Financial Viability Assessment for Mental Health Social Enterprise

We were commissioned to undertake a full assessment of finances for the a Mental Health social enterprise. The service was formerly part of a PCT’s provider services. But, following the national strategy for PCTs to divest themselves of provider responsibilities and concentrate solely on commissioning services, it decided to set up itself up as an independent, non profit making social enterprise.

The assessment included a review of the historic finances of the services together with a 5-year forward projection of profits, cash flow and balance sheet. It risk rated each element of the organisation’s finances and recommended courses of action to ensure the new social enterprise remains financially sustainable into the medium term.

As well as being used by the applicants in their decision to go ahead and develop a full business case, it was also used for due diligence purposes by the commissioner and the strategic health authority.

Table of Contents

Page

1. Background

3

2. Scope of Work

4

3. Assessing Financial Viability

5

4. Historic and Current Financial Position

6

5. The Financial Model

8

6. Assumptions – base cases

9

7. Assumptions – downside case

10

8. Financial Risks – downside case

11

9. Results from the Financial Model

15

10. Savings Required

17

11. Conclusion

19

Appendices
1. Rationale for the application
2. Bailey & Moore – letter of engagement
3. Documents received
4. Monitor – ratios and risk ratings
5. Output from financial model – base case
6. Output from financial model – base case with
management action
7. Output from financial model – downside case