The National Disability Insurance Scheme (NDIS) is an Australian government-funded initiative, launched in 2013. Administered by the National Disability Insurance Agency, this scheme provides services and support to people with permanent and critical disabilities.
Instead of the Australian government directly implementing this scheme, it uses middle parties called providers. NDIS providers offer funded services to NDIS participants that can help them attain their goals.
However, to be a successful NDIS provider, it is crucial to perform without any costing mistakes. Because a costing mistake can greatly influence how much does it cost to become an NDIS provider. Want to know more? Here’s a guide for you to understand better.
How to Establish a Successful NDIS Business
No matter how much does it cost to become an NDIS provider or how well-structured and efficient your business is, making costing mistakes can defy the whole purpose of being an NDIS provider. Here’s a brief outline of how costing mistakes will ruin your business.
- Audit risks: Financial reporting errors are a leading cause of Australian Taxation Office (ATO) audits for NDIS providers.
- Financial penalty: If a provider fails to charge the necessary tax when required, they may be liable for the GST themselves, reducing their profit margin.
- Administrative inefficiency: Correcting errors in Business Activity Statements (BAS) is time-consuming and can cause cash flow gaps.
Common Costing Mistakes New NDIS Providers Make
Here’s a detailed breakdown of common costing mistakes.
Ignoring Non-Billable Time
Billable hours are the time spent working on NDIS participants’ services, and non-billable hours are any time spent on administrative or overhead projects that aren’t directly related to service.
However, non-billable activities like training, travel gaps, and compliance work still use paid staff time. Ignoring this will make the services look profitable when they’re not, thereby hiding real cost.
Misinterpreting the NDIS Price Guide
The NDIA, which is the governing body of NDIS, sets price limits for NDIS-funded support services. The set price limit is the maximum fee you can charge the participants for their disability support or service. So, if you failed to understand the NDIS price guide or misunderstood the pricing in any case, it will lead to a costing mistake.
Underpricing Services
A common costing mistake a new NDIS provider makes frequently is underpricing services. Sometimes, this problem occurs because providers try to strictly comply with NDIS pricing limits. But if costs are higher than the NDIS price limit, services may be delivered at a loss, leading to underpricing and financial strain.
NDIS Software Costing Mistakes
As much as NDIS software is important for your NDIS business, it is important to acquire the right NDIS software pricing package as well. For instance, ignoring per-user scaling because costs can escalate rapidly as the team grows.
Additionally, choosing enterprise software with unnecessary features will lead to a waste of subscription money. On the other hand, choosing budget-friendly software results in higher total costs due to lacking features.
Employee and Sub-Contractor
A common practice among NDIS providers is to hire subcontractors to work for them. And more often than not, NDIS providers think this arrangement might allow them to reduce specific employment-related costs, such as superannuation and work cover obligations.
Thus, hiring subcontractors will lead to a costing mistake, because the contracting is still for their labour, and they will be considered employees. Thereby, making you must pay at least quarterly superannuation based on the super guarantee percentage.
How to Fix Them
In order to know how much does it cost to become an NDIS provider, you need to understand how to fix these common costing mistakes. Here’s how.
- One of the first and foremost practices to avoid a costing mistake is to be cost-effective with both billable and non-billable time.
- Additionally, plan your support in compliance with NDIS rules and pricing limits.
- For a more effective business, you can use NDIS-specific software to track billable hours, manage compliance, and reduce manual errors. More importantly, you should treat tax obligations as a priority, not an afterthought. And when it comes to NDIS software, you need to choose a system with participant-based pricing with preferred features to avoid surprise charges.
- Last, but not least, if you want, you can enlist support from a professional consultancy firm to make the NDIS provider business productive.
Conclusion
NDIS providers bring personal care, therapy and services to improve the livelihood of the NDIS participants. An NDIS business, if established precisely, can be beneficial for both the provider and participants, no matter how much does it cost to become an NDIS provider.
But the costing mistakes beat the main purpose of establishing the NDIS business. That’s why you need to make sure your business is steered away from such mistakes by comprehending the cause of costing mistakes and knowing how to fix them.
