Daycare and Childcare Cash Flow: A Management Playbook

A daycare’s biggest costs are set by regulation: a fixed number of staff for a given number of children, whatever the income. That makes enrolment the key to cash flow. A provider with full rooms and fees collected in advance has steady cash; one with half-empty rooms, slow subsidy payments and late-paying families struggles even with good care. This playbook sets out the routine. For how childcare cash flow works and a worked enrolment example, see the daycare cash flow forecast page.

Occupancy by room

Track occupancy by room, because ratios differ by age:

A single empty place in the baby room costs as much in lost fees as one in preschool but matters more for the ratio. Plan waiting lists by room, and move children between rooms at birthdays in a way that keeps each room as full as possible.

The monthly routine

1. Fees collected against forecast, and any families in arrears.
2. Subsidy payments received and outstanding.
3. Enrolment: current, confirmed starters, leavers and waiting list by room.
4. Staffing against ratios, including agency or bank staff costs.
5. Payroll and major payments due.
6. Cash balance and the lowest point in the next twelve months.

Collecting fees

• Collect monthly in advance by direct debit or card on file.
• Take a registration fee or deposit when a place is confirmed.
• Follow up missed payments within days, with a clear policy.
• Keep extra charges, such as late pick-ups and meals, billed with the monthly fee.

Fees collected in advance mean cash arrives before staff are paid, and families usually find a single monthly payment easier to budget for.

Government funding and subsidies

Subsidies, funded hours and food programme reimbursements often pay in arrears, after attendance is reported, and sometimes on schedules that don’t match your pay dates. Forecast each funding stream in the month it actually arrives, submit claims promptly, and make sure you can fund the gap. Rules and rates change; keep the forecast updated when they do.

Staffing in ratio steps

Staffing rises in steps: adding one child may need no extra staff, while the next requires a whole new staff member. The centre is most profitable just before it needs its next hire, and least profitable just after. Use the forecast to time hires to confirmed enrolment, and use bank or part-time staff to cover peaks.

The September intake and summer

Older children leave for school in late summer, while new starters often begin in September or January. The gap leaves summer fees lower while staffing costs continue. Forecast the transition from your enrolment list, market places in spring, offer summer settling-in starts, and keep part of the stronger months’ cash for July and August.

Fee reviews

Staff costs usually rise every year with pay awards and minimum wage changes. Review fees annually, give families clear notice, and forecast the new fees from the month they apply. A fee increase that lags wage increases by a year leaves the centre funding the difference from its reserves.

Sibling discounts and funded hours

Discounts for siblings and places part-funded by government programmes reduce income per child. Forecast them explicitly, room by room, rather than using a single average fee. When funded rates don’t cover the true cost of a place, the forecast shows how many fee-paying places are needed to balance them.

Food, supplies and premises

Food, consumables and play equipment are steady costs that follow enrolment. Rent, utilities, insurance, licensing and inspections are fixed. Put annual costs such as insurance renewals and registration fees in their months, and keep a small maintenance fund for the premises and outdoor areas.

A worked year

A centre with 62 children at an average fee of $1,150 a month forecasts two new starters and about 2 percent of children leaving each month, with most leavers in August. Its forecast shows fee income falling by about $9,000 in August and September, while staffing stays the same, and a subsidy payment for the summer term arriving six weeks later than the centre had assumed.

The manager opens a spring waiting list for September places, offers August settling-in sessions at a reduced fee so new children start earlier, and sets aside $15,000 from spring fee income. The following August, the centre is 94 percent full instead of 85 percent, and the late subsidy no longer causes a dip below the buffer.

Staff retention and training

Recruiting qualified childcare staff takes time and money, and agency cover while you recruit is expensive. Stable teams also help families trust the setting, which supports enrolment. Include training costs, qualification support and any retention bonuses in the forecast, and compare them with the cost of turnover.

Growing the setting

Opening a new room or a second site adds rent, fit-out, equipment and a full staff team before enrolment builds. Forecast the new space separately with a realistic fill rate, often several months to reach target occupancy, and check that existing rooms can support it through the ramp-up. A waiting list before opening is the best evidence of demand.

Warning signs

• Occupancy falling in any room
• Families in arrears growing
• Subsidy payments arriving later than forecast
• Agency staff costs rising
• Waiting list shrinking ahead of the intake
• Summer planned on the basis of full enrolment
• Fee increases delayed while staff costs rise
• Staff turnover rising, with agency cover filling the gaps

When cash gets tight

1. Fill empty places: waiting list, local marketing, flexible start dates.
2. Chase fee arrears and move families to direct debit.
3. Submit all subsidy claims promptly and follow up late payments.
4. Review rotas and agency use against ratios.
5. Talk to your landlord and bank early.

Tools

The premium Daycare & Childcare template includes an Enrolment tab that calculates children enrolled and fees from starting enrolment, new starters, leavers and average fees, subsidy and registration fee lines, scenarios for slower enrolment, and a dashboard. See also seasonal cash flow.