Childcare Accounting

4 Ways Your Daycare Franchise Can Be Successful in the New Normal

The advent of the COVID-19 pandemic has disrupted business in virtually all industries and sectors, perhaps forever. With seemingly no end to the coronavirus crisis and its ravages, daycare franchising and businesses worldwide are fighting for their survival and shifting their operations to accommodate the new normal.

In nearly every economic sector today, the businesses that survive the pandemic will need to change how they operate and interact with consumers. The coronavirus has forced every daycare franchise across the U.S. to rethink its operations. Survival and success will require franchisors to support their franchisees and their customers by pivoting their business models and processes to suit the changing marketplace.

Moving forward, daycares centers should formulate and implement both short-term and long-term strategies for recovery. They should also address what consumers require right now – protection from the virus and a safe place to take their kids as they work – and position their brand to meet those needs.

Ways Daycare Franchises Can Achieve Operational Efficiency in Uncertain Times

While the COVID-19 pandemic has wrought havoc globally, things must go on as the need for products and services resumes – although reshaped by the crisis to some extent. As such, businesses and franchises should remain open to new opportunities and re-evaluate their operations to ensure efficiency, survive the pandemic, and even thrive. Here’s how:

1. Adapt for Change

After the initial lockdown imposed across the U.S., daycare franchises had to navigate reopening at the height of the pandemic and ensure parents that they were taking all safety measures to safeguard children’s safety. They took steps in compliance with government COVID-19 prevention guidelines and new regulatory requirements. These included:

  • Ensuring social distancing in daycare centers and during pickup and drop off points
  • Frequently cleaning and disinfecting surfaces and indoor fixtures
  • Practicing good hand hygiene among all children and staff members
  • Wearing facemasks at work
  • Keeping small group sizes of about six kids in home-based programs and eight in centers
  • Symptoms screening

These are some of the changes that daycare franchises should implement moving forward. But to survive the crisis, attract more business, and quell parents’ fears, centers need to adapt for change moving forward.

Therefore, rather than trying to upgrade their old systems and processes, they now have the chance to implement new and more impactful digital strategies and solutions. For example, franchise businesses can opt to implement center-centric solutions like Prime Childcare Software built for multi-center chains and franchises.

Daycare franchises that openly address how they keep staff and children safe will most likely win during and after the pandemic winds down.

2. Connect with Customers

Right now, it’s vital to strengthen connections with existing customers – in this case, parents. As habits and preferences rapidly change in response to the pandemic, you must show parents that you are willing and able to meet their new reality regarding safety measures. Connecting with parents and other stakeholders remotely must be at the center of your strategy.

3. Create Synergy

Examine your existing business infrastructure and plan and identify what other services you can offer to diversify or expand your business now. What existing resources, such as trained staff, transportation network, equipment, and more, can you adapt to offer new, different services. Find one or more needs that fit your current daycare operation and fill them.

4. Give Peace of Mind

Look at your daycare business through your customers’ eyes and identify what they need presently to give the added assurance and increase their peace of mind during COVID-19. Think of how you can alter your web presence, marketing, and branding to bolster that reassurance and trust. Parents require assurance that their children are safe with a pandemic-prepared daycare center like yours.

How Prime Can Help Franchises Run More Efficiently

Prime Childcare Software has an enterprise solution that allows franchise businesses to combine centralized and local management seamlessly. It makes it easy for the owners and executive management teams of multiple centers to stay connected to their locations. Prime allows you to view critical management and operational processes across a broad array of functions inside all your locations.

For example, you can view the check-in and check-out procedures implemented and followed by your child care locations to ensure child safety during the COVID-19 pandemic. You can also view expenses and profitability, manage resource loading and scheduling, and oversee invoicing and tuition collection from a central location.

Prime also provides the following operational capabilities:

  • Payment processing using an enterprise payment module
  • Hassle-free registration and enrollment
  • Fluid parent communication to help build and retain their clients
  • Human resource payroll management
  • Automated billing and online payments

Prime offers all these and more child care franchise services on a single cloud-based commercial site with a super-convenient mobile childcare app. Contact us today and schedule your appointment to get started.

