If you’re a small independent childcare business, the money coming into and going out of your account each month can quite literally make or break you. With challenges to contend with like the government’s 30 hour childcare pledge and parents paying you late – what tweaks can you make today to help secure the long-term future of your business?
1.Have a place for everything
Do you know where all your invoices, credit notes and bank statements are located? Hopefully, you have a filing system in place which means you can put your hands on any document at a moment’s notice. But have you considered the advantages of having online copies of these documents on a cloud system? This is really prudent because it means if you ever suffer a catastrophe like a fire, these important financial documents will be backed up.
2.Don’t mix business and personal accounts
If you’re starting up your first nursery, as a fledgling business owner it can be quite tempting to mix accounts for business and personal use. Although this may seem convenient at first, it will create a lot of confusion when you have to go over all your statements at a later date. Keep these accounts separate from the very beginning, to save any headaches later on.
3.Always charge a deposit
Charging a deposit to secure a place at your setting protects your business by discouraging parents from changing their minds at the last minute. A nursery in Denham charges a £100 deposit to parents, but how much you charge will be down to personal choice and should reflect the inconvenience you’ll incur as a result of parents not taking up the place you’ve set aside for them.
4.Establish payment terms
Every childcare business should have a policy in place covering what is expected of parents in terms of their fee payments, the deposit, late and non-payment of fees and fees due in respect of the child when they’re not able to attend your setting (eg due to illness). This should be signed by the contracting parent(s) to show they have understood and agree to the terms.
5.Keep a tight rein on outstanding payments
As your business expands, make sure that the average number of days that invoices are outstanding doesn’t expand too. Closely monitor any money that is due to come in from parents and make sure you have a system in place to flag up when it doesn’t. It might help to outsource this function of your business to a third party who provides automated fee collection. This will remove some of the guess work as to when you’ll be paid.
6.Cut your costs
Every business has two types of costs: fixed and variable. You still need to pay fixed costs (like rent) regardless of how much money is coming or going out of the business. However, you can tweak your variable costs to reduce unnecessary expense – for example, you could advertise your vacancies for free online, video call instead of travelling long distances for meetings and ask parents to provide recycled materials for crafts and other activities.
7.Monitor and measure performance
To make informed business decisions, you need to be able to keep a close eye on your setting’s performance in all areas. Using nursery management software, you can produce reports on aged debt, occupancy and much more. This information can be really helpful when you want to know where your business is excelling and in what areas you can make improvements.
8. Have a fail-safe for ad-hoc sessions
Make sure that you raise an invoice whenever parents book an ad hoc session. Some nurseries fail to bill and as a result, it’s then down to honest parents to flag up whether they were undercharged. Whilst this can be embarrassing for both parties; all the while you fail to raise an invoice, you’ve provided a service for free! It’s much more professional to have a system in place to ensure no extra sessions are missed. Read more here.