While childcare is an essential profession in society, it isn’t a charity. At the end of the day, you and your staff have families to feed and lives to live. You all need to get paid for your hard work and service.
It’s common practice for childcare providers to have a payment policies to make sure parents pay for childcare on time. If you’re wondering what makes a good childcare payment policy or how to improve your existing one, keep reading. Here are the top things to include in a payment policy, plus several ways you can encourage parents to pay on time.
What is a Payment Policy for Childcare?
Payment policies outline how, when, and what methods customers can use to make payments responsibly. As a consensual agreement, a payment policy can also put legal protections in place for everyone involved, from customers to business owners. The bottom line is that payment policies help you, and by extension your staff, get paid on time.
Childcare payment policies, often thoroughly explained in the parent handbook, cover all the details parents need to understand how to pay for childcare services. Whether it be tuition amounts, late fees, add-on services, billing, or online payments, your payment policy should inform customers of their financial expectations and options.
What to Include in a Childcare Payment Policy
While policies can be customized for your childcare center, there are several things every childcare provider should include in their payment policy.
Tuition Fees
The first and most important item on the list for your payment policy is childcare tuition. This is how your business makes money. Tuition is the set fee that covers the cost of childcare. Whether parents enroll their children for daily care or only twice a week, they should be aware of the tuition owed.
Late Fees and Penalties
Childcare centers often charge late fees for invoices that are paid past the due date. Late fees motivate parents to make payments on time so they don’t have to incur higher childcare bills. Late fees also help your business recover from the inconvenience of late payments. A late fee can be anything from a $45 flat fee or a $10-per-day charge for every day the bill is late.
Other Fee Agreements
Other fees that may be part of your childcare business include meals, after-hours childcare, enrollment fees, drop-in childcare, field trips, and merchandise. Every childcare center is different: some may include all items in the parent invoice while others may prefer to collect payments on demand. Include these fees, descriptions, amounts, and payment method options in your policy.
Invoice Delivery
Before you get paid, you need to send out invoices to all of your childcare customers. Many childcare centers send invoices via email, postal delivery, or in person. Invoices list all items that parents are being charged for, such as tuition, late fees, snack fees, and more. Decide how you’ll deliver invoices, and set consistent dates for delivery — as well as reminders.
Payment Timelines
Be clear about how frequently parents are expected to pay their childcare bills. For example, will they be expected to pay tuition weekly, monthly, or quarterly? What day of the week or month are bills due? Do you expect parents to pay by a specific time of day, such as by 6:00 pm on Fridays? Be as detailed as possible to make sure parents understand their payment obligations.
Payment Methods
Once parents know how much they owe, when they’re expected to pay, and the potential consequences of late payments, they need to know how they can pay you. Your parent handbook should clearly outline:
- Acceptable payment methods (credit/debit card, cash, check, ACH bank transfer)
- Any processing fees that may apply
- Links and instructions for online payments
- Details on what happens if a payment is denied or returned, such as a bounced check
Make sure parents know about their available recurring payment options, as well. Many parents today prefer to pay online.
Childcare Financial Assistance
If your childcare business works with financial assistance programs, you may want to include a section explaining this process in your payment policy. It may also be helpful to share financial assistance resources, links, or hotlines in the parent handbook for anyone who may need that option.
Childcare Termination Clause
It’s valid to include terms for childcare termination in your payment policy. For example, a “three strikes” rule may state that if a parent or guardian fails to pay tuition for three billing cycles in a row, their child will be removed from care.
This clause can also explain steps to avoid termination of childcare, such as arranging parent-teacher meetings to discuss temporary financial struggles. Encourage understanding and communication with parents, but also have firm boundaries so your business is not taken advantage of.
Review Policies With New Customers
Even if you create the best payment policy in the industry, parents still need to read it. The reality is that some parents don’t read the full agreement. Make an effort to spend some time with each new family and clearly explain the payment policy. Even if it’s just ten minutes during enrollment, verbally communicating the most important policy points can make a big difference.
Support Parent Billing and Childcare Payments With Daily Connect
As a leading childcare management app, Daily Connect supports childcare providers with all the tools they need to manage payments. From helping you create a thorough childcare billing strategy to managing invoices and late fees, our new parent billing features support childcare centers every step of the way.
Here’s what you can expect with the Daily Connect app:
- Collect different types of payment from parents
- Choose a multi-payment option (50/50 between parents or guardians)
- Track business performance year-round
- White label the app to represent your brand
- Reduce late payments with conveniently scheduled recurring payment options
- Automate billing and late fee reminders so parents never forget a payment
- Enjoy the Daily Connect dashboard to track payments and financial reports in one place
Whether you’re currently wanting to improve your childcare payment policy or you simply want to ensure it’s followed effectively, the Daily Connect app is your solution.
Get started with Daily Connect and enjoy our all-new parent billing and childcare management features. To see how it works, reach out for your free trial today.
