CQC Registration and Why Financial Viability Matters More Than a Bank Balance
Updated: Sep 2
Vicky Vimbai Goredema is an award-winning chartered certified accountant, entrepreneur, and author of The Numbers Behind the Business: Tax Structure and Systems for the Modern UK Entrepreneur.
For healthcare and social care businesses preparing for Care Quality Commission (CQC) registration, regulatory compliance is often the main focus. Policies, procedures, safeguarding, staffing, and operational readiness all require careful attention. But another important consideration can be overlooked: financial viability.
Where a Financial Viability Statement is required as part of the registration process, an accountant or other appropriately qualified financial specialist may be asked to assess whether the proposed business has the financial resources to operate and continue providing its regulated services. This is much more than simply looking at a bank account balance.
What does financial viability mean?
Financial viability is about whether the business has a realistic and sustainable financial model. For a new healthcare business, this means understanding how much funding is available, what the expected income will be, and whether that income is sufficient to cover operating costs.
A business may have £50,000 in the bank, for example, but if its projected monthly expenditure is £30,000 and it does not expect sufficient income for several months, the cash position needs to be considered carefully. This is why cash flow forecasting is so important.
What will an accountant look at?
Before signing a financial viability statement, an accountant should have sufficient information to support their professional opinion.
Depending on the circumstances, this may include:
The business plan
Financial forecasts
Projected income and expenditure
Cash-flow forecasts
Evidence of available funding
Business bank statements
Existing accounts or management accounts
Staffing and payroll costs
Premises and operating costs
Loans and finance arrangements
Existing creditors and liabilities
HM Revenue & Customs (HMRC) obligations
The source of funding for the business
For an established business, historical financial performance can provide useful evidence. For a newly established business, however, the focus is likely to be much more heavily based on the business plan, assumptions, funding available, and financial projections.
The importance of realistic forecasts
One of the biggest mistakes I see when businesses prepare financial forecasts is being overly optimistic. A forecast should not simply demonstrate that the business will make a profit. It should demonstrate that the business has a realistic plan for funding its operations and managing its cash flow.
For healthcare businesses, costs such as payroll can be significant. Recruitment, training, pension contributions, employer National Insurance, insurance, premises, software, professional fees, and other overheads can quickly add up. A strong forecast should therefore consider different scenarios and allow for unexpected costs.
Financial viability is about sustainability
Financial viability should not be viewed as a box-ticking exercise. If you are responsible for providing care, your financial position can directly affect your ability to maintain staffing levels, meet operational costs, and continue providing a quality service.
This is why healthcare business owners should understand their numbers from the beginning. Your accountant should not simply prepare your accounts after the year has ended. They can play an important role in helping you understand your financial position, forecast your cash requirements, and make informed business decisions.
Don’t wait until registration
If you are preparing for CQC registration, start preparing your financial information early. Having your business plan, forecasts, and funding evidence organised can make the process much smoother and, importantly, gives you a clearer understanding of whether your business model is financially sustainable.
CQC readiness isn’t just about compliance. It’s also about having a business that is financially prepared to deliver the service you have committed to providing.
As accountants, our role is not simply to report on the numbers. It is to help business owners understand what those numbers mean and use them to build sustainable businesses. Your care business needs a strong foundation. Your finances are part of that foundation.
Read more from Vicky Vimbai Goredema
Vicky Vimbai Goredema, Chartered Certified Accountant UK
Vicky Vimbai Goredema is an award-winning chartered certified accountant, entrepreneur, and author of "The Numbers Behind the Business: Tax Structure and Systems for the Modern UK Entrepreneur." She is the Founder and Director of VCK Accounting Services Ltd, a UK-based accountancy practice supporting small to medium-sized businesses with strategic financial expertise.
