with its own rules, timelines, and expectations. Richard Ayres, Social Care Advisor at Care England, notes that care operators deal with “over 250,000 self-funders, 153 local authorities and 42 NHS Integrated Care Boards (ICBs), all with a myriad of different ways to transact. Whether you're paying staff or receiving payments, these complexities are a daily challenge.” This fragmentation creates a heavy administrative burden. Teams spend hours logging into multiple portals, reconciling records, and chasing errors across disconnected systems. All this extra work is not only inefficient – it’s demoralising, stealing time from frontline care.

Late payments trigger a vicious cycle

Even providers with excellent care quality can find their efforts undermined by one persistent challenge: getting paid on time. Victoria Ramsay, Founder and Director at Aequalis Accountancy, describes a vicious circle: “lack of invoices being paid on time causes cash flow issues, meaning companies can’t always afford to upgrade systems and streamline the business.” Late incoming payments from local authorities or private payers leave care homes struggling to meet their own obligations. Staff salaries might be delayed or paid incorrectly – hurting morale – and supplier invoices get pushed back, straining relationships. Meanwhile, management

loses real-time financial visibility, so strategic decisions stall for lack of accurate data.

Big expectations, little funding for digital change

Policymakers have placed digital transformation high on the agenda for social care. Yet while providers are expected to modernise, the funding to do so remains limited. As Richard Ayres explains, “commissioners look at the cost of care, not the cost of transformation.” With net margins of just 1–3%, there is little room to invest in new technology. Even minor inefficiencies in payroll or invoicing can significantly dent a provider’s bottom line under such tight conditions. And without dedicated funding, necessary improvements like streamlining payments often stay on the back burner, leaving organisations stuck with outdated manual workflows.

Turning the tide on inefficiency

Combined, these factors create a hidden drain that care providers can no longer afford to ignore. The good news is that tackling payment inefficiencies doesn’t require a massive overhaul. By starting with how money moves, providers can begin to reclaim lost time and revenue. Modern payment solutions – including automation tools – can reduce admin, improve cash flow, and free up staff to focus on care. If you’re ready to explore how smarter payment processes could support your care business, Modulr’s specialists are here to help. Book a no-obligation call with a payments expert to see how streamlining payments can strengthen your organisation.

For further information view the full post at: https:// www.careengland.org.uk/the-cost-of-paymentinefficiencies/