Kaljit Randhawa, who ran The Little Genius Academy, formerly Baby Einstein's Nursery, in West Bromwich, allegedly claimed sums of about £25,000 of taxpayers' money that she was not entitled to.
The 33-year-old allegedly cashed in on the Government’s Early Years and Nursery Education Funding schemes – which provided free nursery time for two-to-four year-olds from hard-up families between January 2017 and December 2018.
Mr Thomas Holden, defence barrister, asked Randhawa to explain what she meant when she sent a parent a text stating, "if anyone asks, tell them you have got a place here" after the child left in October 2017. A claim for funding was allegedly made for January to March 2018.
Giving evidence Randhawa replied: "I didn't ask her to lie about it."
Randhawa told the court the child was awarded a place at a different nursery and she was telling the parent to advise the new nursery that the family was already receiving free hours from The Little Genius Academy.
She said the parent had also made an error on the original claim form which she had to correct.
In response to claims submitted for January to May 2018 relating to another child who allegedly did not attend at all, Randhawa replied: "As far as I was aware that child was attending and that's why the claim was made. The parent attended to complete the paperwork. The parent was unable to write in English, although they could understand the language a little.
"I had to go through the forms with them.
"When this child started he was not entitled to free hours and at first the parent paid for the place privately. The parent signed the form and I dated it afterwards."
The defendant told the jury that the authorities had advised that claim forms requesting free 30-hour places should be submitted early as the claims took months to process.
She also said some parents promised to bring children for a particular start date, but they did not attend until the following term.
Randhawa told the jury that as a result some of the children were registered with forms signed months in advance of their actual first day.
She added that due to a number of deaths in her family at one stage she rarely visited the nursery and her employees were responsible for the forms.
The prosecution alleges that Randhawa confirmed bogus claims for funding credit from Sandwell Council relating to 16 children knowing they were untrue and misleading,
The defendant, of Inkberrow Close, Oldbury, denies 16 charges of fraud by false representation, between January 2, 2017 and December 22, 2018.
The trial continues at Wolverhampton Crown Court.