How to prepare your nursery for the increase to funded childcare by 2020

The implementation of the Scottish Government’s plans to increase funded childcare from 600 to 1140 hours is fast approaching. The aim is to provide all children with the best possible start in life, however, as a direct result of the proposed changes, many private and third sector nurseries are predicting a shortfall in funding which will need to be covered by other means.

Many nurseries are already feeling under funded and will struggle to offer the required hours under the new scheme. Under funding comes as a result of the increased minimum and real living wage meaning an expected funding shortfall of around £1,188 per child. To offset the shortfall, nurseries may be planning to increase their fees to cover costs not covered by government funding. There is also still confusion regarding whether the local authority funding is designed to cover meals or not.

Nurseries will be under pressure to deliver the additional hours, increase minimum and real living wages as well as experiencing general increases in costs due to inflation. These increasing costs will leave little capacity to make a profit or surplus. Cashflow is also likely to be heavily impacted by the changes as the timing of income from local authorities will differ from the current monthly income from parents.

Here at EQ, our Healthcare specialists can assist nurseries by preparing financial projections to ensure you are better prepared for the changes ahead of their implementation in 2020.

Projections can assist the decision making of whether to deliver the additional hours, or if this is not beneficial to the business. With business pressures mounting and many nurseries struggling with cashflow, projections and forecasting can provide you with comfort over the changes proposed by the Scottish Government.

For more information, support or advice with preparing financial projections or cashflow queries, please contact our dedicated EQ Healthcare team today via healthcare@eqaccountants.co.uk or call your local office contact.