The agency and the problem
The agency runs regulated domiciliary care across a few north and east London boroughs, with 45 carers on the payroll and a client split of roughly 70 percent council-funded and 30 percent private. The care was strong. The finances were not. The registered manager was doing the rota and the recruitment, the owner was doing the invoicing at 11pm on Sundays, and the year-end accounts were being pulled together in a panic each spring from a shoebox of bank statements and a rostering export nobody trusted.
Three things were bleeding the business. Council invoices went out late and were rarely chased, so cash arrived nearly two months after the care was delivered. Payroll was run on contact time only, which meant paid travel time between calls was being missed, a genuine minimum wage exposure sitting quietly in the background. And there were no real management accounts, so the owner was flying blind on margin, on which contracts made money, and on whether the next council block was even worth bidding for.
This case study is written by LOYALS, a King's Cross firm of chartered accountants that runs weekly payroll and council invoicing for London home care agencies, and it walks through exactly what we took on, in what order, and what moved in the first three months. The client gave permission for the anonymised numbers to be shared. Nothing here identifies the agency.
What the finance function covers each month
Running the finance function for a care agency means owning the whole money side, week in and week out, not just filing accounts once a year. For this agency that breaks down into a weekly cycle and a monthly cycle that we own end to end.
Weekly, we take the rostering export, add paid travel time, run auto-enrolment pensions, and process the pay run for all 45 carers so wages land on the same day every week without the owner touching it. We also raise the council and private invoices and run credit control on what is outstanding. Monthly, we reconcile every council remittance line by line, produce management accounts that show margin by funder and by contract, prepare the VAT position, and keep the year end permanently up to date rather than leaving it to spring. Our care agency accountants run this as a single outsourced finance department, and the payroll and PAYE piece is the engine it all sits on.
The part most generalist accountants underweight is travel time. Time spent travelling between clients counts as working time for the National Minimum Wage, so it must be paid and it must be inside the wage calculation, per HMRC's guidance on calculating the minimum wage. On the 2026/27 National Living Wage of £12.71 an hour, an agency that pays and records contact time only is understating both its wage bill and its exposure. Across the agencies we run payroll for, paid travel time adds roughly 12 to 15 percent on top of contact hours.
VAT is the other trap. Regulated personal care supplied by a state-regulated provider is exempt under the welfare services VAT exemption, so most domiciliary agencies do not charge VAT on their care. Introductory-only arrangements can be standard-rated, so a mixed model has to be split cleanly or the VAT and the debtor figures both drift.
The first 30 days: how we onboarded it
The first full weekly pay run went out on time inside two weeks, and the finance function was steady by the end of the first month. Onboarding a live payroll is not something you can pause for, so the sequence matters: nothing is allowed to slip while the switch happens.
Week one is unglamorous and it is where most of the risk lives: getting access to the payroll software, the rostering system, the bank, the sales ledger and the council portals, and reconciling the opening position so we know exactly what is owed and by whom. Get that wrong and every later number is built on sand. Get it right and the rest is process.
The numbers: what changed in a quarter
The finance function paid for itself inside the first quarter, and not on tax tricks: on cash, on time, and on removing a live compliance risk. The three operational numbers that moved the most are below, before and after we took over.
Faster council collection was the headline. By billing on time, matching every invoice to the purchase order, and chasing weekly rather than never, the average time from delivering care to banking the council payment fell from around 52 days to around 34. On a council ledger of this size that pulled roughly £40,000 of aged debt back into the account, which for a care agency is the difference between sweating a pay run and never thinking about it.
The payroll change was quieter but arguably more important. Running travel time correctly removed a live minimum wage exposure, and processing the run properly cut the weekly stream of "my pay is wrong" queries from about 11 to 2. Carers who trust their payslip stay longer, and in a sector where staff turnover is expensive that is a real, if unglamorous, retention lever.
The three things that made the difference
None of this was clever tax planning. It was three unglamorous things done properly and on a schedule, which is exactly what a busy owner-manager rarely has time to hold together.
One, the pay run became boring. Boring is the goal. Rostering export in, travel time added, pensions applied, run against the £12.71 National Living Wage, out on the same day every week. When payroll is predictable the owner stops firefighting it and the carers stop chasing it.