6 Ways to Estimate Your Cash Flow During Fall and Winter

Cash flow refers to the movement of money in and out of your daycare business during a specific period. Managing your cash flow is critical for a daycare business’s success, especially after the long holidays and plans for expansion or market share growth. Cash flow is king for all businesses. It keeps your daycare business healthy and enables it to accelerate during busy months and withstand lean ones. There are different ways to estimate and measure cash flow. Each has its merits and weaknesses, depending on your operational goals.

Projecting Cash Flow

It helps to project your daycare’s cash flow accurately before you can properly manage it. Cash flow projection or estimation means knowing how much money will come into your business and how much you have to pay in expenses. Of course, it’s nearly impossible to estimate your cash flow with certainty. Unexpected expenses almost always arise, kids will come and go, government grants may change, and parents will pay late. However, if you are organized and diligent, you can get a good idea of how much cash you need for a specific period and know how much money is in your accounts. Below are six ways of estimating your day care’s cash flow.

1. Make a Cash Flow Budget

Developing a cash flow budget requires you to estimate your daycare’s income and the expenses it will payout. Base your estimates on past performance to make them verifiable and help determine your financial projections. Furthermore, base any new program assumptions on carefully-conducted market research of other similar daycare businesses. Assumptions to consider include:
  • The vacancy rate
  • The number of kids served
  • The fees you charge
  • The number of hours and days the business is open
Developing your budget requires considerable time and planning. Below are some of the activities involved:
  • Establish the budget period – annually, monthly, quarterly, or biannually.
  • Estimate the number of kids you will serve based on your licensing standards, space available, the number of kids already enrolled, and the number of staff you have (if any).
  • Estimate anticipated revenue. It could come from parent fees, public subsidies, food programs, sponsors, etc.
  • Estimate anticipated expenditures. Make sure to include:
    • Fixed expenses like rent, insurance, utilities, mortgage, and telephone
    • Salary expenses if applicable
    • Program or funder requirements, for example, associated costs of a grant program like obtaining accreditation
    • Everything else such as food, equipment, supplies, advertising, staff development, and liability insurance
To get your ending cash, you must add your starting cash (the amount you have in your daycare accounts) and anticipated revenue (money coming into the business). If the number is positive, then your daycare has a positive cash flow for fall and winter.

2. Free Cash Flow

Free cash flow is a standard method of estimating and measuring cash flow. The FCF metric tracks the cash you have leftover after making capital expenditures like mortgage and equipment payments. To determine your FCF number, you must examine both your capital expenditure and operating cash flow. Free cash flow is essential because it’s the money available to build your daycare business, expand your product offerings, and carry out other activities that increase your business’s long-term value.

3. Cash Flow from Financing Activities

Cash flow from financing activities shows your business’ financial condition by showing how you raise your capital and repay investors. These activities include taking on new loans or paying investors, if any. Therefore, if you consistently take on new debt for your temporary cash shortages, it is an indicator of financial problems down the road. Cash from financing activities tells you what percentage of your money is from financing instead of operations revenue. It is also an indicator of your expansion readiness.

4. Cash Flow from Operations

It is one of the best indicators of your daycare business’s overall financial condition. The term operation refers to your core business activities. In your case, it’s providing care and supervision to the children under your care. Cash flow from operations shows how much money goes out and comes in from your core business functions. It’s the cash flow available before you finance anything. If it’s thin, you must consider outside financing to pay your bills.

5. Levered Cash Flow

Levered cash flow (LCF) refers to the free cash flow you have remaining after taking care of your debt obligations. It tells you how much money you have available for distribution and investment. To determine your LCF, you must first figure out your un-levered cash flow and subtract any outstanding remittances, including interest payments. Levered cash flow is a suitable indicator of your business credit record, as well as your ability to repay debts and manage business funds.

6. Use of a Spreadsheet or Software

In most cases, the best way to estimate your cash flow and keep track of it is to use a spreadsheet or software. Today the market contains excellent software to help childcare and daycare businesses manage their budgets and daily operations. One example is Prime Childcare, a cloud-based childcare management software, plus a supporting mobile childcare app. Prime Childcare can help you simplify your finances, automate your back-office processes, optimize your communications, and streamline your compliance reporting. Such software leaves you enough time to take care of the kids and communicate with parents and prospects.

