Northamptonshire County Council owes money to more than 200 early years providers and some now say they may have to stop offering funded places unless the authority sorts out its payment system.
Childminders, nursery owners and pre-schools from across the county have been regularly paid wrongly by NCC since the 30 hours funded childcare was introduced in autumn 2017.
The authority currently owes 230 of its 622 providers £124,845 from the period between autumn and spring last year. It says £40,881 has been paid and the rest will be paid when agreement is reached with the early years provider.
But the debt could be much bigger as many providers are saying they were paid wrongly again last month and are owed funds.
The council says the payment problems have happened because it brought in a new computer system and introduced monthly payments at the same time.
A meeting of 21 providers earlier this week at a Northamptonshire nursery calculated that all together the small group was owed about £50,000.
Sam Evans, who owns two nurseries in the county, has 80 staff and a monthly wage bill of £115,000. She says the problems have caused her sleepless nights and said if the authority continues to pay incorrectly then it could find itself without enough early years providers to give the government funded childcare hours.
She said: “It needs to be taken seriously. But I think people just think, oh it’s a load of childminders so it doesn’t matter.
“They rely on us. It is not that we don’t want to offer free childcare but there will come a time when we are not able to offer this service if this continues.”
The county council, which is given funds by central government to cover the childcare, says it has also made overpayments to some providers but cannot give the figure of how much it has overpaid.
A spokesman said: “We are unable to confirm a final figure as further communication with individual providers needs to take place before a final position is agreed.”
The 30 hours payment issue appears to be unique to Northamptonshire County Council, which says it is using the same system as a number of other authorities.
Childminder Lynn Haycocks from Great Oakley is owed £500 from January and said the payment issues are causing her a financial headache. Each month the council gives a remittance advice but many users have said it is hard to work out what is actually being paid for.
She said: “We don’t know how much is owed to providers across the county. I’m not paid to act as an account and go through my figures each month. Other authorities are managing to work the payments properly so why not Northamptonshire County Council?
“It has crossed my mind that the financial situation at the council could be a factor in this.”
The children’s department at Northamptonshire County Council has been deemed as failing by the Government who sent in Children’s Commissioner Malcolm Newsam at the end of last year to get the department into shape.