Thriving Childcare

How to get paid on time! 4 Easy Keys for the Child Care Provider

Over the years, believe me, I have heard and seen it all.  Well maybe not everything, but a lot.  When it comes to being a Family Child Care provider you would not believe how difficult it can be to get paid on time.  So today I thought I would talk to you about strategies for how to get paid on time every week.

If you are new to child care you might think, “what’s the big deal, as long you get paid right?”.  Well not knowing when you will get paid can cause real problems. 

It can cause accounting issues, deficits, and inability to pay bills or pay your assistant.  Keep reading for some easy solutions to how to get paid on time.

How to get PAID ON-TIME in Childcare

It might come as a total surprise to you but for many parents, it seems to completely escape them that your child care is your source of income. This may become evident at the first meeting where a parent will be taken aback by your rates. Or you might see it on a weekly basis when they routinely “forget” to submit payment.

In either case, it is in your best interest to have and enforce your tuition payment policies. Now I know this can be an area where the provider may feel uncomfortable.  It can feel intimidating approaching a parent about making timely payments or late payments.

My Wake-up Call

Years ago I had just that problem. Parents were consistently forgetting payments or continuously submitting payments late. It got to the point where I was going to the bank 3 to 4 times a week. 

On one of my many trips to the bank, I remember talking to a teller that I had become familiar with.  She told me that her sister-in-law had a childcare too and that she also had issues with parents not paying on time. She continued to tell me that her sister-in-law actually wound up having to close her childcare because she had lost her home. This was because she couldn’t make her payments on a regular basis.  All of which was related to her income fluctuation due to late payments the childcare parents would make.

That was my wake-up call!

Eventually, I became so frustrated that I realized that I needed to develop strategies to ensure payments were made on time.

4 Keys for How to get paid on time

Offer Incentives

The first thing I did was to offer a discount for payments made on a monthly basis. It is only 3% but it winds up being a good about of savings for parents over the span of the year.   

Starting A Childcare

Parents must submit their payments on or before the 1st of every month in order to get the discount.  Can I tell you this really did do a lot for ensuring that most payments were made on time! 

The monthly option worked for the parents who truly kept forgetting the weekly payments and had the ability to pay the lump sum. 

There is a trick to this though and this is REALLY IMPORTANT: be sure to take the weekly tuition and multiply it by 52 weeks in the year then divide that by 12 months to come up with the monthly rate. I made the mistake of not figuring that out and it took me a while to realize where the shortfall was. 

This really did work like a charm, but I still had issues with a few clients.

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Enforce Late Fees

I believe it’s always been a part of my contract to include fees for payments made late. So all I had to do was enforce my policy.  Side note: this book is a great resource for establishing a family child care contract and policies.

So I simply started sending an email to all the parents reminding them when payments were due and restating our late payment policy.   At that time the payments were due on Monday and I even gave a grace period till Wednesday morning without incurring any late fees.

I had some success with this strategy, but of course not with everyone.

There’s always one!

There was one family that was consistently late every week. At first, I didn’t recognize it as being deliberate. Until I noticed that the mom would bring the payment every Wednesday morning right at the cut-off. And sometimes she would even forget to do that. Never did she acknowledge or offer to pay a late fee. 

Remember how I said late payments could cause problems?  Her late payments would actually wind up being almost a week late by the time they posted to my account.  At times it even put my account in a deficit.

In the end, it was my fault because I allowed that to continue for too long! 

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Have an iron-clad contract

As I said before, even though I thought my payment procedures were pretty detailed in my contract, some tweaking was in order. 

What I did was to make a separate addendum to my contract.  It was a form simply entitled “Payment Procedures”.  In truth, the form really didn’t have any new information than what was already in the contract.  What it did was to call specific attention to how and when tuition payments were to be made.

I started including this form in each enrollment packet.

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Eventually, I was able to take advantage of a free service that was offered to childcare providers to review contracts. I was advised by a legal analyst to change my payment due day to the Friday prior instead of Monday morning.  

Ever since then I rarely have any problems with tuition being submitted late.

This essentially required payment prior to services. She explained to me that it was a better practice to have the payment due for the coming week. That way if parents were to forget their payment on Friday they would certainly have to submit it by Monday morning.

So I sent a memo out to the parents stating that we were changing our tuition due day from Monday morning to Friday morning for the coming week.  I actually was surprised that for the most part, no one complained.  

Ever since then I rarely have any problems with tuition being submitted late.

Send out reminders

As I said, in recent years I don’t usually have problems with late payments.  But just like anything, you have to stay on top of it so it doesn’t become a problem. 

Another thing that I have found helpful is that whenever I have new clients or I see that a parent is “forgetting” their payment,  I am sure to send out emails or text reminding them that payments are due on Friday.  I currently have a practice of doing this at least twice a month on Thursdays and again right before the monthly payments are due as well.

It actually might not be easy to get paid on time all the time, but I hope some of these strategies will help you avoid serial late payments.  Do you have a method for how to get paid on time that has worked for you?  I would love to hear about it.

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2 Responses

  1. I love the idea of offering a discount for paying monthly! It would be so much easier for the parents too. They could pay at the start of the month and then not worry about it for the next 30 days. Were any of your parents concerned about it being too much all at once?

    1. Hi Megan, Thanks. Actually most of the parents love the option to pay monthly so they don’t have to think about it but once a month. I offer them the option at the orientation so they can decide if it works for their family. It makes my life easier because I know when the bulk of the tuition is coming in and I only have to remind the few that use the weekly option. This year I plan to try adding the option of credit card for payments with something like Google Wallet, PayPal, etc.

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Adrienne Bradley Thriving Childcare

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