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Incomings And Outgoings


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I've just received an updated set of accounts from our treasurer (I'm chair). I've not been doing the post of chair long, and I'm not good at figures, but from what I can gather our monthly wage costs are more than our termly income from fees. Now this can't be right or sustainable for that matter.

 

Presumably in a normal year quite a bit of what we fund raise goes towards paying wages and rent, but that doesn't seem right, as surely it should go on 'extras'.

 

Do other settings struggle to cover wages from fees alone? I can't see that we're over staffed. Okay we could cut down the staffing a bit and still be in ratio, but I really wouldn't want to do that.

 

I'd love to hear about what others think.

 

Whilst pondering all this, I was thinking about ways to bring in more money, and I wondered about sponsorship. Would it be okay/legal to ask around to see if any local companies or similar would like to sponsor us, or is that a big 'no no' as a charity?

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Just an update, had a closer look at last year's accounts and she hasn't included the NEG in this amount. Phew! Still we do in the average year run at a slight loss. Is this the same position for other PVI settings?

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We always found that we ran at a loss for the first half of the year and then towards the summer term, when we had more children, this evened out. We never made a profit though! Fundraising was essential for us to afford to buy essentials such as stationary and art supplies.

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I'm administrator (and deputy supervisor) for our setting (was chair, secretary, joint treasurer in years gone by).

 

I do a cash flow forecast each year to try to balance the books, and keep it updated throughout the year. Last year we made quite a profit, this year we should just about break even, perhaps a small profit (we opened some afternoons as well). We are currently looking at projected income for next year and projected outgoings (which is a huge headache) to try to fix the fees at the correct level.

 

My own view is that fees and funding should cover the cost of running the setting including materials. I feel this because it is the only fair way of ensuring that everybody who uses our service pays for it depending on what they use, as not all parents support fundraising or take on committee roles (obviously for various reasons). It has been our long term plan to gradually increase fees to equate to the Nursery Education Grant which we may well achieve for the coming year. We use fundraising to buy new toys and equipment etc, but only if we have the fundraising income.

 

With my staff hat on, the most important resource any setting has is the staff. As you obviously appreciate, ratios are only the minimum ratios. If a setting can afford it, ratios should be set so that minimum ratios are met and where possible exceeded to allow staff to provide for the care and education for the children, in line with the EYFS, rather than simply be able to fight fires. My personal aim is also to try persuade successive committees to increase what staff are paid in recognition of their increased responsibilities and often qualifications, if we can afford it.

 

Hope that helps and I haven't rambled on too much.

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same as Beau...

 

first term at bit of a loss and this reduced to even by easter and then profit last term..

numbers increasing over the year being the big factor.. the profit in June/july offset the loss in September, so we broke even most of the time, some years it was a loss of a couple a of thousand no more ..

it was usually at break even - this is for rent, wages, and essentials such as paint paper etc food and drink, cleaning stuffs, small pieces of equipment, training costs, larger items or projects fundraised for.. fundraising never used to cover the wages or rent.

 

It became much more difficult every year to cover costs as increases far out weighed the income form grant... for example the minimum wage increases on average 5% but he grant increase by less than this..we did pay more than this but increased the wages by same amount as otherwise the cleaner would end up earning same as qualified staff... :o

 

include increased holiday pay national insurance for employer and other 'official' increases the grant depleted rather rapidly against the outgoings needed..

 

Inge

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When setting the annual budget, I tend to overestimate outgoings, and underestimate income. It is impossible for me to be anywhere near accurate as to our income - although the waiting list gives me some idea of the numbers of children we will have, things change so quickly. Parents move, or put their child on the waiting list for several groups. We get last minute applications, we get last minute leavers. We even get some no-shows (who have already accepted a place with us). Outgoings are a little easier, as there are some constants such as wages, rent, etc. But the finances do need a regular check kept on them.

 

There seems to be a pattern of having one good year (lots of children) followed by a leaner year (when a lot of children leave to start school at the same time). I try to prepare for the lean years, and put some money aside to cover for it.

 

Budgeting gets harder and harder - expenses are increasing dramatically, whilst income is just too variable and rises nowhere near as fast.

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Thanks for all the replies, I definitely agree that staff are our most important resource and I would willingly spend more in this area as required.

 

I'd like to do as Deb says and actually project our incomings and outgoings over the year, at the moment it feels like we chuck everything in a big bucket and see what's left when we've shaken everything out.

 

I definitely want to give staff a pay rise, it's on the agenda for tomorrow's committee meeting.

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Suzie let me know if you would like me to attach a cash flow forecast in the form of an Excel spreadsheet so all the calculation is done for you. I found mine on my computer templates.

 

It makes it easier to punch in some numbers and see what the end result is ie if we increase the fees by such and such this will enable us to cover our projected expenditure including a pay rise of such and such for staff. Don't forget the minimum wage goes up in October by 1.2 % to £5.80.

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Here it is. I have populated it with a few figures to illustrate the idea. In this case it is showing an operating loss for the year of £2,500. In which case we would need to look at ways of increasing our income or decreasing our costs.

 

I generally put in prediced figures for the whole year which I adjust every month with the actual figures. This gives me an idea if we are on target or not. If necessary, we might consider putting up the fees partway through a year but we haven't had to as yet - touch wood!

 

Hope that helps, let me know if I can be of any further help.

Cash_flow_09_10_for_FSF.xls

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Wow, Deb, I just love this forum. That is absolutely perfect and thank you so much for sharing it. I will forward it to my treasurer, not sure how pleased she'll be :o but we did discuss forecasts today at committee meeting.

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Any of you brilliant people able to save this in the old version as I am unable to open it? xD Cait where are you!!!! :o

 

It's an Excel document, not a Word document and opens fine in my older version of Office. Do you have Excel though, or just Word?

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