Daycare accounting alternative

Childcare bookkeeping solution

Operating a day care or child care center requires you to juggle the needs of children AND an effective business. Many centers use basic spreadsheets or general accounting tools not specifically designed to much the early childhood operation’s cash flow, billing and reporting needs. This is the article that gives you real direction on what kind of accounting alternative you should look for to address the realities of daycare finance and know —without any mention of a specific commercial product —what to do about books, transparency, and burden.

Why centers need to be addressed differently

Daycares finance a little differently vs your regular small business. Revenue may flow from installment tuition plans, part-time enrollment, subsidy payments and late-fee schedules. Outgoings incurred will be for wages for a variety of pay rates and certificates reimbursed, classroom materials and resources, hall hire and fee. A dedicated child accounts feature allows you to map revenue directly to individual children, track grant or subsidy dollars separately and generate parent statements that easily show charges and payments.

Essential features to prioritize

In evaluating those others, concentrate on these features:

Tuition and recurring charges processing: The system needs to automatically cover off weekly, bi-weekly and monthly tuition cycles, mid-period start and end prorations, plans for other family members (sibling discounts or belt promotion plan), and things of that nature.

Child ledgers: Create an account for each child to track their invoices, payments, discounts, credit memos, and past due balance and make it easy for staff to answer parent questions on the spot.

Family statements: Provide detailed family-level charges and payments, group activities for fees due by the family, breakdowns by child and clear descriptions of fees.

Attendance-based billing: If your center bills based on attendance or hourly care, the option should take attendance data and transform it into accurate invoices.

Payroll integration – Find an integrated solution that facilitates payroll posting, manages staff pay rates and benefits, as well as distinguish taxable from non-taxable reimbursements.

Grant and fund tracking: With fund accounting features for centers that accept grants or offer subsidies, restricted funds are easily tracked and reported independently.

Bank reconciliation and expense capture: Automated import of all your bank transactions means bookkeeping can be done in no time, whilst an easy to use attachment tool for receipts keep everything on the right side of an audit.

– Reporting for oversight: The ability to provide customizable reports – from occupancy, to accounts receivable aging, to revenue by classroom, and monthly cash flow – is essential for management as well as board oversight.

— Data export and backups: Make sure the software allows you to manually, or automatically, export general ledger data and backup records in easy-to-read (for accountants or auditors) formats.

Operational considerations

Looking past features, also consider how these products will integrate into your workflow and daily routines:

Easy to use: Employees responsible for input of the day-to-day transactions should find the interface user-friendly. Find easy to use workflows for invoicing, receiving payments and inputting payroll data.

Training and documentation: clear onboarding path, and easy to get help material means less errors and faster time to adoption.

Security and privacy: Daycares manage private family information. Instead, the option should offer role-based access control and help ensure the safety of financial and personal records.

Scalability and flexibility: Say yes to a platform that can deal with growth – be it more sites, classroom divides or bigger service offerings.

Cost benefit: Consider subscription or licensing costs, transaction fees, time spent learning and the amount of automation reducing manual work.

Migration checklist to move from spreadsheets or general ledgers

When changing to a more appropriate accounting method, it is important to plan ahead so that no data is lost or billing interrupted. Use this checklist:

Chart of Accounts Mapping: Map your existing chart of accounts to the new structure—pulling apart operating revenue, restricted funds, payroll liabilities, tax accounts and so on.

Export & clean history data: Be sure warehouse for customers/family card, payment history and balance due, vendor list before you are going to import.

Opening balance reconciliation: Confirm what was available in your bank accounts, petty cash and more at the conversion date for accurate financial reports from day one.

Set up Tuition Plans & Billing Schedule: You will need to enter all your current plans with their late fees, discounts, and sibling adjustment in order for the recurring billing be successful.

— Train staff on real tasks: Utilize a parallel period in which a firm’s employees practice issuing invoices and recording payments in the new system while still processing live transactions in the older one.

Talk to families: Let parents know if their billing statement or payment method will change, and include an explanation of how to interpret the new statements.

Practical tips to simplify bookkeeping

Bring a common sense to the naming of your classes, rooms, and services so reports make sense.

Have the same invoice narrative used on invoices to stop statements from being misunderstood.

Establish a weekly balancing practice for the petty cash, deposits and payments.

Have one staff member in charge of overseeing accounts receivable and another person to approve payroll to keep checks and balances.

Archive close the inactive accounts and graduated families so that activing records remain uncluttered but you have history available.

Creating reports that help people make decisions

Get insights from raw financial data:

Monthly occupancy and revenue per child will help to expose where capacity and pricing changes are necessary.

Aging reports assist in prioritizing collection efforts and families who may need a payment plan.

Profitability reports by class level depict the cost of staffing and supplies per classroom.

Cash flow projections (including tuition and anticipated subsidies) – No surprises on payroll dates!

When to involve a professional

Please keep regular contact with an accountant or bookkeeper that is familiar with ECE finances. They can also assist in establishing fund accounting, consult on the tax treatment of benefits and reimbursements, and confirm that all documentation requirements for subsidies are met. Rely on professional help for annual reconciliations and when applying for grants or loans.

Conclusion

A daycare friendly accounting option that takes messy record keeping and turns it into a system of predictability and transparency that helps daycares, parents, teachers & administrators. With accounting by child ledgers, flexible billing, attendance driven invoicing, payroll interfacing and fund tracking with fee schedules, centers can alleviate the administrative burden to generate the reports that leaders need to make more informed operating decisions. Small centers can have accounting practices that grow proportionally as they do — and keep financial stress off the to-do list — with careful migration planning, staff training and regular reconciliation.