For many childcare centre owners, running a profitable enterprise that complies with the National Quality Framework (NQF) has its challenges. Increased staff ratio standards means increased staffing costs for centre owners and dealing with the additional administration load of NQF reporting takes time – and time costs money.
Anyone in business knows that cash is the lifeblood of that business. Put simply, you can’t pay your expenses if you don’t have money in the bank. But to remain competitive, you can’t simply hike up your charges and expect parents to happily pay the extra. The key lies with improving the way cash flows into your childcare business by receiving payments faster, automating parent payments (such as through direct debit) and using the right payment software. Let’s explore these three tips more deeply.
Receive payments faster
The amount of revenue your childcare centre generates in a month is obviously a significant contributor to your profits. BUT, revenue isn’t everything. For example, how would you cope if you were to receive all of your revenue on the last day of the month? How would you pay your staff (and all the other expenses that pop up) every day of the month before you got paid? This is where the importance of a healthy cash flow becomes clear.
You need cold hard cash to flow into your business every day that you operate. Without it, you may find yourself in the stressful and expensive position of needing to rely on a credit card to pay your expenses while you wait to get paid by parents.
And this is why it’s important to receive parent payments fast. Rather than spending countless hours chasing late payments from parents (costing you time and money), the right automated solution such as direct debit or BPAY can offer you a fail-safe way to receive parent payments on the day that they’re due and practically eliminate your inbound cash flow problems overnight.
Automate parent payments
What are the standard payment terms that you place on your parent payments? Are your administration team members left combing through a combination of cash, cheque, EFTPOS and credit card payments at the end of each week? How much more simple would it be to manage your childcare centre’s cash flow if the majority of your parents were to pay you by direct debit according to the time and frequency that works for you best?
Making a simple adjustment to the standard payment terms that you place on your parent payments can have a dramatic effect on how cash flows through your childcare centre. Consider tweaking your parents’ service contract so that automated payment terms (such as direct debit or BPAY) are the default and preferred option. This simple shift in payment terms will improve your cash flow, save time chasing up late parent payments and help to streamline your financial reporting.
Use the right payment software
Our research tells us that, with the right payment software, childcare centres could reduce the time spent on payment administration and financial reporting by as much as 95 per cent.
The most savvy childcare owners are already integrating parent payment software into their childcare management software to cut down on administration time, decrease administrative staffing costs and streamline their financial reporting through one single source of truth. You can do it too!