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Spotting ‘Bookkeeping Red Flags’ for NDIS Businesses - What You Need to Know
As an NDIS Service Provider, you’ve already experienced the stringent requirements to get started in the industry. With NDIS registration, audit, practice standards and the code of conduct to get through, you then must deal with the administrative side of things, including employee screening checks, full policies and procedures, insurances and strict compliance. With so much to consider, your bookkeeping can quickly become a minefield if not handled correctly. Add to that multiple people entering data in some cases, it can be easy for your bookkeeping to get out of control. But how can you tell if something isn’t quite right? Well, there are a few bookkeeping red flags you can look out for that could save you from costly mistakes, penalties or even reputational damage. So, in this article, we’re going to highlight some of the most common financial warning signs, specific to NDIS businesses. By being aware of these ‘red flags’, you'll be better equipped to maintain your financial health and compliance. Let’s dive into what you should be watching out for - and how to keep your finances on track.

The 8 red flags in NDIS bookkeeping that service providers should be aware of

1. Watch out for discrepancies between bank statements and your records

As a ‘No.1’ rule in bookkeeping, it’s imperative to reconcile your bank statement against what’s recorded in the accounting software. These days it’s very common for your software to be connected directly to your bank account, so transactions are downloaded straight into the system, but you still need to be vigilant. If the recorded sales and purchases regularly don’t match the bank statements or transactions, it’s a red flag that ‘something is not quite right’ with your procedures. Reconciliation is still an essential part of bookkeeping, regardless of how good your software might be.

2. GST & BAS reporting

Before lodging your BAS, always ensure you look over the ‘detailed’ report to ensure transactions are being entered correctly. NDIS services are GST-free and, of course, need to be recorded that way, but errors in data entry can occur. Similarly, claiming GST for expenses needs to be looked at carefully, as not all transactions include GST, particularly if you have independent care workers under an ABN who don’t charge GST. Errors in BAS reporting can lead to ATO audits, so be vigilant and check the BAS report.

3. Frequent reversals and adjustments

Constant changes to financial records in your system can signal bookkeeping issues. You might need to reassess your policies or provide staff with further training.

4. Unexplained or missing transactions

If you are frequently finding transactions without supporting documentation, you should consider this a red flag! Even in our digital age, receipts can be emailed or texted. If you have regular transactions without receipts – find out why and talk to staff about the importance of documentation, as strict record keeping is imperative to NDIS businesses. Documentation is required to be kept for five years and missing records may cause compliance issues.

5. Incorrect allocation of NDIS funds

NDIS funds not allocated correctly can lead to compliance breaches that could affect funding and even your NDIS registration. Systems need to be in place to ensure NDIS funds are not used for non-NDIS expenses. As mentioned before, NDIS compliance is strict and needs to be adhered to. If you notice funds being incorrectly allocated you have to fix it …. and quickly.

6. Late Invoicing or NDIS claims

Inaccurate or late invoicing is another red flag to be aware of. Delayed invoicing and claims can result in cashflow problems and funding delays. If this is happening in your business, consider what you can change in your processes to ensure timely invoicing.

7. Employee related red flags

Calculating wages within the care industry can be complicated due to shift work and allowances, so if staff are regularly grumbling about pay, consider this a red flag and double check you are paying them the correct award rates. The SCHADS award is a complicated beast – seek professional help to ensure interpretation is award compliant.

8. Cashflow warning signs

If your business is struggling with cashflow, it’s time to check why. Are you undercharging your clients? Overpaying your employees? Not getting invoices out on time? Perhaps, you’re not tracking billable hours properly. Get to the bottom of any cashflow issues quickly so you can make changes to your processes to fix the issue as quickly as possible.

Keeping an eye on these red flags can help you to stay compliant and maintain financial integrity. There are so many compliance rules as an NDIS provider, and rightly so, but it can sometimes feel hard to stay on top of things … especially with your record-keeping and bookkeeping. If you need any support with your NDIS bookkeeping, reach out to us. At WestBAS, we specialise in bookkeeping for the NDIS industry. We can ensure you remain compliant with stringent record-keeping policies and help you through the stress of administrative tasks.