Want to set up a prepayment system for childcare tuition payments? This post will show you how.
How and Why to Get Prepaid for Childcare
Have you ever had a client cancel on you? Or even worse, cancel at the last minute? all of a sudden you don’t get paid that childcare tuition and at the same time, you have a vacancy that you may have otherwise have filled.
One of the best ways to avoid this is to require upfront childcare tuition payments. So today I’m going to show you how to transition over to a system that will not only get you paid on-time but ahead of time. Keep reading for how to set up a prepayment system for childcare tuition.
Pay to Play
Most providers are aware of “Pay to Play“, which is simply getting childcare tuition payments on-time or not providing services until you are paid.
An even better strategy is to require childcare tuition payments prior to providing services. Which is getting prepaid.
One of the best things ever suggested to me was to require that childcare tuition payments be due and submitted on the Friday for the coming week. Meaning my clients will pay me this Friday for next week’s childcare services.
For me, simply moving the payment date to Fridays accomplished so many things –
- I didn’t have to chase payments since most people get paid on Fridays
- For the most part, it eliminated clients getting in arrears
- Parents got used to prepaying their childcare tuition
Prepayment is Common
Before I made the change I thought I would get pushback from my clients. I thought they would object about paying for services prior to receiving them.
But prepayment is actually quite common.
Consider this, when you buy tickets to a concert. You will either purchase your ticket early or at the very least right at the door.
You never pay after the concert do you?
That is prepayment or paying for services prior to receiving them. In general, we do this all the time. We pay for our groceries before we take them home. And we pay our rent or mortgage for the coming month.
As a matter of fact, we probably prepay for more services than we realize.
Why Prepay Childcare Tuition?
Ensuring childcare tuition payments are received on time can be one of the biggest problems with running a childcare.
I once took a poll on Facebook of all the excuses parents give for why payments are not submitted. You seriously would not believe what parents try to get away with!
Needless to say, requiring payments upfront, could all but eliminate the hard and fast late payers.
The Best for Drop-In’s
This is especially helpful when it comes to drop-ins.
I can’t even tell you how many times I’ve had former clients request a drop-in day only to have them back out at the last moment. Of course, they canceled after I had already purchased food for their child or scheduled extra help.
By requiring prepayment for drop-ins or seasonal enrollment, you eliminate the casual last-minute cancellation. Even if they do cancel, by having a cancellation fee (more on that in a minute), at least you will be able to get a partial payment.
How to Easily Set-up a Prepayment System for Childcare Tuition
Believe it or not, setting up a prepayment system for childcare tuition payments is very easy.
All you really have to do is begin accepting prepayments and only then confirming a reservation.
If this is for your enrolled parents, just decide when the change will take effect and send out a mass email stating that there is a new due date for childcare tuition payments.
In my opinion, it is best to keep this memo or email as brief as possible. Don’t get defensive about why there is a new due date or why it was needed.
Just state when childcare tuition is now due, when it takes effect and what the consequences will be if it’s not adhered to.
We take …
As a part of your payment system, you may want to consider alternative ways of receiving payments.
The point is to give parents alternative ways to pay their childcare tuition. Especially when they “run out of checks” or “forgot”.
Confirmation after Payment
Now set up a system for confirming that you received payments. This doesn’t have to be complicated.
You could either send out a text or email virtual receipt stating that payment for next week has been received. Or, if you decide to use any of the alternative payment services, you can just acknowledge payment right in the app.
Dealing with Cancellations
Hopefully, you will not receive many cancellations, but I believe it is better to be prepared just in case.
So if a parent does decide to cancel a drop-in day that they have reserved and prepaid for, having a deadline and a fee associated with the cancellation process is a very good idea.
You might even think about having a simple tiered system.
For instance, consider having a standard cancellation fee. This will be a fee that is imposed if clients cancel at any point after the reservation has been made and paid for. At the very least, consider charging them for any fees you incur to transfer/refund them.
Another way to discourage parents casually canceling would be to state that something like a 50% fee will apply to last-minute cancellations made 72-24 hours prior to the reservation date. This means if a parent cancels last minute, they will lose a lot of $.
Prepayment System in Place
So if you have ever had clients that pay late or cancel childcare services, especially at the last minute, try setting up a prepayment system for childcare tuition payments.