Navigating Your New Responsibilities With Confidence
Becoming a childcare centre Director or Executive Director is an exciting, and potentially nerve-racking, step in your career. The years you spent in the classroom are foundational, but they don't prepare you for all of the new responsibilities in the office. And you learned a lot while getting your ECE, but how to manage a childcare centre and overseeing its finances are not on the list.
But no need to stress, you've got this! In addition to your experience, you bring new energy to the role and the potential to improve systems and processes that may no longer be working.
This financial guide for new Directors will highlight some of the key accounting and financial items that you should keep in mind when managing your childcare centre.

Understand your Revenue Streams
Childcare centres primarily generate revenue through fees from parents and government funding. Parent fees are more straightforward, while the government funding takes many forms (CWELCC, fee subsidies, general operating funds, cost escalation funding, etc.) The key is to get a sense of your monthly revenues and to understand whether any funding is at risk of needing to be repaid. Your bookkeeper plays a key role in helping you understand your monthly revenues, as well as whether any funds should be put aside for potential repayment. [You can refer to this guide for how to evaluate your bookkeeper.]
Understand your Expenses
There are many different types of expenses for your childcare centre, but your largest expense will be paying your staff. Not only is it your largest expense, it is also your most important expense. It must be paid on time, and it needs to be right. Any funding related to payroll should be calculated correctly and reflected in staff paycheques. Again, your bookkeeper should be able to help you with any payroll-related questions, as well as with doing payroll on your behalf if that's your preference.
Other expenses can be divided into two categories: (1) recurring, and (2) non-recurring. Recurring expenses (for example, catering costs and rent) can be expected to show up every month, while non-recurring expenses (for example, repairs) will show up periodically. When thinking about your monthly budget, it's helpful to focus on recurring expenses, and maintain enough of a cash cushion to cover non-recurring expenses when they occur.
Budgeting and Expense Management
Putting your revenue and expenses together, you'll be able to see whether your centre has a monthly deficit (your expenses are larger than your revenues) or a surplus (your revenues are larger than your expenses). For most centres, some months you'll have a surplus, and other months you'll have a deficit.
If you have a consistent monthly surplus, your cash should be growing every month. You'll have more funds to increase salaries, buy that new playground equipment, etc. If you have a consistent monthly deficit, your cash balance will be decreasing every month, and you should talk to your bookkeeper or accountant about the best way to address the issue.
Your bookkeeper should be available to explain the financials to you, and answer any questions you have. A big part of their role is not just to prepare the financials, but to make sure everyone understands what the numbers mean.
At ChildcareCPA, we are not just bookkeepers, we are also Chartered Professional Accountants. That means we can manage your bookkeeping needs, but also provide financial advise to help you succeed. Unlike other CPAs, we don't charge by the hour or extra for this advise. We're here for you when you need us.
Financial Reporting and Compliance
As you know, there are lots of reporting requirements for childcare centres, and over the last few years, unfortunately, the reporting requirements have increased. Which means Directors today are managing more than Directors were managing 5 years ago. It also means that your bookkeeper should be providing more assistance than they were 5 years ago.
As a new Director, a potential big area of improvement is introducing new systems and technology to make your centre more efficient. Maybe it's a bigger change like collecting parent tuition electronically and moving away from cheques, or a smaller change like using a new waitlist-management tool like WaitlistPlus. Big or small, every improvement adds up and will make a huge difference.
ChildcareCPA specializes and only works with childcare centres, so we're here to help you with any changes you're considering, from moving away from cheques and e-transfers to changing caterers, to revamping your payroll process. For accounting and finance, there are lots of new technologies that make things easier for you and for your auditor. And these technologies are always changing and improving. We focus on using the latest and best technologies that will make things easier and save you time.
Working with your Board of Directors [If You Manage a Not-For-Profit Centre]
For many new Directors, working with the Board is a new experience, and can initially feel intimidating. There may be lots of formalities with meetings, policies, and decision making. But managing your Board is easier than managing a classroom!
You will likely have monthly board meetings, as well as a more formal annual meeting:
Monthly meetings are held to review financial performance and provide updates on any changes at the centre. It's also an opportunity to get the Board's input on any issues and approvals if necessary
Annual general meetings are held to review results from the prior year, approve the minutes from the previous year's meeting, make any changes to the directors by nominating and electing next year's Board, appointing (or re-appointing) the auditor for the financial statements and discussing any new business/initiatives for the year
To get the most out of your Board, consider being well prepared for meetings, and being clear about where you might need their support.
It's important to remember that the Board is there to support you. The Board members love the centre and appreciate the care you and your team provide for their children, but they don't understand the centre's operations as well as you do. It's important to seek their diverse perspectives and insights, while also advocating for what you strongly believe in. Clear communication and transparency can help bridge any gaps, and ensure you're getting the most out of your Board. This approach will help turn the Board into a pivotal resource for innovative ideas and guidance.
If you are a new Director and want to discuss your centre's accounting and finances, or want to better understand what all the accounting means, please reach out!