11 Ideas to Get Your
Nursery Finances Under Control
Time to find the money you need.

We know that nursery finances are not the reason why you got into childcare.

But it’s important. Really, really important. See, unless you can come up with a sustainable business model, you can’t continue to provide outstanding childcare long into the future.

That’s why getting control of your nursery finances matters. It lets you focus on the important stuff.

We’ll go over some easy ways you can get those finances back under control, explain the figures you need to be on top of, and give you some great ideas to run a stable, uncomplicated financial model in your setting.

1. What do you want to spend money on?

There’s a few reasons why we’re starting here.

For starters, you need to know what you’re aiming for in order to understand how to budget for it. Perhaps more importantly, having a target or aim is a great light at the end of your financial makeover tunnel.

It might be a new look outdoor area. Maybe you need to revamp your resources. You could be looking to invest in software, new staff, or send your existing ones on the training courses they need. Whatever you’re aiming for, if you don’t understand the costs and budget properly, you’re not going to get there.

A few tips:

  • Unsure of what your next step is? Ask the children! They’ll tell you what areas they love playing in and the things they never use.
  • Get a quote for your next project. It might be more than you think, it might be way less, but without finding out, there’s no way you can plan properly.
  • Once you know what you’re aiming for, it’s time to put a budgeting system in place. Work out how much you should be spending each month, and set a traffic light system in place to make sure you can see which areas you’re consistently overspending on.
2. Funding

One of the biggest headaches in everyone’s nursery finances is public funding. If you’re not getting the funding that you need, it’s important that you understand the shortfall between your usual prices and the amount you’re getting from your LA.

Once you’ve compared your funding rate to your average hourly price, you can take steps to ensure that the 30 hours is not losing you money that you can’t afford.

A few tips:

  • Adding consumable charges is the most popular way to make up this shortfall, as the 30 hours is not designed to include these charges.
  • Making the funding available only on your less popular sessions is also another way to ensure that you’re not losing out too much with the 30 hours.
  • For other ideas on how to make up for the shortfall, and more information on the 30 hours funding, take a look at our guide – The 30 Hours Funding Bible.
3. Stick to your core sessions

Setting up custom sessions for every single new parent who wants something a bit different is going to lead you down a road of ruin. It’s admin chaos.

Instead, stick to your core sessions. For many nurseries, this means full day, short day, AM, and PM. From there, you can charge parents by the hour for the additional time they need.

That way, you’ll keep everything relatively simple when it comes to collecting an overview of your nursery finances, and you’ll be keeping it clear and simple for the parents too.

A few tips:

  • If you’re already overrun with complex sessions, it can be difficult to overhaul – especially if it’s going to cost parents more money. But many parents are far more forgiving than you might think when you explain to them the context of how much better this simplicity will be for you and for them.
  • This model also makes it really simple to add extra hours ad-hoc. You can even consider a slightly higher rate for these last-minute additions, which many parents will consider perfectly fair.
4. Use percentage discounts

When it comes to discounts, many nurseries make it much harder than it needs to be by creating separate fee structures for sibling discounts or staff fees.

Instead of trying to add and tally all these different fee structures, you’re going to be far better off by working with percentages. You just apply the percentage to the relevant plan items each month, and you don’t have to juggle 5 or 6 different session prices.

A few tips:

  • You can even use this system for holiday clubs or weekend care. If you need to, you can still present parents with a different fee structure, but calculate everything at your end by applying a simple percentage discount or surcharge.
  • In general, you want to keep your nursery finances as simple as possible. The more complexity, flexibility, and different pricing options that you add in, the more difficult it is to get a clear picture of your finances.
5. Charge based on actual sessions

Many nurseries use a complicated averaging out process to make sure that parents pay the same amount each month, rather than for the sessions their child actually attends.

To be honest, it’s better if you just don’t offer this to start with. The price changes are unlikely to fluctuate much from month to month anyway, and working out these prices can be a headache-inducing task.

Stick with charging parents for the actual sessions, and the job of getting your nursery finances in order is going to be a lot simpler.

A few tips:

  • With ad-hoc purchases included, the rates parents pay are unlikely to be the same month-to-month anyway, so there’s really no need to introduce an averaged-out system in the first place.
  • Read the Spring Group story to find out how one of the biggest nursery chains in the UK manages their finances, and get inspiration for your own setting.
6. The biggest cost

Almost all settings in the UK have one thing they spend most of their money on. That’s right, it’s staff.

