Published: Mar 30, 2020
6 steps every Approved Provider should action
The government has already stated that centres will be permitted to receive the Childcare Care Subsidy (CCS) should they be forced to close, but what happens if a centre has already lost more than half of its enrolments before a shutdown occurs, if ever? The government is yet to provide an answer on this. Centres are highly dependent on receiving the CCS to pay staff wages and other expenses. They are not permitted by law to wave the gap fee for families if they remain open and continue to receive the CCS.
We understand the challenges faced by centre owners / approved providers and have compiled a list of recommendations for owners to action in the coming days:
1. Have your accountant assist you prepare a cashflow forecast for at least 6-12 months:
This will provide visibility and help you take control of your expenses. No doubt it’s difficult to forecast given the current circumstances, but preparing a series of different scenarios as well will help you take control and give you visibility. You may decide to defer / minimise or cancel upcoming expenses and payments such as rent (awaiting some government guidance on commercial tenancies), worker’s insurance, council and water rates and electricity and gas.
2. Have your accountant lodge your centre’s March quarter 2020 Activity Statement as soon as practicable:
This will ensure you receive a rebate on the PAYG withholding amount reported at W1 on the Activity Statement. Any refund due will be credited to the centre’s bank account within 14 days. Rebates / payments of up to $100,000 are available to eligible operators.
3. Encourage families to hold off on withdrawing their enrolment:
No doubt this sounds easier said than done, however encourage families to apply for the Additional Childcare Subsidy (ACCS) and/or consider a reduced fee (not fee gap).
3. Apply for rebates on trainee and apprentice wages:
This measure announced in the government’s stimulus package will rebate 50% of wages for 9 months from 1 January 2020 to 30 September 2020. Centre’s (and other eligible employers) will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter)
4. Consider reduced pay for permanent staff:
At this stage, no doubt most centre operators would have let casual staff go. The government has announced a range of income support measure for them. Any wage reduction of wages for permanent must be agreed with employees. We would encourage operators to speak to their preferred HR advisor or FairWork about the appropriate procedure for doing this
5. Get in touch with your bank about pausing your business loan / overdraft repayments:
This is critical! interest is a significant profit and loss item for many centres. Most major lenders are on board and I am aware some banks have already automatically paused repayments for a period of 3 months and will permit this for up to 6 months. More information on pausing repayments can be found with the Australian Banking Association
6. Apply for the Community Childcare Fund Special Circumstances Grant:
This is State government funding available for centres – CCCF facing an event or incident beyond their control and is designed to help them meeting ongoing costs including wages and other expenses. The eligibility for the funding has been broadened to include centres impacted by COVID-19.