Paying for Childcare

Introduction

Paying for Childcare can be a bit of a hassle, so many parents will often send lump sums to their childcare provider. This will usually cover the cost of their upcoming bill, with the remainder being held on account for future use.

At Childcare Bookings for Schools, we call this customer credit.

Typically, around 10% of payments received will be customer credit. In larger provisions this can be in excess of £10,000 per year. However, it’s amazing how often schools are unable to give an accurate value for this credit.

Most commonly, schools will simply report the value of the cash into the bank, during a 12-month period, as their sales for that year.  Over the last 20 years, I have yet to meet a school that ringfenced this money, despite the fact that it’s not their money – and it definitely isn’t income!

So, why is this happening, and what can be done about it?

The main challenge that schools face is the systems they use typically apply payments received to bookings, as opposed to applying payments received to the parent/carer. This is because the system they are using (frequently their MIS or third-party software) has been built with fixed term events in mind, such as paying £10 as a contribution towards swimming this term, or paying £30 for 8 afterschool football club sessions.  The systems are not designed for recurring monthly bookings, with variable values dependent upon the number of days the school is open.

Why is this an issue?

Any business that holds credit for customers has a responsibility to keep that separate from its cash flow, as at any moment, the customer may request a refund of their credit. By not having this figure itemised, and separated from the remainder of their income, schools are leaving themselves open to financial problems in the future. We only have to cast our minds back to the pandemic, when all childcare closed for months at a time, to remember a time when many parents were quick to ask for their credit back.

What can be done about it?

In the first instance, schools need to keep hyper-accurate records of attendance (ensuring they exclude any children whose places are given for free). Secondly, they should move to matching payments to the person who has made the payment, as opposed to matching it to a specific booking or bookings. 

But, fundamentally, without a booking system that can do this for you, and a support team to manage this process on your behalf, this is a very challenging task to stay on top of (without dedicated office staff time to do so). 

At Childcare Bookings for Schools, we do all of this for you, with monthly remittance including the value of customer credit, held separately within a ringfenced bank account. It’s just one of the ways we can professionalise school childcare administration, which, if we are honest, is rarely the top priority for office staff!

If you recognise some of the challenges discussed in this blog, and you’d like to find out more about how we can help, we’d love to chat to you.

Are you a school that is running (or thinking of starting) your own Breakfast & After School club?

We can help, whether that is just an informal chat, or to
discuss our service. Click here to get in touch.

About the Author

Dan McCaffrey is the Managing Director of Childcare Bookings for Schools, the only outsourced payment, bookings and administration service for school-run childcare in the UK. A former primary teacher, he is also the owner of Pioneer Childcare, the 5th largest wraparound provider in the country, where he learned (the hard way!) everything he shares in these blogs. Dan lives in Sussex with his family.

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