So, you've been approved to open your service & you can start inviting families to come in - and you can start earning the money back that you've poured into your business!
But there's a slight problem.
You have to apply for CCS approval, and before you get it, you either have to charge families full fees or forego some initial earnings until the subsidy comes in.
So what should you do?
Estimating CCS
The department recommends that you don't estimate CCS.
Estimating CCS typically means you bill families before their children have attended, so for the sake of ease we'll call this day 1. On day 1, you might see that families should get around 50% CCS. So you charge them 50% of the fee and wait for the other 50% to come from the department.
For the vast majority of families, this will run smoothly. But the instances where CCS may be wrong (based on changes to entitlements or incorrect assumptions) can cause a huge administrative nightmare and could leave you out of pocket!
When you're opening your service, you have a million things to do. Don't add any extra burden on yourself and estimate CCS during this period.
We've seen lots of services do it this way and, quite frankly, their family accounts can end up a mess in a matter of weeks.
So here's what you can do instead...
Option 1: Billing In Arrears
CCS approval usually comes in within 2 weeks of your application.
So if you bill families fortnightly in arrears (i.e. billing on Day 15 for Days 1-14), you'll likely receive your CCS approval BEFORE your families' first invoice.
This means you can correctly administer CCS and charge families the correct amount from the start. No added admin work. No risk of debt due to poor account management.
FYI: When I say 'administering CCS', this just means adding the subsidy to the family's invoice - i.e. a child has received 1 day of care at $100. If CCS is 50%, I take $50 from the family and 'administer' the $50 CCS to make up the $100 bill.
Option 2: Billing in Advance (but administering CCS in arrears)
Billing in advance is a popular solution for a lot of services. This is where you receive the money up front.
But how can you bill in advance without estimating CCS?
The department suggests that, if you want to bill in advance, you should follow this strategy.
(for the purposes of this, we will use a centre that bills fortnightly in advance)
Day 1: The service bills families full fees for the first fortnight (no CCS applied)
Day 1-14: CCS approval happens during this period
Day 15: CCS is given to the service from Day 1-14
Also on Day 15: The service bills families for fortnight 2, but administers the CCS that was given to them from fortnight 1.
So for the family in the example above whose bill in $100, their invoices would look like this:
Invoice 1: $100
Invoice 2 onwards: $50 ($100 minus the $50 CCS from fortnight 1)
What this means is that CCS is never estimated, and families will (in theory) always be in credit. In a family's last fortnight at the service, the balance can be reconciled.
This is a popular way of being able to bill families in advance, whilst avoiding the administrative burden involved with estimating CCS.
Where To Go Now?
If you're starting a new service, my advice is to make things easier for yourself and administer CCS in arrears - whether that's billing families in advance or arrears.
And if you want to know more about managing CCS, you can take my course, 'The Complete Guide to CCS'