Two, billing and credit control became weekly, not "when I get a minute". The single biggest cash lever in a care agency is not winning more hours, it is collecting the hours you already delivered. The Homecare Association puts the minimum sustainable price for homecare at £34.42 an hour for 2026/27, which only works as a margin if you actually bank it promptly. Weekly invoicing and weekly chasing turned a 52-day habit into a 34-day one.
Three, the numbers arrived while they were still useful. Management accounts nine working days after month end, showing margin by funder and by contract, let the owner decide which council blocks to keep bidding for and which were quietly loss-making once travel time and voids were counted. Registration and growth decisions also lean on this: the Care Quality Commission expects a provider to demonstrate financial viability, and you cannot evidence what you cannot see. Auto-enrolment sits on top of all of it, with the employer minimum pension contribution at 3 percent under the workplace pensions rules.
Here is how the three common ways a care agency handles its finances actually compare:
| What a care agency needs | Owner / in-house junior | Generic accountant | LOYALS specialist |
|---|---|---|---|
| Weekly payroll with paid travel time in the NMW calc | ● If they know to | ✗ Contact time only | ✓ Built into the run |
| Council remittances reconciled line by line | ✗ | ● At year end | ✓ Every month |
| Weekly credit control on council and private debt | ● When there is time | ✗ | ✓ Weekly |
| Management accounts by funder and contract | ✗ | ✗ | ✓ +9 working days |
| Welfare VAT split and CQC financial viability | ✗ | ● If asked | ✓ Care specialism |
| Open Mon to Sat for urgent pay-run questions | ● | ✗ Mon to Fri 9 to 5 | ✓ 10am to 7pm Mon to Sat |
This is why most care agencies that grow past 20 or 30 carers move from a generalist to a care finance specialist.
What this costs and who it suits
An outsourced care finance function of this scope runs from £995 to £2,495 a month depending on carer numbers and how complex the funder mix is. The 45-carer agency in this case study sits on the middle tier at £1,495 a month, which covers the weekly payroll, council and private invoicing, weekly credit control and monthly management accounts. That is not the cheapest option on the market, and it is not meant to be: it is the price of the money side simply working, every week, without the owner in it.
It suits an agency past about 20 carers, or one that is scaling and cannot keep running the books off the side of the owner's desk. Below that, a lighter payroll-and-compliance package makes more sense. Above 50 carers, or with multiple contracts and invoice finance in the mix, it steps up to the larger tier. If you want the full picture on how these fees are built and what sits in each tier, our guide to payroll cost for a domiciliary care agency with 50 carers and the note on invoice finance for home care agencies both go a level deeper. LOYALS is a King's Cross firm of chartered accountants that runs the finance function for London care agencies, so the pricing reflects specialist care work, not a generic bookkeeping rate.
What this typically costs at LOYALS
- Care Payroll and Compliance: from £995/month (up to 25 carers)
- Care Finance Department: from £1,495/month (up to 50 carers, council and private invoicing and weekly credit control included)
- Care Finance Department Plus: from £2,495/month (larger or multi-contract providers)
- Additional carers: £6 each per month. One-off historic NMW compliance review: £595. Xero setup: £395
All fees exclude VAT and are fixed for twelve months. Quotes are issued in writing within 24 hours after a 15-minute call, and we do not take on ongoing work below £500 a month. See full price list.
What this means for your agency
If your agency looks anything like this one at the start, the fixes are sequenced, not exotic, and you can start most of them yourself this week.
- Check your pay run pays travel time. Pull one week's rota and one week's payslips. If paid hours equal contact hours, travel time is missing and you have a minimum wage exposure to fix now, not at year end.
- Age your council debt today. List every unpaid council invoice by date. If the oldest is past 45 days with no chase log, cash collection is your fastest win.
- Match invoices to the purchase order before they go out. Most council payment delays are mismatches, not refusals. Getting the reference and the hours right first time is what turns 52 days into 34.
- Ask for last month's management accounts. If they do not exist, or arrive six weeks late, you are making bidding and staffing decisions blind.
- Decide what you should not be doing. If the owner is invoicing at 11pm on a Sunday, that time is worth more spent winning the next council block. That is usually the real return on outsourcing the finance function.
Done in that order, the money side stops being the thing that keeps you up and becomes the thing that tells you where to grow next.
Run a home care agency? Our care agency accountants run this exact outsourced finance department for domiciliary providers across London, with weekly payroll, travel-time reconciliation, council invoicing and credit control built in, from £995 a month.