Child Care Billing: Complete Guide to ChildCare Billing

People who run a child care business often specialize in areas like education, psychology, and child development. However, child care providers are not necessarily experts when it comes to running a business. But, if you run a child care business and you want it to succeed (and grow!), then you need to make sure you are making well-informed financial decision. You also want to operate it in a mindful, deliberate way.

One area to pay special attention to as a child care business operator is child care billing. Billing is important because it is the transaction that ensures you are properly compensated for your services. It is the process that controls cash flow and also helps ensure that money flows smoothly and easily into your business’ accounts. It can also become an extremely challenging headache if you aren’t careful about creating a billing strategy that works.

If you want to optimize billing for your child care business, the following guide can help. Learn more about the basics of childcare billing and why nailing down your process is important. Also, learn how you can optimize how you bill parents, and how to maintain good billing practices even as your business grows.

What is Child Care Billing?

Child Care Billing is the process by which you charge your parents (children’s parents) for the care that you provide. Usually child care billing happens at a regularly interval, either weekly or monthly. Billing practices can vary from provider to provider. However, many child care providers choose to charge parents by the hour for providing care. There are many factors to consider when setting up your billing practices at a child care center, including how much you will charge, how you will charge, how people can pay you, and more. You should also consider what tools and software you will use for billing. This is because their capabilities and features can help shape your billing practices.

Why Does Child Care Billing Matter?

Asking why child care billing matters may seem pointless, but in reality, it can help to understand why the billing process is so important. This can give you insight into how to optimize your technique for your business. Billing matters because it is the process that controls your cash flow. Cash flow is essential if you want to be able to run a business. This is true whether you run a preschool, afterschool program, daycare, or any other type of child care program. Having cash on hand allows you to cover all of the expenses associated with providing adequate care to children.

Tips for Managing Child Care Billing

Once you understand the importance of child care billing, you can start to consider the best way to set up billing for your program. When not handled properly, child care billing can get chaotic and cause a large amount of stress for you and your team members. However, if you take some time to hammer out a child care billing process and invest in the right tools, you can make the process of billing parents quick, easy, and headache-free. Here are some tips for setting up your child care billing process as you grow your program.

Decide What Your Rate Will Be

The first step in child care billing is deciding what you will be billing for, and how much that will be. Do some research about other child care programs in the area before you choose a rate. You should also think about what it costs to run and maintain your facilities. You should also consider how much supplies and programming costs, as well as what you need to pay your staff members to ensure they are properly compensated. If you are a for-profit child care provider, you should also ensure that you charge a rate that is high enough for you to make a profit. Consider the following costs of child care if you are trying to determine your rate and want to make sure you account for your expenses:

  • Snacks or food

  • Toys

  • Arts and crafts supplies

  • Games

  • Electricity

  • Rent

  • Heat (in the winter)

  • Air conditioning (in the summer)

  • Guests/special programming costs (performers, visiting guests, etc.)

  • Payroll

  • Etc.

Most child care programs charge parents for care by the hour. Once you choose and set your hourly rate, publicize this rate to parents. Then, make sure you track the hours that each child attends your program so you can bill their parents for the time spent.

Decide How Frequently You Will Charge Your Customers

Another factor you will need to decide when setting up your billing practices is how frequently you will charge parents for care. Some child care programs bill parents once a week for the hours that their child was cared for. Others bill parents monthly. Some programs even bill less frequently—for example by the quarter or the semester. Decide what makes the most sense for your program, and let parents know that that is how often they can be expecting bills. While it may not be clear right away how frequently you should charge parents, you may consider things like whether your program is associated with a school or season. You also want to think about how often you need to pay your bills or your staff, so you can ensure you have enough to cash to make these payments when you need to. Lining up how often you bill parents, how often you pay your staff, and how often you pay your bills is important to running a viable child care business.

Choose Your Tools for Childcare Billing

When it comes to child care billing, software and technology can end up being your best friends. There are many digital tools around today that can make the process of collecting and processing payments much easier and faster. If you want to streamline and optimize your childcare billing process, choose to use an online child care billing tool. Make sure it allows parents to make payments from their smartphone or personal computer. By removing the need to make physical payments, you eliminate an extra step for parents. This makes the process easier and more convenient for them, and upping the chances that they’ll remember to pay (and on time).

When choosing a childcare billing software, make sure you choose one that allows parents to set up automatic and recurring payments. Software for automatic or r
ecurring childcare billing minimizes the chances that a parent will forget to pay. It is a feature of billing software that can help maximize your cash flow. Also, consider using a software tool that can automatically generate invoices for you, then send them to parents. Automatic invoicing for parents means that you don’t have to take the time to regularly sit down and draft bills for parents (and then send them out).

Many parents who choose to enroll their children in childcare programs do so because they are busy and lead hectic lives. So, offer parents payment tools that they can take advantage of mindlessly and that make their lives easier, rather than add any tasks to their plate. Automatic payments and regular invoices (that don’t tax you too much) can be key to upping the income you bring in consistently.

Stick to the Billing Practices You Set Up

Once you’ve nailed down the major logistics of your childcare billing (the rate, the frequency of billing, and the tools you use to bill), make sure you are consistent and that you stick to the practices you set up. By standing firm when it comes to childcare payments, you can show to parents that your billing policies have no wiggle room. This ups the chances parents abide by them. When you are rigid with your billing practices, you encourage parents to pay on time. You can also demonstrate that paying late or skipping payments is not an option.

Make sure you have a process to deal with parents who skip a payment or are late when it comes time to pay. Draft up a late notice that acknowledges the payment’s lateness and what the repercussion is for paying late. You may want to charge a late fee to discourage lateness. Once a parent misses a payment multiple times, you could also consider informing them that their child is no longer welcome.

Child care can feel like a personal business where you know the families you work with well. By having a written late payments policy, you can simply show parents that your policies are established rules. This helps remove any personal feelings from the exchange.

Remind Parents about Tuition and Due Dates

When it is coming time to charge parents again for your child care, send them an email in advance letting them know payments will be due again. Do this several weeks in advance. Then, do it again just a week or two before payments are do. By taking advance of email communication with parents, you can be sure that they are given ample notice for tuition due dates. This also helps up the chances that no parents is caught off guard and, in turn, unable to pay.

Rely on Your Billing Software For Better Financial Tracking

Once you’ve gotten the hang of your billing at your childcare business, you should feel like bringing money into your business is easy. You should also feel able to afford all expenses. As you continue to run your business, consider relying on your billing software to help you learn more about its financial health. Are you consistently making a profit at your child care center? Are you ready to pay taxes for your business? What type of children and parents are you attracting to your program? Could you invest more marketing dollars to bring even more of them into your program? Billing software that allows you to take a closer look at your finances can help you grow your program. It can also ensure you are being paid properly for all of the hard work you are putting into it.

At the end of the day, child care providers are tasked with the responsibility of nurturing children, keeping them safe, and helping to foster their development. However, what many people who launch a child care business don’t realize is that they also need to master the art of running a business. This is particularly true if they want their company to grow. So, if you run a child care company, make sure you take the time to master certain logistical elements of your business—particularly billing. When you get child care billing right, you can bring revenue into your company easily. You can also minimize stress for you and the parents of children you provide care for, and ensure the financial health of your program. This will allow you to grow and provide care for years to come.

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