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A Complete Guide to Managing Child Care Billing

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

Financing Your Daycare Center

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

Child Care Payments

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

child care management software

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.

Final Thoughts

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.

Related Articles:

Want more tips on how to run a successful child care business? Check out these related articles.

The Child Care Manager’s Checklist

checklist
Being a child care director is both a challenging and exceptionally rewarding job. The nuances of combining physical care and education in a nurturing environment require a special person, because there is so much to do. We honor professionals, like you, who make a difference every day.

We’ve created a mini-checklist for many of the management tasks in your center. See which ones apply to you.
Continue reading

Tuition Payment Reminders for Your Daycare Center

The ideal child care billing situation would be one where every parent is aware of a looming tuition payment deadline, and is prepared when that day arrives with a check that covers each day of child care provided, as well as factoring fees for late pickup and similar infractions.  

As nice as this sounds, it is rarely the case. The parents your child care center serves are busy. It is unlikely that they will remember every payment, let alone track hours and accrued fees on their own spreadsheet.

It can be difficult to remind parents of their overdue child care bills. Drop-off and pickup times are always hectic as care providers monitor kids, gather their belongings, and prepare them for the beginning / end of the day, while parents hurry off to work or to get their kids home for the night.

Because this is often the only face-to-face time care providers get with parents, incorporating  daycare attendance software that can also display tuition payment reminders is valuable.

Child Care Payments

Use Check-In Messages as Tuition Payment Reminders

If left unchecked, a family’s balance due can build up over time, making collection of larger balances difficult and time consuming. Using the Attendance Tracker messaging feature of Procare Software®, you can remind parents they need to make a payment if their balance exceeds a certain amount. Because the Attendance Tracker also knows exactly when students were checked in and out, the center can easily charge fees for extra hours and late pickups.

Of course another option, to make sure you are paid on time – every time, is to use Tuition Express™ to collect payments electronically, but we’ll save that for another article.

How Does it Work?

Video: Check-In Message for Balance Due

You’ll simply create a recurring message to appear at the Computer Check-In Station for any parents whose balance is greater than a certain dollar amount, say $50.  This message will only be displayed when their balance exceeds that amount.

To create the message begin at the main screen Procare Family Data:

  1. Go to Functions –> Attendance Tracker –> Messages.  Click New at the bottom.
  2. On the Message screen under Type of Message select the option Current Balance and set the ‘greater than or equal to’ amount to whatever you’d like, say $50.
  3. Choose an End Date far into the future, and mark Show Always – that way the message will appear any time the balance amount is exceeded, until the future date is reached.
  4. In the box below, type the message that you’d like your payers to read, for example:

“Attention! Your payment is past due. Please speak with the office manager to make payment arrangements as soon as possible.”

Final Thoughts

It can be easy for parents to forget about an upcoming payment. While this is understandable, child care providers can’t let it slide. In order to run a successful child care program, there has to be a consistent cash flow on a monthly basis.

An easy way to send child care billing reminders to parents is through your check-in interface. This is beneficial to your center as it ensures consistent cash flow, and to parents as it keeps past due balances from becoming unmanageably high.

Related Articles

Want to learn more about managing child care billing? Check out these related articles:

 

Online Child Care Payment History

This question recently came in to the ProCare Tech Support team.

“Is there a way for parents who currently pay by Tuition Express to look at their account history online?”

The answer, of course, is yes. We’ll get to the details in a moment.

For those of you who may not know about Tuition Express yet, it’s an innovative payment processing service that works with ProCare Family Data & Accounting to automatically collect tuition and other payments for child care centers, daycares and preschools. Fees may be electronically deducted from parent bank accounts or charged to a credit card. Either way you get paid on time, every time.  And, it’s extremely secure as ProCare Achieved Level One PCI Security status.

Now, to the part about how parents (and center owners / directors) can view their payment history online. Continue reading

Stepped Rate Child Care Billing

The following question recently appeared in the ProCare Tech Support “IN” box.

“I am setting up our child care tuition fees, but we do not have weekly rates. Our billing uses a stepped rate charged ahead of time. Here’s our rate schedule:

Infant Rates

  • Up to 3 Hours/Day $21 (level 1)
  • Up to 4 Hours/Day $25 (level 2)
  • Up to 5 Hours/Day $29 (level 3)
  • Up to 6 Hours/Day $33 (level 4)
  • Daily MAX  $35 (level 5)

Please let me know how we can enter this to be billed according to the days they are scheduled in advance.”

You can absolutely do this kind of stepped rate billing in ProCare. In fact, one of our standard billing formulas fits this case perfectly.

Continue reading

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