Over to You

While it may take some time and experience, if you properly manage your cash flow and keep good records, you can make accurate cash flow projections and estimates. You can also anticipate when things get tight. One best practice to help your cash flow budgeting is to lower your cash in (anticipated revenue) projections and raise your cash out (expenses) estimates. At Prime Childcare software, we pride ourselves on technical innovation and providing comprehensive, easy-to-use technology supported by humans. We remain dedicated to empowering childcare centers to manage their routine functions so that proprietors can spend time nourishing relationships and doing other core business activities. Contact us today to get started.

Child Care Accounting Made Easy

How To Collect Tuition & Payments From Parents Without All The Fuss

Money is such a sensitive subject. No one wants to have to ask for it, but many people simply don’t want to part with it. It is one of the more challenging issues child care center administrators and owners face. To run a business successfully, you must carefully balance your cash flow both in and out of the business.

While you’re busy checking kids in and out, monitoring all of your various teachers and classrooms, and handling any and all parental concerns, you’re also managing the books. You’re taking in tuition payments, fees of varying sorts, and additional costs for field trips or other activities offered at the center. You’re also managing the outflow to cover your rent, utilities, staff payroll, and various materials, supplies, and snacks needed to actually run your classrooms and feed the children. To turn a profit, you have to carefully set up your cost structure as well as carefully manage your costs. It’s a tricky balance, but there are tools that can simplify this process.

Whether you are a new or well established daycare, preschool, or after school care center, the key to ensuring timely payments from your parents requires 3 important things:

1. How To Make It Easy For Parents To Pay Tuition & Fees

Parents are busy; like you, they spend 95% of their day multitasking. They are rushing in and out of your center focused on their workday ahead, planning the evening dinner routine, trying to remember who has a birthday/anniversary this week, and whether they remembered to pack the right things for the child they just dropped off with you.

Sometimes finances are tight. Unplanned (and expensive) events happen to families regularly, and sometimes cash flow can become an issue for a parent. Give them the option to pay by credit card. Though credit card companies can charge hefty fees for using their services, you can opt to pass these charges through to your families as a processing fee.

Stopping a parent to discuss payments during pick up or drop off is not likely to result in an immediate payment — they simply don’t have the time to stop and write you a check on the spot. Worse, if they’re suffering financial problems, it may be an embarrassing conversation for them. Do everything you can to make billing simple for them.

  • Provide online billing options so they can log in and pay after the kiddos go to bed, or on a break during the day.
  • Offer automatic payments for tuition, fees and other expenses via draft, ACH payments, and credit card payments so parents don’t have to try to remember whether they’ve paid.
  • Send reminders by email or text message rather than trying to catch parents in person during drop off or pick up

2. Think About How Your Clients Prefer To Receive Invoices & Bills

Be sure to consider the method by which you send invoices or bills as well as how you account for payments based on your clientele. Some may not have easy access to computers or email. Some may be paid monthly, whereas others are paid bi-monthly or even weekly. So many want to pay by cash or check. Some may want or need to prepay. Being flexible in an effort to accommodate your clientele is extremely important. You want to make payments as easy as possible so as to keep families on track with timely payments.

If you are uncertain of what your clients need in terms of billing and payment options, you can survey them both formally (through a custom form within a child care management system or surveying website such as Survey Monkey) or informally through simple verbal or written onsite surveys. Understanding the easiest way in which to bill and accept payments will help ensure more timely payments.

3. Communicate Tuition, Payment, And Fee Information Regularly

Parents have a lot to keep up with, so be sure to communicate account amounts as well as ways in which to pay early and often. This allows families to plan for these payments, especially when additional fees (such as early drop off and late pick up fees, field trip fees, lunch funds due, etc.) are involved. Understanding the best ways to contact families regarding such is vital. Options include emailing statements, hard copy statements, access to parent portals through child care management systems, newsletters, etc. Be sure to have a way to send reminders when families miss important due dates and deadlines. It is rare that you can over communicate such information.

Whether you are managing a single daycare, preschool or after school care facility or multiple, Prime Child Care Software can help! This comprehensive, easy-to-use child care software provides multiple options to help you manage tuitionfeesmeals, and multiple payment methods with just a few clicks. It allows you to manage families with multiple children at a single facility, account for subsidy payments, such as CACFP or other third party payments with ease. You can handle account payable/receivable within a single solution, as well as run reports by child, family, sponsor, and more. It is a cost effective tool to make the accounting part of your job much easier.

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