If you’re looking to run a more sustainable childcare business, you need to start here. Are there any days that you’re consistently over the ratios you want to have? Are you often calling in bank staff on certain days?

Both of these are classic nursery finance problems, and taking the time to properly look at your ratios and staff availability is the only way to solve it. Only once you’ve got a broad picture of where the problems are will you be able to rejig the rotas and stop regularly paying out unnecessary expenses for bank staff.

A few tips:

  • Stop wasting your time working out daily staff ratios when there are plenty of tools that can do this for you. They’ll even show you historical staff ratios which you can use to see where the common problems are.
  • Don’t cut the corners with even lower wages or less training opportunities. That’s going to affect morale and the care you’re giving. Instead, it’s about finding ways to more efficiently use the excellent team that you already have.
  • After staffing, the second biggest hit to your nursery finances is normally rent. If you’re not housed in a booming piece of real estate, it’s worth having that conversation about price with your landlord. You’ll never know unless you ask.
7. Controlling your debt

Between the close relationships you have with your parents, and the paperwork chaos in the office, many nurseries often let parent debt rollover or even slip through the cracks.

There’s no way any business can be sustainable working this way. With the tight margins many nurseries run on, it’s even more dangerous to let invoices go unpaid.

That’s why you need to make sure you have a clear system for knowing what has been charged, when, and how much you’re owed. That way, you can easily track the parents who have paid, and keep on top of those who haven’t.

A few tips:

  • Constantly chasing up parents over the phone to pay their bills is an exhausting process. Instead, signing up parents with direct debit or using an online system with invoice reminders can save you money and time.
  • Build a watertight process into your contracts. Have dates and timelines for repayment of debt, and let parents know exactly what will happen if the debt rolls over for too long. This doesn’t mean you can’t be flexible if you choose to, but it does mean you have a clear process if the debt is getting unmanageable.
9. Know your occupancy and availability

When it comes to maximising the revenue you can make in your nursery, occupancy and availability are the key.

Children on roll will only tell you so much. To understand whether you really are at true capacity, you need to get a day by day breakdown of your occupancy or else you’ll never truly be able to understand your availability.

And if you don’t understand your availability, you’ll never be able to offer extra sessions, or explain to new parents exactly what sessions you might have free for their child.

A few tips:

  • Get a day by day breakdown in order to identify session gaps which you can promote to existing or new parents.
  • If you can collect historical occupancy data, that’s even better. Then you can look into the future and identify when you typically tend to have periods of lower or higher occupancy.
  • The holy grail? A full occupancy planner. This will actually use plans and leaving dates to show you exactly when your availability will change. This might take some spreadsheet mastery, or you can use a software program to work it out for you.
10. And sell that availability

Understanding your availability is no use unless you can actually fill up those spaces.

Once you’ve worked out where your availability is, make sure you let parents know. Make sure you have a clear picture of all your availability for when prospective parents come round. If there’s a significantly quieter time, like a Friday afternoon, then consider offering the session to existing parents at a discounted rate.

A few tips:

  • Use Facebook or email to let parents know about any upcoming free sessions. Make clear that it’s only a few sessions and they’ll be offered on a first come first serve basis.
  • Consider building a waiting list for both existing and prospective parents so that if a session does free up, you can contact them straight away and get the session filled quickly.
11. The right kind of flexible

Being flexible with your parents is all part of offering the best childcare you can. But as we’ve already talked about, offering messy ‘custom’ sessions can add hours to your admin time and make working out the finances more difficult than it needs to be.

Instead of offering these custom times, talk to your parents about what would be really ideal for them. Would it be later opening times? A breakfast club for those parents who have to get off to work earlier?

Offering more flexibility in terms of hours that you’re open might be a better way to offer parents the flexibility they need without creating administrative chaos.

A few tips:

  • Consider using parent questionnaires to understand the kind of schedules that would work best. As well as getting an insight into what different hours they’d like to take up, you’ll also have a chance to explain exactly why you can’t offer some of the other things that they might want.
  • Parents are always going to want something that works around their day, but you can’t cater for everyone. Don’t be afraid to tell parents that this is the way it is, and you can’t change just for one person. It’s not sustainable in the long run, and most parents will understand this.

The Spring Group story

Interested in more? Read the full story of how Spring Group got on top of their finances.