Why Childcare Centers Lose Revenue – and How to Fix it

Why Childcare Centers Lose Revenue – and How to Fix it

Managing a childcare business is a unique role that means you have a lot on your plate. You know that staying on top of your parent payments is crucial, but it can fall to the wayside as you focus on the day to day tasks that keep you busy. For this reason, many childcare businesses struggle to track their parent payments – and this can make it hard to pinpoint where the losses are coming from.

Making sure that parents are making payments is key, so that you can spend less time pouring over records, following up with parents that are late and trying to identify where your money is going. We’ve compiled a quick list below to help centers like yours gain your time back and more importantly- stop losing money!

Make Paying Easy

Most of us don’t carry checkbooks in our purses or pockets anymore. If a business is only accepting cash or check, it becomes an obstacle to pay for that service, and much more likely to be forgotten.

Accepting credit or debit cards in house seems like a good move. However, that means you or your staff is taking the time to physically swipe cards and parents have to be present to pay (and again, may forget if they are rushing in our out).

The best solution is to allow parents to pay from anywhere. Using a management software that has an app for parents means that parents can manage their own payment information and make a payment from anywhere.

This reduces the pain points mentioned above, and you’ll get bonus points from the parents who will be happiest with a solution that is easiest for them.

Enforce Late Payment Penalties

No one likes late fees. Parents don’t like to pay them, and Directors and Owners don’t love giving them. However, enforcing them sets a boundary for your parents and lets them know that not paying a bill isn’t acceptable.

Additionally, if using a system to accept parent payments, it’s worth checking out one that has an automatic late fee feature. This helps to take some of the responsibility off your plate. Let your parents know if they are more than 24 hours late (or whatever time frame you allow), that a late fee will automatically be added to their bill and processed when they pay.

Setting that expectation up front means your parents won’t be surprised by late fees and you’ll feel less guilty implementing and enforcing them.

Require or Incentivize for Auto-payment

Allowing parents to autopay has become a necessity. Not only does that mean regular, recurring revenue for your center (with no follow up required on your part!), but it’s also the easiest solution for the parent. Many adults prefer to pay most bills by autopay, so they know they aren’t late and are on top of all of their bills.

Consider requiring autopay enrollment for all parents or offering an incentive to parents who set it up. We’ve seen centers do a small discount on tuition for parents enrolling in autopay or a small increase in tuition for parents who don’t enroll in autopay. You’ll know what will work best for your parents.

Once you’ve set up a system to manage your parent payments, along with automatic late payment fees and most of your parents are on autopay, you should be able to sit back and relax knowing that no revenue is getting lost in the cracks.

 

The Ultimate Guide for Childcare Businesses: Accepting Electronic Payments

The Ultimate Guide for Childcare Businesses: Accepting Electronic Payments

It’s not uncommon for many childcare businesses to accept only checks and cash. With so many childcare-specific problems to solve on a daily basis, it’s incredibly easy to procrastinate on the bigger picture items. While some centers have progressed a bit and might have a credit card reader in their center, which is a great step toward convenience for the parents, that may not help the director much at all. Additionally, as the millennial generation becomes the majority of the “parent” demographic, they expect to pay for childcare as they do everything else: on their phone.

 

Having payment system that is integrated into your family data means that you spend less time doing administrative work and spend more time with your teachers and students.

 

It’s truly a win-win for everyone. It may seem overwhelming to analyze your options, decide on a solution and switch all of your existing families to a new process. Change can be difficult, especially when you have tens or hundreds of parents to get on board.

 

In this guide you’ll learn why in this day and age, electronic payments are not just a feature that’s nice to offer, but a must-have. Then, we will dig into how to find the best solution for you and how to implement the change for existing and new parents.

 

 

Why should I accept electronic payments?

 

 

Save Time

 

As a childcare director or owner, you spend a lot of time doing a variety of things in your center. We’ve found that the largest amount of time is usually spent staying on top of billing parents and accepting payments. Your business has to accept payment to run, so this is a top priority out of necessity.

 

There are childcare management solutions out there that allow parents to pay via a mobile app, update their payment method, view their bill and access their statement history. This amounts to hours each week that you can spend elsewhere, growing your business and making it run efficiently, instead of focusing on these day-to-day tasks that can weigh you down.

 

Ensure Accuracy

 

Eliminating a human hand from the mix means that you’ll be reducing the risk for human error.

 

Let’s face it: everyone makes mistakes and each mistake is time (and potentially money) directly out of your pocket.

 

Using a system that can generate a recurring invoice each period, automatically charge the parent’s card or bank account, and adjust the balance accordingly, means less math for you.

