Finance best practice for childminders

You have a lot to consider when running a childminding business. But perhaps the most important thing of all is making the numbers add up.

At the end of the day, it is your business, and developing good financial management skills will help you to sustain – and grow – your business.

We talked to Jon Hopper, Commercial Director for Retail Business Banking at Lloyds Bank, for his tips for childminders on creating a successful small business.

Here are some things to think about to help you manage your finances.

Have a clear funding strategy

Your business plan will give you a clear idea of the vision of what you want your business to achieve. Having this in place will help you to develop a funding strategy. In simple terms, this means that you need to understand where your income is coming from – how much of it comes from the early years entitlement, Early Years Pupil Premium, other grants or loans, rental income – and private fees from families.

Writing down this strategy as part of your business plan will be important to demonstrate to your bank and other potential funders that you have sound business plans in place.

Setting your price

It may be stating the obvious, but the most important thing you need to do is ensure you set a price for your services to ensure that your income exceeds the cost of providing the service.

Calculating whether you are breaking even when setting your price – and helping you decide whether to take on funded places (or how many places to offer) is a good first step.

Understanding your costs is vital. Use our childminding costs calculator to help you.

Some costs will be fixed (your rent or mortgage, utilities etc), whereas others will vary depending on the number of children you take (e.g. food, craft activities, staffing costs). You will also need to consider annual costs such as PACEY membership and insurance; large equipment costs – and leaving room for contingency that vital "just in case" money. Kelly, who ran a successful childminding service for ten years, shares her suggestions and tips for setting your rate on our blog.

Key questions to consider when setting your price:

  • What are others charging in your area?
  • Does your business plan ensure that your funding structure matches the vision you have for your setting?
  • Does what you offer match – or exceed – what other local providers offer, and can you reflect that in the price you charge?
  • Do you want to focus on offering places to funded children?

We spoke to childminder Ellen who talks about how she manages her costs for her term-time setting with a simple calculation which means she has an even amount of income across 12 months.

Looking ahead

Keeping track of your income and expenditure on an annual basis will help you to keep on top of your finances – and it will also make it easier when it comes to completing your annual tax return.

Thinking ahead to the next year – and beyond – will help you to prepare for changes, and to ensure your business stays sustainable.

Use the following questions to help you think about what lies ahead.

  • How old are the children in your setting – if you offer funded places how will the funding rate change (for instance, do you have a lot of 2-year-olds about to turn 3)?
  • What are the increases to your costs that lie ahead – if you are employing staff you need to think about the National Living Wage and National Minimum Wage and other costs (e.g. pensions) – what about mortgage/rent and food costs?
  • What does your setting need – is there equipment you need to replace or areas of your setting that need redecorating?
  • Do you have any training/CPD needs for the future? Remember that your first-aid certificate needs renewing, for example.
  • Build reviewing your finances as part of your business routine – set aside some time every week to check your payments on a weekly basis and check your budget on a monthly basis.

Completing a financial forecast will help you to think carefully about the business choices you need to make to ensure your business stays sustainable.

More tips for financial sustainability

Filling vacancies

According to our 2018 Building Blocks survey, 45% of childminders have at least one unfilled place that they would like to fill. Maximising the number of children in your setting will help keep your business buoyant. See our marketing section for ideas to help attract customers to your setting.


  • It is good practice to invoice monthly in advance on the first of the month to avoid cash flow issues, and add any extras from the previous month to the new invoice (e.g. any extra hours or trips).
  • Create a standard template – every invoice should include your bank details and your hourly or daily rate.
  • Encourage parents to pay by BACS or direct debit, and don’t accept cheques.
  • Make it clear that you expect all invoices to be paid within 10 days of receipt.
  • Use online banking and check your bank account carefully and regularly. Be careful with parents who pay with a combination of childcare vouchers and BACS transfers – get parents to confirm how they have split payments.
  • Online digital solutions such as Kinderly (England only) can make invoicing quick and efficient.

Chasing late payments

  • After 14 days, you should consider this a late payment and send a polite reminder with the invoice re-attached, in case they missed it.
  • If you are dealing with consistently late payments, send a more strongly-worded email and then warn parents regarding the terms of their contract.
  • Read more about dealing with debtors.

Deposits and retainer fees

Decide whether your deposits and retainer fees will be refundable or not. If you have parents who want to hold their child’s place for several months or more in advance, it can be a good idea to charge a non-refundable retainer fee to avoid losses because of last-minute drop outs. If you are planning to refund the fee at the end, you can call it a deposit and state this in your paperwork. 

Deposits for all funded places must be fully refundable. Of course if the parent doesn’t take up the place, then the provider is entitled to keep the deposit. In addition, local authorities have discretion to determine when deposits for funded places must be refunded. If they think a deposit will prevent take-up, for example of a two-year-old place, then LAs can also insist that they are waived. Be clear in your paperwork what you plan to do.

Contracts and extras

It is up to you to decide the terms of the contract, consider payment monthly in advance, payment for any holidays parents take, days when their children are ill, as well as extras such as outings and playgroups.

PACEY contracts are tailor-made to meet your needs and include useful guidance notes to help you negotiate and agree terms with parents or guardians.

Setting up sound financial processes

At the end of a long week it’s probably the last thing you feel like doing, but checking on a weekly basis that everyone has paid you is a really important way of keeping on top of your finances.

Try these tips to help you:

  • Using an online system can help by setting up an alert for any late or non-payment.
  • Deal with non-payment promptly – an informal chat with a parent will help check they haven’t forgotten this week and can help to avoid future problems.
  • Build reviewing your finances as part of your business routine – set aside some time every week to check your payments on a weekly basis. Look back quarterly as well – is there a pattern emerging?
  • Be aware of the allowances you are able to claim as a childminder. Read more about your allowable expenses here.
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