To think people should pay for their childcare?

[MacInTheBox]

Okay, so perhaps a bit of a clickbait-esque title but all the same...

Picked DD up from nursery today to be handed a letter and told that they would be closing for good on Friday. I am absolutely gutted.

DD has been attending the nursery since she was 9 months old, she's 3 now. We've always been very pleased with her progress and all of the staff are so lovely.

The reason for the closure is that there is about 20k of unpaid nursery fees. Financially they couldn't keep up. I am gobsmacked at just how much they were owed!

I suspect there are other factors at play, such as the free childcare places, etc. But I can't believe that people would/could continue sending their children to nursery without paying?!

I'm now faced with having to sort out a new nursery for DD ready for when we get back off holiday in 2 weeks. I feel sick to my stomach that we might not be able to find a place for her and what a mess we'll be in.

I know that lots of people are facing financial hardship. We are not hugely well off ourselves, but we've always managed to keep up to date with nursery fees because it's a service we rely on. If we couldn't we would have no choice but to find an alternative. AIBU to feel this way?

The nursery my nieces attended closed last week, as did it's stay and play sessions.
It is the same 'playgroup' and 'mothers and toddlers' as we used to call it that has run for over 40 years in our village.
I like most people round here attended a couple of sessions a week as a little one and took my own children.
It closed as the 30 free hours has meant they cannot cover overheads even with the Vicar offering to remove rent on the church hall. It felt a very sad day for our community when it closed doors.

Couldn't they use an invoice factoring service? Basically sell the invoices to another company to collect on

Can't see any sound financial firm taking on that risk, and the margins in childcare are so small it would unlikely be affordable.

Have not read the full thread. It'll be the 30 free hours. You can't have it all. You're happy to take the free childcare (you're not wrong to be happy - who wouldn't be?!) But the government simply don't give nurseries the amount they need. It is terrible. How are nurseries supposed to pay their staff members if they can't afford to? I'm not against the 30 free hours, but it puts people like me (a nanny) out of work, and then nurseries are stretched and struggling to stay open because so many people use the 30 free hours but the only people benefiting are the parents. And in the long run, parents won't benefit because frankly nurseries won't be able to stay open.

Our local nursery, which has been running for over 40 years, has just closed too. The church has increased the rent this year to more than the nursery can afford to pay.

I worked in a Nursery some time ago ,and had no idea things were this bad TBH. It will be an own goal for the government, if they provide all this "free" childcare and there are few Nurseries left open due to miscalculation by them !

I've just had to pay this months childcare bill for my grandchildren. Daughter is a single parent nurse with 2 children and usually gets help with childcare from universal credit. They forgot to pay the childcare element this time. I have the children when she's on nights if their father refuses ( he's a twat who puts his new girlfriend first) but cannot have them any other time. If I couldn't come up with the money she would have no childcare next month and would have to give up her job. The last time universal credit did this, just before Christmas, it took them 3 months to pay it. Daughter is in constant fear that they are going to keep messing her about and she'll end up losing her job.

Invoice factoring is impractical in this situation. It work in one of two ways, broadly speaking.

1. The nursery 'sells' the entire debt to the factoring company, who then chase the payments. The factoring company only pays the nursery a very small percentage of the total debt, because they’re takin get on a lot of risk and have their own running costs and need for a profit.

1. Alternatively, the nursery pays a fee to the factoring company, who provide a service in trying to recover the debt. The nursery then gets back the money from any invoices settled. The fee is a percentage of e invoice, which rises over time.

Either way, the return to the nursery will be very small. The profit margin on nursery fees is tiny, so the cost of using factoring will instantly negate any supposedly benefit.

I doubt the nursery gave two days' notice by choice.

It’s more likely they were trying to stay open but ran into an impossible position. For instance, if suppliers of food, cleaning or other essentials (could be any number of things) refused to extend their credit, then they could no longer operate within the regulations. Maybe they’ve been given two days notice by the landlord.

Or it could be a legal or tax issue. Even when on the verge of going bust, companies have a legal duty to try an maximise their income, so they can pay back as much as possible to creditors. Unfortunately, the kindness of a longer notice period would naturally result in clients and staff jumping ship earlier, thus doing further damage to the balance sheet.

It’s by no means nice, but it’s a matter of company law. The owners' or directors' first responsibility in any industry is to the business and the creditors, not to the customers. We forget this because we are generally content to fool ourselves with false notions of 'putting the customer first.'

Free spaces do cause problems and not just because of the fees. Some CF parents deliberately send their kids into nursery without nappies or water bottles or food / snacks and so the nursery has no choice but to use their own resources, then don’t pay for this either. At DN’s nursery they have now posted notices that detail exactly what the ‘free childcare spaces’ do and do not include and that anyone who flauts the rules will have their space removed.

But people also struggle

In other words they manage their money badly. In any income bracket there are some who manage and others who can't be bothered. Maybe those who 'struggle' need to assess their priorities and pay their bills. If they're using a nursery then they're presumably working. All nurseries should expect payment in advance, miss once and your child is not welcome, don't make others suffer.

The 'free' hours are damaging in several ways.

On average, a nursery will lose around £1000 a year per funded child. Think about that for a moment..... How secure would you feel in your job if your employer took on multiple loss-making customers? Also consider the fact that, on the eve of the introduction of 30 hours, barely 50% of nurseries were making any sort of profit.

'Free' places also mean increased costs. Childcare providers suffer an increased admin burden to process funding claims and related paperwork. So nurseries have to pay staff to do more admin hours, but nobody is funding those admin hours. Childminders are left working more unpaid hours on paperwork too.

'Free' hours mean more risk. Childcare providers cannot charge registration fees to funded children. So the costs of signing up a child are not covered. The parents have no money tied up in the arrangement; thus, with nothing to lose, their commitment is frequently minimal. They leave without notice or don’t even start, and the childcare provider is left with 'dead space' but still has staff and other costs.

'Free' Childcare depresses fees overall. In fact, even paid-for childcare is priced far too low, in normal business terms. One reason why so many providers are struggling, regardless of being sold short for 'Free’ hours: they are being underpaid all ways round.

'Free' hours reinforce the erroneous view that 'someone else' should pick up the bill if you want to have children. Something we see all too often on these discussion boards.

Yes people who can pay should
Err no, everybody using the service should pay, if they can’t pay they can’t use it
Why is nursery different than Asda? Would you say people who can pay should, they other can just walk out with their shopping?

Itsaboojum has it spot on. We cannot survive the introduction of the thirty funded hours and so far we have resisted it and are sticking with fifteen. I dread the day that it is made compulsory for us to offer it. Currently we are paid under £4 per child, per hour by the local authority. It costs us close to £7 per child, per hour, to deliver a quality early education. It is unsustainable for almost all private and independent nurseries. It also reinforces the entitled attitude of a large number of parents who expect the earth, for close to nothing. This is why so many are closing.