One of the most time-consuming tasks in a childcare facility is managing the money. Childcare is more like a subscription than a purchase, meaning you must send out weekly or monthly bills, receive and process payment, take care of refunds, and pay taxes.
Childcare businesses with multiple locations rely on software tools to manage invoicing and payment, but smaller or more moderately sized facilities may have an enrollment of anywhere from 12 to 80 or more.
The administrative time it takes to manage tuition increases with the number of children enrolled. The amount of time and effort spent in managing finances is the same no matter the size of the facility.
However, childcare management software is available that is appropriate for smaller centers, too. These tools can be scaled to fit your business and are no longer limited to enterprise-sized businesses.
Manage Your Budget with Childcare Software
Like any good business person, you need to know how much money is coming in and where it goes. Your business depends on whether the flow of money is positive or negative and how you manage each of those scenarios.
Childcare management software shines a light on the flow of money and helps you track it, spend it wisely, and create a cushion for poor economic times and emergencies.
- A budget is a plan for your money and an overview of income and outgo.
- A budget determines how much you and your employees can be paid.
- If an item is not in the budget, do not buy it. Save or set aside money to buy it later if you really need it.
- Maintaining a budget is one part of essential record-keeping for tax and business purposes.
If you see your budget will not stretch for all the necessities of your business, you can look for additional funding opportunities such as applying for grants and loans.
Project Your Cash Flow
Projecting your cash flow is an attempt to predict how much money you will receive in the future and where it will need to go. While cash flow projections are not completely accurate, you can make an educated guess with a little research and your financial records for previous months or years.
Start with the amount of cash you have on hand and add the cash collected over the course of a month. Include payments from parents and income from asset sales.
Next subtract cash out for your various expenses including rent or mortgage, payroll, supplies, insurance, and food. Once you subtract expenses, you have an idea of your ending cash. A positive number indicates a positive cash flow.
If you have extra cash at the end of the month, you can pay down debt, create an emergency fund, or share it with your employees. If you have wanted to make improvements, the extra cash can go towards that.
Keep in mind that you may run into unexpected expenses after you have made your projection.
- Customers make late payments.
- The hard drive on your computer dies.
- Extreme weather conditions create a roof leak.
- Illness runs through your facility, and you need to pay for extra cleaning and disinfecting.
Late paying customers can be a fact of life for most businesses that bill on a monthly basis. However, childcare management software can ensure your invoices go out on time each month and can automatically tag delinquent accounts, sent reminders, and shut down unpaid accounts.
If you see you will run a deficit because your classes aren’t full, put more effort into marketing and increasing enrollment. If your facility is full, however, and you still project a deficit, you may need to get aggressive with your collection efforts or look for ways to lower your expenses.
Weekly and monthly billing can take a huge chunk of time if you are using a spreadsheet and printing invoices for each client. Childcare management software takes the burden off you and your staff. Each client will be billed automatically through the software. If you still provide paper invoices, the software can print the entire batch at once for you to mail to parents or for your staff to place in the children’s folders.
If you bill online, childcare software sends an electronic invoice via email or to a parent portal, ready to be paid. Automated billing also makes it easier for you to offer additional activities for a fee, apply discounts, and add late fees.
Complexity in billing grows if you receive split fees and payments from divorced parents, or co-payments from families who are subsidized by a government program.
Payment processing includes taking checks to the bank, receiving payment via credit or debit card, e-checks, money orders, or bank draft. Childcare management software expands the methods of payment you accept, which may be a selling point for some parents.
Once you process the payments, your software can automatically send funds to your bank to shorten the payment cycle.
Provide Refunds for Cancellations
With the right software to keep track of all the directions your money is going, providing refunds becomes easier as well. All the financial records are stored in a single database so you can look up an individual account and calculate the refund. It doesn’t matter if the refund is partial or in full, the system streamlines the activity and keeps your records accurate.
File Your Taxes
When it comes time to file your taxes, childcare management software provides all the information you need from the central database and prepares reports to help you or your accountant fill out your tax forms.
- Pull total revenue and income reports.
- Print a complete audit and change log.
- Print any current or past statement.
- Pull payment reports.
If you like, you can export your financial data to another system for further tracking or processing. Don't forget, your clients need tax statements from you as well, and your software will provide it in hard copy or electronically.
Many people who go into business do so to follow a passion or provide a service. The financial part of the business sometimes turns out to be more complicated than they expected. Childcare management software automates your financial processes and provides reports to help you understand your cash flow.
When you also receive special payments or co-pays, charge late fees, or provide individual discounts, it can be overwhelming. Let the software take care of that for you, so you can rest assured of accuracy and timely notifications of problems.