Starting a childcare center can be very challenging. Aside from the actual child-care, there are numerous clerical and administrative processes and aspects consider. The U.S. Small Business Administration outlined some crucial pointers on how to start a quality child care business. It stressed the importance of financial management and accounting in the business’ long-term success.
Business accounting entails a complex, repetitive, and time-consuming processes. It requires a systematic and comprehensive processing, recording and reporting of all financial information related to your business. While these functions can be done manually, it can be counter-productive and error-prone, especially once the number of transactions grow.
Initially, a few labeled folders and ledgers are all you need to record your childcare center’s financial transactions. But as your business grows, transactions will grow alongside other complicated financial concerns. The rudimentary system that worked during the early days might not be enough.
What is a childcare accounting software?
Fortunately, there are accounting software programs specifically designed for childcare centers. Aside from the common functional modules of an accounting software such as accounts payable, accounts receivable, journal, general ledger, payroll, and trial balance, these software applications offer unique features and functionalities.
Childcare accounting software is an invaluable tool in running a daycare center. From billing to payment collection down to reporting, the software streamlines and automates accounting processes thereby improving productivity and efficiency. And since all of these processes are done in a single platform, employees can save time and ensure data are fully integrated.
What are the features of a childcare accounting software?
There are numerous childcare accounting software suites today. They vary greatly, such as off-the-shelf software that can be installed into an office desktop and online-based software that can be accessed through the Internet anytime, anywhere. Aside from these general classifications, every software offers unique functionalities.
Let’s take a look at the top childcare accounting software features.
1. Billing and invoicing
Invoicing for early childhood programs and after-school care has always been complicated. The booking patterns are inherently variable, making the process time-consuming and tedious. Managing and tracking invoices is difficult, especially when doing things manually.
Childcare accounting software offers billing and invoicing feature. It can cutdown the process and save you time. The application allows you to create line items, chart of accounts and customer database. When creating an invoice, you simply select the service or program availed. The statement is automatically sent as scheduled either as a one-off or a recurring invoice. Unless there are adjustments, you don’t need to create a new invoice every pay period.
This feature also allows you to send payment reminders, send follow-ups on pending payments, and track overdue or delinquent accounts.
2. Payment collection
This feature offers convenience not just the childcare center owners and employees but also to the parents. Childcare accounting software offers online payment methods, allowing parents to pay securely and conveniently anytime. Parents can pay directly using their credit or debit cards or through a third-party payment gateway. Childcare vouchers can also be used as payment.
Once payment is made, the software automatically updates the records on file. The system can also be updated in case of non-digital payments, such as cash or check.
3. Account reconciliation
This feature allows you to put on auto-pilot payment reconciliation. Account reconciliation is a tedious process wherein the payment transaction from your ban feeds are sorted out and matched with your invoices. When done manually, this can be very tiresome and prone to error. But with childcare accounting system, this process can be done with just a click.
Account reconciliation allows you to monitor and track in real-time open balance, pending payments, and status of each digital transaction. This data allows you to forecast cashflow which is useful in managing finances and making crucial business decisions.
This is another important feature of a childcare accounting software. With this feature, you can automatically generate the payroll based from the time records of the employees. It can also be programmed to calculate deductions, leave benefits, overtime rates, taxes, insurance, and other applicable dues. Some software applications can be integrated into an existing computerized time-clock.
5. Timesheets and records
Aside from primary accounting features, childcare accounting software can also be integrated into the log-in and log-out of children and staff, enrolment information, and booking calendar. This streamlines all the core administrative functions of your childcare center into one program. With all information stored in one database, you don’t need repetitive data-entry and unnecessary transfer from one platform to another. You can also avoid data loss due to damaged or lost documents.
Since childcare accounting software keeps all your critical records and handles financial transactions, it is equipped with stringent security and encryption features that are regularly updated. These software programs follow latest security standards. You and your consumers are assured that all data in the system are protected and safe. Likewise, parents are guaranteed of a secured payment gateway.
7. Financial management
As your business grows, expect financial concerns to become more complicated. With this feature, you can simplify complex financial tasks such as handling budgeting, tracking expenses, paying bills, and generating reports. Financial management feature gives you insightful data that can help you guide in making profitable business decisions based on cash flow.
You can use childcare accounting software to maintain records of your suppliers and agencies, payment terms, account codes, and recurring expense categories like lease, meals, classroom supplies, utilities, and maintenance. You can create journal entries for expenses like payroll and taxes. At the end of the year, you can automatically generate the books of accounts and financial statement. You can also reconcile your checkbook, enter starting balances, and establish a budget for the new fiscal year.