The child care billing process at your daycare, preschool, or after school program can be a complicated and time-consuming operation. With staff looking after kids and planning lessons, and busy parents running out the door, it is easy to lose track of billable care hours for each student and any additional fees that may be accrued.
It can even be a challenge to track down parents and guardians to collect their checks or payments. However, having a consistent cash flow is key to running a successful business, which means that no matter what, time has to be made to organize and collect payments from parents.
There are a lot of considerations that go into the child care billing process aside from collection. Child care providers have to thoughtfully choose their billing rates and structure based upon a multitude of factors, as well as come up with a system to track payments, fees, and credits.
How to Manage Child Care Billing
To simplify this process for child care providers, here are some top considerations and tips for child care center owners as they build out their billing protocol.
Setting a Child Care Rate
Setting the price for care at your daycare center can be tricky. Center owners must find the right balance of what is reasonable for parents, and what is required to keep the center running and providing high-quality care.
It is important to remember that many parents will plan their child care budget out far in advance. Therefore, increasing your billing rate, though sometimes necessary, can be a major inconvenience for parents. That said, it is important that providers be as thorough as possible when pricing their services, to avoid unforeseen price hikes in the future.
First, when mapping out your child care billing rate, factor in how much your space and materials cost. To earn a profit, the payments from each family have to cover the cost of your space, utilities, and supplies such as snacks, games, and crafts for the kids. When assessing these costs, keep in mind seasonal expenses such as the cost of heat in the winter and air conditioning in the summer.
Of course, this money will also have to cover payroll for your staff. The number of instructors centers have to employ will depend on the number of children, and the required student to teacher ratio. As such, center owners will have to keep a record of enrollment numbers as well as tracking enrollment projections to ensure they are not overstaffing, resulting in greater expenses.
Finally, owners must also factor in the prices charged by other care providers in their community to ensure their prices are competitive, as well as the average income in the community to ensure they are not be pricing their child care out of range.
Determining Billing Frequency
When it comes to payment structure and how often parents will have to pay, child care centers have many viable options. Among the most popular are weekly, monthly or tiered, which is based on attendance. This might mean paying a flat monthly or weekly rate, or paying on a weekly or monthly basis for the hours of care accrued. A daily tiered, or stepped up rate, means different flat rates for up to a certain number of hours, after which the rate increases.
When deciding how often to bill parents, it’s important that it aligns with how often you pay bills and staff; to ensure your payment structure will support your business on a monthly basis. For example, if you plan to pay staff twice a month, but collect from parents at the end of each month, this could present some issues. To ensure a stable billing structure, you will have to align your enrollment, how often you pay staff and bills, and how often you want to collect from parents.
Tracking Child Care Billing
Regardless of the billing structure chosen by individual child care centers, the most important aspect of billing is that the center is adequately compensated for work on a regular basis. This means keeping track of the number of hours each child attends the center, tracking fees for late pickups or additional costs such as field trips and class outings.
For child care centers to continue to run and be successful, it is necessary that these costs are accounted for, and paid in a timely way. Conversely, maybe your center offers discounts to families that have multiple children enrolled. When tracking costs, it is important that you are as accurate in billing as you want parents to be, so be sure to have a system in place account for these discounts.
Tracking payments manually can be time consuming, and leaves room for error. Child care management software can automatically track billing, while integrating with attendance tracking systems to ensure billed hours are accurate.
Furthermore, statements can automatically be emailed to families to help them track their own finances, while serving as a reminder that their payment is due. The software automatically tracks all transactions and instances of cash leaving and coming into the center, providing center owners with updated reports to ensure the financial needs of the center are being met.
With Procare, child care centers also incorporate automatic billing through Tuition Express. This allows families to pay from their computer or mobile device, or setup recurring payments. This is both convenient for families, and ensures your center is paid on time every time.
For child care providers, high quality child care is always the number one priority. However, neglecting the business and financial aspects of your child care business jeopardizes the ability to provide this car one a regular basis. With child care billing software, caregivers can be sure that their billing and accounting are taken care of, allowing them to spend more time with their kids.
Learn more about streamlining the child care billing process here.
Want more tips on how to run a successful child care business? Check out these related articles.
Procare Software, the nation’s leading child care management solution provides an automated tuition collection service called Tuition Express. During our frequent conversations with users and non-users alike, a common theme continues to surface, parents pay late.
The solution to this problem is to make automated tuition collection the only way you collect tuition and fees. With Tuition Express, child care providers make the service mandatory for parents and late payments become a thing of the past.
Automated and integrated tuition collection is easier, safer and more convenient for you and your customers. Today’s parent doesn’t carry a checkbook. They handle all their financial transactions online or set up automatic payments. Additionally, by processing payments automatically—transactions are posted to each parent’s account instantly.
How do you convince parents to accept automated payments?
Some families may be resistant, but directors are simply saying, “Our management software allows us to collect tuition automatically. That gives us more time with the children—and that’s important to all of us!”
Is it affordable and reliable?
Tuition Express is it’s own processor. This means substantial cost savings that we pass on to you with the lowest rates in the industry. We offer rock-solid reliability, handling more than a million transactions each month for nearly 200,000 families across North America.
If you’re currently a Procare user and you’re not using Tuition Express, or if you’re a child care owner or director and would like to learn more, call us at 1-800-338-3884. You can also click here to find more information online.
It’s the first day of the month and a Monday too. You have some parents who pay tuition weekly, some monthly, and even a few who pay biweekly. There’s a flurry of activity in the office of your child care center or preschool because everyone has a balance due today—which means lots of questions for your front desk staff to answer. Does this hectic scenario sound familiar?
You’d like to simplify payment collection and relieve the recurring chaos on tuition due days, but first you need a way to separate payments based on whether a family pays weekly or monthly, etc. The random sticky notes on your calendar haven’t done the trick.
Well, there is good news for you! Continue reading
Running a child care business takes dedication, persistence and desire. To continue providing top-notch care to the children, you’ve got to have a healthy financial footing for your center.
“Adequate revenue in the bank is the cornerstone of a successful business.”
Income for your child care center comes from the parents. As you know, one of your biggest challenges is collecting payments in a timely manner. Parents often have problems making ends meet, which may cause them to avoid their monthly bills. Continue reading
It’s no secret that collecting child care tuition is one of the hardest things you have to do as an owner or director of a child care center. Parents who pay late always have an excuse. The fact is, they are just paying you last (or not at all) and putting your business—your livelihood—at risk.
Be diligent, be firm
By creating policies (and adhering to them) you can avoid a lot of late payment situations. For example, charge a late payment fee and stick to it. To make sure parents know your policies, post them in a conspicuous place or give them a handout. Be aggressive about collecting on time. If you’re passive, you will have delinquent accounts. Continue reading