Accounting services for daycare nurseries: How to manage your finances

/ Posted By - Bradleys Accountants / Categories - Advice for Small Businesses, Uncategorized

Ever since the pandemic upended our world, there is not one sector unaffected by it. Day nurseries therefore have faced their share of challenges over the last 2.5 years because of Coronavirus – from extended lockdowns to COVID-19 outbreaks.

However, this has not stopped nursery schools from opening. Statista reports that in the 2020/21 academic year, there were 3,079 nursery schools in the United Kingdom, compared with 3,039 in 2018/19. A small growth admittedly but encouraging considering what the industry has encountered.

Childcare is an exciting prospect. However, it is an equally demanding and challenging industry to do business in. Taking care of children – aged 0-5 – takes commitment, a solid budget, and competent support staff.

Managing your nursery finances is a vital part of starting a day nursery. Even with the immense dedication, you need a sustainable business model to survive and thrive in the long term.

Sadly and all too frequently, whenever the question of managing finances arises, it is often met with concern. The good news is, managing accounting services for daycare nurseries need not be a struggle. In this article, we will show you how following a few simple steps can help you get your day nursery finances under control.

1. List down your expenses

Once you clarify your business goals, it becomes easier to outline a budget for the essential requirements. Being able to set clear targets can keep your financial situation under control.

Your day-to-day expenses should be all encompassing – from tea and coffee for the staff to juice and milk for the children, from toilet paper and light bulbs and electricity to rent and rates and insurance. Include all the expenses and ensure you do not forget staff salaries.

Part of the budget plans must include funds for children’s toys, books, music materials, games, and creative supplies, so your children are entertained at all hours of the day. You must understand the requirements then and adequately cost up.

Next, get quotes from vendors for all the supplies you want to introduce or replenish. Speaking to multiple vendors will help you gain more options and pricing plans that will help you in the long run. Define a budget for each month and put a system to stay within it.

Set up an efficient financial plan that will help keep track of your spending in each category and highlight when overspending occurs.

2. Opt for funding

Getting public funding is a headache when you are in the EYFS (Early Years Foundation Stage) setting. This can be frustrating if you are not getting enough money from the local authorities and need a larger sum than what is offered for everything to run smoothly.

Make sure you compare your funding rate to the average hourly price and ensure that the 30 hours of free childcare offered to parents and foster parents is not making you lose money.

One of the more popular accounting services for daycare nurseries involves making up this gap by including consumable charges, as the 30-hour limit is not a part of them.

You can schedule your less popular sessions against the 30 hours funding to cover any losses. Alternatively, you can decide not to offer the 30 hours and just fulfil the universal 15-hours or even opt out altogether. This has to work for you and your business.

3. Focus on your core sessions

New parents can sometimes want something that is personalised for their child’s needs and may even demand extra time from you or your staff outside of the set sessions. Setting up custom sessions every single time for a child can be a hassle and increase expenses.

Instead of charging parents for hours outside your core sessions, stick with full-day or short-term sessions. The arrangement will keep things clear and straightforward for you to manage. It makes adding ad-hoc extra hours to childcare easier to manage and explain.

4. Use percentage discounts

Offering discounts for siblings and staff can be tricky to deal with in daycare. Making different policies and fee structures for multiple requirements or reasons is not advisable.

The better way to handle this is by offering a percentage discount, calculated straightforwardly and clearly communicated. Having one price that can be adjusted allows you to save time and effort on multiple calculations.

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    5. Charge based on actual sessions

    A complicated averaging out process to ensure parents pay the same amount each month is not suitable for day nursery owners. It may not be financially viable for parents in the long run as they may pay the same amount irrespective of the times their child attended sessions.

    Therefore, charging parents for the actual sessions is a much simpler and easier way to go about things. The sum of money you receive every month is unlikely to fluctuate. However, the parents get the satisfaction of paying for the care and support the children specifically get.

    6. Analyse bank staff requirement

    Bank staff may be keeping you from running a more profitable childcare business so it is something you should stay on top of as far as you can. Calculating daily staff ratios is a time-consuming and laborious task, leading to added expenses in your time.

    But paying out for bank staff when you may not actually need them could be a costly error. Using a tool for calculating daily staff ratios reduces your workload and highlights historical data on ratio fluctuations. Identifying such days allows you to control costs while nurturing your staff.

    7. Keep your debt low

    Day nurseries, by their nature, tend to maintain close relations with children (and their parents) and this can extend to that all-important paperwork. Amidst all the responsibilities, debts and be left to roll over or they may even ignore unpaid invoices.

    Chasing payments individually makes other work unmanageable and can impact on relationships. Having a reliable provider of accounting services for daycare nurseries can pay dividends here. Ask them to introduce a transparent payment system that reduces instances of non-payment.

    Also, put a policy in place that states dates and timelines for debt repayment to reduce stress. Opt for a direct debit or an online system that automatically generates invoices and reminders. It can save money and time for your business while keeping the relations cordial.

    8. Track occupancy and availability

    To maximise revenue in your day nursery, occupancy and availability are critical. Maintain a day-by-day breakdown of how many hours each room is open to new children to clearly see availability, or else you will never be able to offer extra sessions to new admissions.

    Preparing a full occupancy planner using a spreadsheet or opting for a tool will give you daily and historical data on occupancy.

    You can leverage accounting services for daycare nurseries to sort this out and offer extra sessions to new and existing admissions in low occupancy slots.

    9. Give away free sessions

    Free sessions can bring down your profitability but offering them is crucial when you build your business and want to establish a sense of trust among the parents of potential children in your daycare facility.

    Once you have identified the free slots, let prospective parents know about your availability. It is only a few sessions, and they should ideally be offered on a first-come, first-serve basis. Create a waiting list for prospective parents if your slots fill quickly, and there is scope for you to take on more fee-payers.

    10. Be adaptable and accommodating

    Offering the best childcare support to each child is imperative for the success of your nursery business. But custom timings and unplanned sessions can simply add to the chaos.

    Parents will also expect something that suits their timings and may demand special considerations from time to time. Therefore, be flexible and collect parent suggestions through questionnaires periodically.

    Analyse their responses to find solutions that can benefit most parents – for instance, a change in opening hours or a breakfast club. However, do not give into individual requests and decline them politely, as that would not help you run a viable business.

    Over to you

    Regardless of the industry you operate in, you must deploy an efficient financial model that helps you be in better control of your business.

    Nursery accounting is no exception, and if you want to expand your daycare nursery in the most efficient way possible, you cannot ignore the financial side of things. Invest time and resources in day nursery finance and get expert accountants to help you if that is important.

    Bradleys, for instance, specialises in offering accounting services for daycare nurseries. Why not speak to us about your requirements? Contact us today!

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