Skip to main content
Find Your Local Branch
Back
Scroll to top

Cash Management for Daycare Centers

Running A Business 5 min read
A teacher with child holding a toy with a daycare room in the background

Ready to talk to an expert?

Find A Location Get In Touch

Cash flow is the way money moves in and out of your business during a specific period of time.

Managing your cash flow is extremely important for a successful daycare business, especially during plans for expansion and market share growth.

Projecting Cash Flow

Before you can properly manage the cash flow for your daycare center, you need to be able to project it accurately. Projecting cash flow means knowing how much money will be coming in and how much you will have to pay in expenses.

Of course, it’s nearly impossible to predict your cash flow with 100% accuracy. Unexpected expenses will arise, children will come and go, and parents will pay late. However, if you’re diligent and organized, you will have a good idea of how much cash your daycare center has in its account at any given time.

To get started, here are some basic cash flow terms:

Starting cash

The amount of cash you have on hand at the beginning of the month.

Cash in

All of the money that you collect over the course of the month. This includes paid receivables from parents as well as cash from the sale of any assets.

Cash out

All fixed and variable expenses for your daycare center. Some common examples include:

  • Rent/mortgage
  • Utilities (electricity, phone, Internet, etc.)
  • Food
  • Payroll
  • Supplies
  • Liability insurance

Ending cash

Add your starting cash and your cash in, and subtract your cash out. This is your ending cash.

If the number is positive, your daycare center has a positive cash flow for the month.

In most cases, the best way to keep track of your cash flow is to use software or a spreadsheet.

And while it may take some time, if you’re properly managing your cash flow and keeping good records, you should be able to anticipate when things will be tight.

A best practice that will help you budget your cash flow is to always lower your projections for cash in and raise them for cash out.

A good rule of thumb is to project a maximum of 85% capacity for your daycare. This way, if a few families leave unexpectedly, you will still be able to pay your bills.

What to Do if You’re Projecting a Deficit

If your daycare center isn’t at full capacity and you’re projecting a deficit, this is where you want to begin your efforts.

Put more time and energy into your marketing to increase enrollment. Encourage current customers to make referrals (incentives might be helpful here), and get social online.

However, if your daycare center is at full capacity and you’re still projecting a deficit, there are a few things you can try:

  • Collect money from parents who are late on payments
  • Try offering a small discount to people who pay early
  • Think about ways to lower your expenses

Sometimes, even after doing all of the above, you may run into a projected deficit. Here are a few ways that you can meet cash flow needs when money is tight.

    • Use emergency funds that you’ve set aside
    • Utilize short-term financing
    • Establish a line of credit with your financial institution

What to Do With Extra Cash

Early childhood education is some of the most rewarding work a person can do. Of course, from a business perspective, the ultimate goal is to make a profit.

If you find yourself in a position where you have extra cash each month, here are some ways you can reinvest the money into your daycare center to ensure future positive growth.

Repay debt

Paying down your debt when you have extra cash will lower your monthly expenses and help you maintain a positive cash flow.

Invest your cash

You probably don’t want to take high risks with your businesses profits, but investing in CDs, money market accounts, or other interest-bearing [permalink id=”98″]checking accounts[/permalink] will allow your positive cash flow to work for you by earning interest.

Create or add to your emergency fund

Think about putting money away to establish an emergency fund.

While you may have a positive cash flow right now, things might not always be this way. If you have money set aside, you will be prepared for months where your cash flow is negative or your van breaks down.

Give back to your team

Your staff is the foundation of your business. If your business is successful and consistently profitable, think about increasing wages or offering profit sharing.

This will serve as an incentive for your employees and will help you retain your best team members.

Improve

Consider using extra cash to improve your business.

New supplies, equipment, toys, and furniture are all great ways to spend your cash. By improving your facility, you will show your customers that you take pride in your business.

Expand

If you’re consistently profitable, it may be time to consider expanding. A larger building or a second location could be viable options that will help you continue to grow your business — and your profits.

If you’d like to learn more about [permalink id=”1284″]cash management[/permalink] for your business, or if you have any questions not covered by the above article, feel free to come in and talk to a cash management specialist at a [permalink id=”244″]branch near you[/permalink].

Ready to talk to an expert?

Find A Location Get In Touch
Share:

You may be interested in...

