Many years ago, my daughter was attending the afterschool club of a local chain of childcare nurseries. She had been there for about 4 months before I realised that I’d never received an invoice and therefore, had never paid. The owner was not only a client but also a friend of mine, whom I bumped into often – and during our regular chats, I asked multiple times if he was sure he was correctly invoicing for all the services he was providing. Of course, he was adamant he was!
Revenue Leakage In Childcare Businesses
When I saw him over the next couple of months, I asked the same type of question and always got the same answer; everything was being billed correctly. Of course, a little while later, it became too embarrassing to avoid paying any longer so I met him and paid my dues – the point is however, the owner had revenue leakage and simply wasn’t aware of it.
As part of Parenta’s commitment to supporting settings, we run surveys which provide a series of questions that allow providers to compare their performance against the most successful childcare settings. One of the questions is about revenue leakage, and 25% of respondents said they didn’t know what this was.
In last month’s column, I talked about the importance of lead generation and the true value of a lead to you being worth £50,000. But (and this is really important) there is simply no point in continuing to fill a bucket with water when it has a hole in the bottom, no matter how small.
This analogy may sound frivolous, but it’s the exact opposite. Having worked with so many providers over the last 25 years, my suspicion is the vast majority have some form of revenue leakage from their business. Simply, they are either not billing, or not billing correctly, and more importantly, they are not receiving the income due to them.
Nursery Management Software For Effective Billing
Nursery management software is an absolute necessity to solve this problem, but even then, I would urge all owners/managers to pull every single invoice for the last month and to check them all thoroughly against hours/sessions used, late payments and late collection fees, as well as extras. Unfortunately, this is not a job that can be passed to someone else – you need to satisfy yourself that everything is 100% correct.
If I’m wrong and you find everything to be 100% correct, congratulations, you are one of the few. If I’m right, fix the issue fast and set a calendar reminder to repeat the exercise in 6 months.
You may also want to grab a copy of my book, “Improving the Business of Childcare” which has many similar hints and tips, available here on www.amazon.co.uk or, take our quiz to see how successful your setting is compared to others we work with here
Read Unlock The Secrets To Childcare Success: Part 1 here
