NOW IS THE TIME

In the newspapers, on television, online and radio news there are constant reports that the economic climate we are heading into is like none other.  Yesterday the Prime Minister confirmed that we are headed for a recession.

Network SA has already had requests from services where, due to parents’ job losses, there has been a decline in their utilisation rates.  Their financial viability can, and has, become an issue.

Steps you can take now
Don’t wait until you have a large decrease in your utilisation rate and start to feel the financial impact on your service.  There are steps you can take now to monitor and manage your utilisation rate and financial situation.

• Check your clientele
• Check utilisation rate
• Check staffing flexibility
• Check provision levels
• Closely monitor your budget and outstanding parent fees

Check your clientele. 
In an economic downturn the positions your parents hold in the workforce may indicate the likelihood of job losses amongst your parent body.   

Some small business operators, casual employees and middle management may be the first casualties in the current economic climate. We have already seen job losses in the manufacturing industries.  With income levels reducing, fewer hours worked or with a job loss by one or both parents, the money they do receive will be spent on essential items such as food, mortgage/rent, bills etc. and less on non essential items such as eating out, beauty, fashion and entertainment etc.  A flow on effect of this is that those employed in the non essential industries find their jobs at risk.

This brings into question the affordability of child care for families.

Now is the time to start monitoring your utilisation rates, flexibility with staff, staff leave entitlements, provisions, and finances.

Check utilisation rate
Watch for declines.  Check the numbers each school term to see those who will be going into school or parents who no longer require child care.  Check your waiting lists and contact parents in advance about up and coming vacancies.  Having this knowledge enables you to get the best possible result in replacing those bookings or managing your staff levels to cope with a reduction in utilisation. 

Some services only take permanent bookings but seeing the ‘gaps’ in the daily sessions enables you to offer casual bookings.  Have a notice on the front door or in the reception area listing next week’s casual vacancies.  This may entice some parents to seek respite for half a day, a day, a few days a week.  They may be happy to take those casual bookings without committing themselves to a permanent one.  Any extra child, even a casual one can keep the centre viable.  You may find these casual bookings help sustain your utilisation rate which in turn keeps staff employed and the centre viable.

Check staffing flexibility
Do you have a fair and workable number of permanent full time, part time and casual employees?  If you have a drop in utilisation you need to have staff flexibility.  Also look at end dates on contracts.  End dates on contracts will enable you to renegotiate hours in a new contract prior to the end of the current contract.   If there is no end date the contract rolls on continuously and a termination payout may be required should the need to restructure occur in times of substantial utilisation reductions. 

Check your provision levels
Monitor leave entitlements and encourage staff to take leave if you have a drop in utilisation.  Carrying excessive leave entitlements indicates that the staff are not taking their entitlements each year.  Check your own policies and industrial instruments (e.g. Awards) to ensure your compliance.  Leave entitlements are a ‘health and well being’ entitlement for staff.  Leave gives them the opportunity to have a break and come back to work refreshed.  

An excessive accumulation of leave entitlements can also cost the service financially because you need to top up the amount of money you put away in provisions each year.  Any entitlement carried forward from previous years has to be increased not only by a new unused entitlement each year but adjusted to make sure the total figure is at their current rate of pay (previous years will be at old pay rates but when they take those leave entitlements it will be at the current rate of pay).  Encouraging staff to take leave has 2 benefits – a health and well being one for the staff, children and colleagues and a financial benefit to the service by keeping fees to a minimum.

Closely monitor your budget and outstanding parent fees 
Monthly comparisons and the ability to understand what your financials mean can help pin point potential financial issues.  Take steps early rather than wait until financial difficulties arise.  Some financial difficulties can be avoided or minimised with close monitoring and appropriate steps being taken early. 

Closely monitor your outstanding parent fees.  The longer you allow outstanding fees to remain unpaid the harder it is for the parents to catch up.  Recovering a small amount is more likely to be successful and easier for the parents to cope with than a larger amount.   There are various methods for allowing parents to make arrangements to catch up on outstanding fees such as small additional payments along with existing payments or reducing the days of care but the parent continue to pay the normal fee until the outstanding amount has been paid.  Your fee policy will set out the course of action you need to take.

It is widely reported that this economic global crisis is like no other and careful planning NOW is very important to minimise the impact on your service.

If you are worried about the financial viability of your service, contact Network SA for support.  You can call us on 8445 8128 (or 1800 673 714 for country callers) or email gail.gullickson@networksa.org.au or bev.pope@networksa.org.au.

Gail Gullickson
Financial Management Consultant
Network SA
21st April 2009

Network SA EXtra is a subscriber funded industrial and legal accountability service.

To become a member either:
• head to our online shop and purchase a subscription or
• download the Network SA EXtra application form.

For more information head to the Network SA EXtra information page.

ARMSU is the Aboriginal Resource & Management Support Unit provides management and quality care support services for Aboriginal children's services.

•Cultural Awareness Training

•Flexible Learning Documents

The ARMSU Talking Culture Team provides cultural awareness training for staff and cultural experiences for children.

ARMSU Talking Culture develop cultural resource kits which are available to loan by services who subscribe to the ARMSU Resource Centre.