Direct payment bank accounts & financial record keeping Factsheet number: 1.1 Last Updated: 05 August 2021 Introduction As a recipient of Direct Payments you will either need to set up a bank or building society account to receive your Direct Payment (DP) or in some areas a pre paid card will be set up for you by your funder. If you are using a bank/building society account you must provide details of this bank account to your funder (social services or NHS) It is very important that you keep accurate financial records of what you have spent your DP on. In certain areas a copy of your DP bank statement must be sent to your funder each month and a copy kept for your financial records (unless you have a pre-paid card). Please refer to your funder for their guidelines on this. Contents 1. Opening a bank or building society account 1.1. Prepaid cards 1.2. Client contribution 2. Why do I need to keep financial records? 3. Which financial records should I keep? 3.1. Keeping a spending record 3.2. Cheques 3.3. Timesheets 4. Bank statements 1. Opening a bank or building society account If you are going to be receiving your Direct Payment into a bank or building society then this account must be completely separate from any personal accounts that you have. We recommend that you use a completely different bank for your DP money as some banks have a policy of clearing personal money problems or overdrafts from any other accounts that you may have with them. If you keep your DP money at a different bank it saves this type of confusion. In order to receive your Direct Payment you only need a basic current account. Some banks will promote ‘enhanced’ current accounts which incur a monthly charge. Banks can describe these as ‘reward accounts’, ‘added value accounts’, ‘premier accounts’ or accounts with ‘additions’ such as discounted services or insurance unrelated to Direct Payments. The council expects DP funds to be used only to pay for costs which are necessary to achieve the outcomes in your support/personal plan. Enhanced bank accounts which charge are not necessary to meet these outcomes and you should not use your Direct Payment to pay these charges. When you open the account you should request a cheque book and debit card. The cheque book will be useful as you may wish to pay your PA’s by cheque. You should make all payments from your account by cheque, debit card or internet transfer. You should only use cash in exceptional circumstances and with written agreement/permission from Social Services/NHS. You may want to ask your bank for a signature stamp, if you have difficulty signing cheques. Ink pads are available from stationary shops. If you need a close family member or partner to sign cheques for you, ask the bank about that person being a joint signatory on your DP bank account. 1.1 Prepaid cards Many councils now use prepaid cards for their new Direct Payment customers. They are doing this to make things easier for their customers. You can use your card to pay for any support that has been agreed in your support/personal plan. This includes payments to a care agency or your PA. As the card will be managed by an external card issuer, you will no longer have to send monthly bank statements to the council. You will also be able to access information online about your Direct Payment account 24/7. If you have difficulty using a computer, your prepaid card issuer also offers telephone banking. Contact your funder for their contact details. This will be a free service. 1.2 Client contribution If you have to pay a contribution toward your care, you will need to pay this into your prepaid card account or your bank/building society account by standing order. This payment needs to start from when the Direct Payment starts even if the DP is backdated. 2. Why do I need to keep financial records? Your DP will be paid into the account monthly or 4-weekly and once you start employing PA’s you will be making regular payments from the account eg PA wages. It is very important that you keep accurate financial records of all these payments. Financial records are records of money coming into and money leaving your DP account. You must keep them so that you are able to: show how much money you have received into your DP bank account and what you have spent it on. check whether there are any mistakes on your bank statements. track the progress of cheques you have written. identify long term trends that lead to your account balance building up or getting low. easily answer any questions that your funder may ask about your expenditure. demonstrate that the DP money is not your personal income if HMRC or the Department for Work and Pensions enquire. 3. Which financial records should I keep? 3.1 Keeping a spending record A spending record allows you to record all the money coming into and going out of your DP account- ‘income’ and ‘expenditure’. Your DP bank or pre paid card statement will provide details of incoming and outgoing payments. It is also important to keep receipts and invoices so that you have evidence of exactly what each payment was for. Your spending record might look something like this: DP spending record Name KJ Smith Date 01 - 31 May 2020 Income Date Description Amount 01 May 2020 Direct payment £120 Total £120 Outgoings Date Description Amount 05 May 2020 PA wages Cheque no: 0001 & 0002 £55 05 May 2020 PA expenses (see attached receipts) Cheque no: 0003 £10 09 May 2020 Payroll invoice Cheque no: 0004 £27 Total £92 Along with your spending record, please remember to keep: Cheque stubs Invoices Receipts Bank statements Timesheets Sickness and holiday records To help you keep your spending record you may find it helpful to use: Employer template 1.1a - Spending record It is vital that you keep receipts for all payments that you make by cash or debit card and that you make a note of what the item purchased was. You should only make payments by cash in exceptional circumstances (with Social services/NHS agreement) and you must never pay your PA’s in cash. 3.2 Cheques If you write cheques from your DP account it is important to make a note on the cheque stub of what the payment was for so that you can match it up to your bank statement. 3.3 Timesheets It is also very important that you keep accurate records of the hours your PA’s have worked. You should ask your PA to complete a weekly timesheet. This will give you a record of the hours your PA has worked so that you and your payroll service know how much they should be paid. You should ensure that the timesheet is signed by you and the PA to ensure it is accurate. You must also keep accurate records of any PA mileage or expenses (if agreed in your budget), holiday taken by your PA and any periods that they are off sick. Record sheets for all these items can be obtained from Independent Lives. 4. Bank statements If you have opened a bank account for your Direct Payment, you should ask your bank to send you a monthly statement for your DP account. You must send a copy of the statement to the finance team of your funder eg Council or the NHS. If you have made any internet transfers/card payments you should write on the bank statement what these are for as the statement will only list the organisation you made the payment to. You should also keep a copy of your bank statement for your own records. If you have an online account you can also send downloaded copies of your bank statements to the council or NHS via email. Please ask Independent Lives for further details.