6 tips for child care services: How to get paid faster

You’ve established that you have a slow payment problem at your child care service. While most of your parents pay eventually, a number of them pay so late that you’re struggling to pay your own bills. It feels like you’re always a step behind: you have just enough to pay your staff, then everything else has to wait until the fees finally trickle in. So how can you try and get paid faster? 


1. Have an agreed process 

Firstly, your child care centre needs the right process in place. This must have been agreed upon by relevant stakeholders so it can become systemised and you don't have to think about it every time there's a slow payer. It’s not worth the pain of doing it manually.

2. Draw up a time line

Provide a time line of what you do after specific periods: 7 days, 30+ days, 60+ days, 90+ days. You may start by re-sending the invoice as a reminder. This may be followed by a final demand, with a copy of your payment policy enclosed. 

Highlight your late payment penalties, to encourage parents to avoid them by paying immediately. If that fails, you may then wish to issue a solicitor’s letter after 90 days.

3. Send automated reminders

Have a process for automated SMSs and emails. This take the pain away from having to send them manually, which is time consuming and even emotional demanding. Communications can change in language as they become more overdue, from a more friendly one to a more formal one. This can be a form letter drawn up by your solicitor. 

4. Get on the phone 

Don’t rely on the postal service, email or parents not managing to lose piece of paper you send home with their child. Phone communication is an important part of business: it also puts a face to your business. A friendly call can often work wonders.

5. Ask for a meeting

It’s probably unwise to approach parents in person when they drop off their child. Remember it’s possible that a genuine error has been made or there is a compelling reason for the delay, such as sickness or job loss.

Instead you can arrange a meeting with repeat slow-payers, and find out if there is a way you can work together to resolve the slow payments issue. Some parents may simply be disorganised with emails, or keep losing paper invoices, and another method of communication works better, such as SMS if you’re not already using it.

6. Tweak your invoices

There are some other things you can try as well. Research suggests that simple changes can actually increase the speed with which you get paid. Being polite and thanking customers for their business can increase your amount of paid invoices by 5 per cent: over a year that’s a huge amount of money.

Using clear and specific terms such as "21 days" are more effective than vaguer terms such as "upon receipt". If people feel they can ignore or postpone something, they often will.

A "sweet spot" of payment terms was also identified when analysing payment rates and days-to-pay.  Payment terms of 15 or 21 days resulted in people paying more quickly, and more people paying overall, than terms of "upon receipt", 7 days or 30 days.

Another interesting find was that threatening interest on late payments resulted in slower payments, but a higher eventual payment rate. This is something to bear in mind if cash flow is already an issue. It may be more important to you to get some now, than all later. Figure out where your business stands and put processes in place that better your situation and give you the results you need.

For more helpful tips on how to stay on top of your finances, download our free ebook ‘Child care services: Getting smart with fee payments’ by clicking the button below.

Child care services getting smart with fee payments

Topics: Child care centre challenges Child care services challenges Managing finances