Late Payments

Navigating Late Payments as a Proactive Daycare Owner

It’s no secret that dealing with the dreaded “late payment dilemma” is one of the most difficult and awkward duties of a daycare director. While the majority of parents who enroll children in your program will be great about making their payments in a timely manner, you may have a select few who prove to be less reliable. How do you handle a parent (or several) who is falling behind on daycare payments? The following guide will help you assess the problem and decide on a course of action that is most appropriate for your unique situation.

Taking a Proactive Approach

Before late payments get out of hand, it is worth setting up clear, firm policies to help discourage late payment habits from becoming a regular problem. You can set the tone right from the beginning when you enroll a new child in your program. Tuition fees and payment schedules should be clearly outlined in your daycare policy handbook available for parents of new attendees. Be sure to note any fees you will charge for receiving late payments and require parents to sign a copy of your payment policy to be sure you have reached a formal agreement at the outset of care.

You may want to consider providing the most convenient payment options possible. An automatic payment plan via credit card or bank account, for example, may help busy parents keep up with on-time payments. Additionally, scheduled payment reminders can be helpful for well-meaning, but forgetful, parents who may need just a little prompting to ensure an on-time payment. Consider sending email or text message reminders before a scheduled payment is due, especially if a holiday throws the usual payment schedule out of whack. You may even want to post friendly reminders in conspicuous areas at your daycare center, such as on the entrance doors, where parents are likely to see them during pick-up and drop-off times.

Finally, be intentional about fostering a great relationship with parents. As far as it depends on you, show parents how much you care about their children and want to have their little ones be a part of your program. Be present and engage with parents as much as possible, during pick-up and drop-off, and at various special events throughout the year. Building a relationship based on mutual respect and trust goes a long way when it comes time for parents to make their daycare payments. They are more likely to recall that the money is going to you, their child’s attentive caregiver, and not a to faceless corporation.

Dealing with Late Payment Issues as They Arise

The truth is, you will have to face the late payment dilemma sooner or later, if you haven’t already. Hopefully, you have already made clear to parents what a kind, caring childcare provider you are for their children. It is equally as important to let parents know you are just as astute of a business owner as you are a caregiver; after all, you are running a business. This is why late payments, when they do happen, must be handled with tact—but they must be handled quickly and efficiently. You stand too much to lose otherwise.

Understandably, there are many factors to consider when approaching a situation of recurring or accruing late payments from one or more families. You must delicately balance hard-won goodwill with families you care about and don’t want to risk alienating if you decide to enforce a course of payment action. On the other hand, you have overhead to cover, a staff of teachers to pay, and a business to run. When it comes down to it, you are offering a service at an agreed-upon price, and you should expect to receive full and on-time payment for the valuable service you provide.

Here are some practical tips for handling a situation in which a parent is falling behind on daycare payments:

  • Act right away. You are not doing yourself or the parent a favor by pretending a late payment is not a big deal because it is. If you do not receive a payment on the day it is due, follow up. Send an email, make a phone call, or chat in private if you have the opportunity to catch the parent during drop-off or pick-up. You can be gracious, but you need to communicate a firm stance on your payment schedule, or you will give the impression that it is “optional.” Enforce your late payment fees as outlined in your daycare policy handbook.
  • Assume the best. Although late payments are frustrating and need to be dealt with, you do not have to play the role of the “bad guy” as you follow up with parents. Assume the best by taking the “I’m sure you forgot” demeanor when you first approach a parent about a late payment. The important thing is, while being kind, to get on top of the late payment and follow up until it is paid.
  • Be as flexible as possible. You may face a situation in which the late payments are beginning to pile up and the parent(s) may feel like they are in over their head, thinking they may never catch up. See if you can come up with a payment plan set out over the course of several weeks or months to help the parents get back on track. Maybe you would like to offer tuition breaks in exchange for assistance with administrative work. You could even implement a referral system to give families a discount for each new child they refer to your program. Get creative as you work with parents but do communicate your need to receive the payments.
  • Offer to help in other ways. Sometimes, parents really are struggling financially in a way that goes beyond irresponsible late payments. Consider helping in other ways besides deferring late payments. Provide information on resources in your local community where parents can ease the burden of expenses without your daycare business paying the price. Clothing donation programs, government childcare subsidies, and other outreach efforts can be a tremendous help for struggling parents.
  • Stand firm in your policies. Having that conversation with a parent who is accruing late payments is hard. But when it comes down to the success of your childcare business, you just have no other option. Parents must find a way to make their mortgage or rent payments, pay their utilities, insurance, and medical bills on time, or face the consequence of late fees as a result. You provide the utmost quality care for precious sons and daughters—your payment policies should reflect this reality.

Although navigating late payments with grace and tact can be tricky, it is well worth an awkward conversation or two to ensure the continued profitability of your childcare business. The Honest Buck Accounting team would love to help you set up a tuition fee structure that work for you. Schedule a call with us today to learn how we can help!  

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