Find the Best Small Business Loan Rates Near Me at First Bank Searching for some of the best rates and the most flexible terms for your small business doesn’t have to take forever. At First Bank, we believe you should spend more time focusing on ways to expand your small business and less time worrying about financing it. Stop searching for “small business loan rates near me,” and start considering First Bank—where we are dedicated to meeting the financial needs of small business owners. At First Bank, we’re small enough to provide personalized service that you’d expect from your local bank and large enough to offer all the options you need to manage your finances. With more than 100 locations in North Carolina and South Carolina, it easy to find some of the best small business loan rates near you. Small Business Loan Options at First Bank First Bank’s loan options provide you with the financing you need in order to be successful in today’s competitive business world. Services we offer include: Business Loans – Infuse your small business with an immediate lump-sum of cash. Expand your business, finance new equipment, or refinance debt quickly and easily. Lines of Credit – Access cash quickly and conveniently so you can take advantage of business opportunities without having to wait. Commercial Mortgages – Take advantage of our commercial real-estate specialists and get help structuring a loan that meets your needs. Construction Loans – Build, expand, or remodel your business with a construction loan approved by our specialized financing team. Business Credit Card With Rewards – Make purchases for your business when you need to with our Mastercard Business Card with Rewards. SBA Loans – One of our SBA loan specialists can structure a loan for your small business when traditional bank financing isn’t the right fit. Our small business banking options don’t end there. We offer checking and savings accounts, debit cards, merchant and treasury services, and much more. Contact or visit a First Bank location to find out about our all of our business banking options, and learn more about small business loan rates near you. Loans subject to credit approval. 2 min read
Business Spotlight: Chris Gilder of Meridian Business Spotlight: Meridian From concept to completion, Meridian specializes in the design, engineering, fabrication, assembly, integration, staging, deployments and support of self-service kiosks. 2 min read
Small Business Loans for Women in South Carolina First Bank in South Carolina is dedicated to helping women entrepreneurs get their businesses up and running. That is why we offer a variety of small business loans with competitive rates. According to the National Association of Women Business Owners (NAWBO), more than 11.6 million firms are owned by women, generating $1.7 trillion in sales nationwide. However, some business owners needed financial backing for their ideas. In South Carolina, small business loans for women can be found at any of First Bank’s six branch locations.* Better Small Business Loans First Banks offers all types of loan services for women in South Carolina. Business loans — A First Bank business loan provides a lump sum of cash for all of your startup costs. Credit line — Our credit line gives you a revolving door of lending so you can borrow when you need it and pay it back when you can. Credit card — Our First Bank Mastercard Business Card with Rewards allows you to make those everyday purchases your small business needs. Commercial mortgages — First Bank offers a variety of commercial lending products with competitive pricing. Construction loans — Use a First Bank construction loan to remodel, expand or take on other construction products. Visit Your Local First Bank Once you have the money you need to launch your small business, take advantage of First Bank’s merchant services such as mobile payment processing, check collection, payroll solutions and more. Visit a First Bank in South Carolina to learn more about a small business loan today. Loans subject to credit approval. Sources:   2 min read
Image for tile. What Is Nacha? Understanding the ACH Network and Its Rules A simple way to think about Nacha: the traffic authority for ACH payments The ACH Network is the highway system that payments travel on. Banks, businesses, and payment processors are the drivers. Nacha writes the rules of the road so payments move safely and predictably. This includes defining standards, setting expectations, and establishing consequences when rules are not followed. Without shared rules, payments could be delayed, misdirected, or abused. Nacha’s role is to ensure everyone follows the same standards so payments reach the right place at the right time. Why Nacha Rules Matter Nacha rules help ensure ACH payments are authorized, properly identified, and monitored for unusual or fraudulent activity. These standards allow the ACH Network to operate at scale while remaining reliable and secure. Nacha regularly updates its rules to address emerging risks, strengthen fraud prevention, and reflect changes in how electronic payments are used. What Happens If Nacha Rules Aren’t Followed? Failing to follow Nacha rules can lead to operational and financial consequences. Depending on the issue, this may include payment delays, rejected transactions, increased scrutiny from your bank, or formal warnings and fines through Nacha’s compliance process. In serious or repeated cases, businesses may lose access to ACH services altogether. Nacha maintains a formal compliance and enforcement process to help protect the safety and reliability of the ACH Network. Why This Matters for Your Business If your business sends or receives ACH payments, Nacha rules apply to you, even if you never interact with Nacha directly. Understanding Nacha’s role helps explain why certain requirements exist and why rule changes, such as updates to payroll transaction descriptions, are introduced. Staying informed about Nacha rules can help businesses avoid disruptions and keep payments running smoothly. 2 min read
First Bank logo
Powered by  GDPR Cookie Compliance
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognizing you when you return to our website and helping our team to understand which sections of the website are the most popular and useful.