This video explains a practical way for NDIS businesses to better understand and control wage costs in a low-margin environment. It focuses on how structuring your profit and loss (P&L) statement considered alongside payroll data can help identify where margins may be leaking. The speaker discusses separating support worker and admin costs, then further splitting support worker wages into recoverable and non-recoverable costs under the SCHADS Award. By analysing these costs monthly, businesses can identify whether rostering practices are driving unrecoverable wage expenses and use that insight to improve financial performance.
I have a tip for NDIS businesses to help you save money.
As we know in the NDIS at the moment, people are saying that it’s like a 2% margin between what they make in sales and what they make in wages and on-costs. So it’s important that you’re organising your wages so you can analyse them and see if there are any areas where you can reduce your wage costs.
One way to do that is actually how you set up your P&L. I see it very commonly that people will set up the P&L between support workers and admin, and I think that’s really good. Separate things like staff hours, meetings, and things like that between support workers and admin staff. If your support workers have a training session or something like that, you can put that in the admin as well.
I want you to then separate support worker costs between recoverable costs and non-recoverable costs. What I mean by that is some of the wages that you pay under the SCHADS Award you’ll be able to claim through NDIS, and some you can’t. The ones you can’t come down to rostering practices.
If you analyse it every month, you’ll start to see whether your rostering practices are passing on those costs or not. If I’m talking about the SCHADS Award, I’m talking about things like broken shift allowances, fortnightly overtime, and any penalty that your staff member might be receiving because they haven’t had enough of a break between two shifts. Any top-up hours, so any hour that we’ve given them where it’s a free hour because we haven’t given enough of a shift, even client cancellations.
If you go through your payroll system and you find these pay categories, you can pass those pay categories on to your non-recoverable costs in your P&L. If you start to analyse your P&L every month that way, you start to see a trend. If that’s getting higher, you know that you’ve got a rostering issue, and you can go back to your rostering system and work that out.
What you usually find is that this cost isn’t something that can be nil. It’s not going to be completely nil, but it is something that you can control, monitor, and start to understand. Once you start to understand it, you can see whether some of the margin that you’re leaking in your business may actually be leading to a loss, and whether the margins of that leak can be controlled by good rostering practices.
So try that out. Upgrade your P&L and get your payroll system pointing to two different expense items for wages instead of one, and see if that makes a difference to the NDIS business.
Thanks very much.