 

A great system should also allow you to credit or adjust bills as needed or even split bills between divorced parents or automatically adjust a bill for a child who receives a state subsidy. All you should need to do is run reports to check or view data when you need to see it; not spend hours daily checking your own work.

 

Parents Expect It

 

Millennials are now the main demographic having children and searching for childcare. This group has had technology for their entire adult life and spends hours each day on their mobile phone. According to Pew Research Center, 93% of Millennials own a smart phone. Gen Z, the generation behind them is the first generation who has grown up with social media.

 

These groups are used to convenience. Everything from groceries to furniture is purchased with the click of a button. Your business is no exception. If you don’t accept mobile payments, but your competition does, as long as the quality of your services is deemed equivalent, they will win that match up. Meet parents needs by adopting the technology and beat their expectations with amazing service and education for their children (which you’ll be able to focus on now, with all the time you’re saving!)

 

How do I start accepting electronic payments?

 

Find a Solution

 

There are quite a few software solutions out there to help you manage your center. Of course, at Smartcare, we are a bit bias about our technology, but you should find the one that meets your needs. All of the options out there should offer you a demo to begin.

 

A software demo is your chance to scrutinize the solution being offered to make sure it does what you need.

 

Make sure you ask the right questions during your demo, depending on your needs. Here are some ideas, based on needs we hear:

 

  • Does the technology support your billing frequency? (weekly, monthly, biweekly)
  • Does it accept both credit cards and ACH? Do you have to accept both if you don’t want to?
  • Can parents manage their own payment methods?
  • Can parents access their invoices on their own?
  • Can parents enroll in autopay?
  • Can you set up automatic late fees or other fees?
  • How long will it take you to get set up?
  • Are you under a contract?
  • Do they offer a free trial?
  • If you need to charge any fees, accept deposits, etc. make sure the software has a solution for that

 

If you center has any unique situations, make sure to walk through it with your sales consultant. You don’t want to purchase technology that doesn’t solve your problem or makes more work for you.

 

 

Email Existing Parents

 

Once you’ve set up your new software, start by moving existing parents over to the new process. Depending on the size of your center, you might start with a small group (like a class or two) and keep going from there.

 

Email is a nice way to communicate this change to your parents for a couple of reasons. First, you can outline the benefits of the new solution for them:

  • Access your invoices
  • Manage your own payment method
  • View your bill
  • Enroll in autopay

 

Secondly, you can also link to the app that they need to download. As most parents will be reading your email on a mobile device, this allows them to click through and download the app right from their phone.

 

Starting with your existing parents (and potentially a small group of them), is a perfect way to introduce this change as they will be more forgiving as you learn the new software than brand-new parents, who haven’t yet made a judgement call on your business.

 

Keep in mind that any new software will have a learning curve, so while it might be tempting to rip the Band-Aid off and move everyone at once, a tiered approach like this will allow you to make sure you’ve selected the right technology and work out any kinks until you’re running smoothly.

 

Enroll New Parents

 

Focusing on new parents should be your second goal, after you’ve gotten most existing parents using your new software. Here’s where we are going to be just a little self-indulgent. Smartcare offers an online enrollment tool that makes this process incredibly easy. Send a link to parents and they can:

 

  • Enter all of their child’s information
  • Add pick up and emergency contacts
  • Add medical information and allergies
  • Enter a payment method
  • Pay any deposits needed
  • Enroll in autopay

 

This means from the minute a parent knows they want to enroll; their billing is set up with zero effort on your part.

 

Making sure that you have a seamless solution for newly enrolled parents means that you aren’t just saving time with the daily billing and payment tasks, but also on the enrollment end as well.

 

Promote Autopay

 

Now that you’ve got most parents set up and have a process to capture payment method during enrollment, you should optimize the software you chose and make sure you are getting the most payments at the earliest time possible.

 

By promoting an autopay feature you will receive parent’s payments on time and have happier parents because the process is easy and will result in less risk for late fees on their end.

We’ve seen centers get creative here. Maybe you simply send out an email blast occasionally, reminding parents to enroll in autopay, or maybe you offer incentives for enrolling. For example, you might give a small discount to parents to are enrolled in autopay, or maybe the reverse works better: if not enrolled in autopay by a specific date, then there will be a small price increase.

 

Parents will understand that if they don’t enroll in autopay, that means more work for you so typically, this approach makes sense and makes everyone happy.

 

Adopting the plan above is a surefire way to implement electronic payments for your center and make sure you find a great program to work with. If you aren’t already accepting electronic payments or using a childcare management software, hopefully this guide has helped you determine what to look for and understand how to make the change. It might seem like a big adjustment, but once you’ve made the jump you and your families will be grateful for the change.

Request a demo below to learn more about the Smartcare solution.

 

Three Ways to Manage Childcare Payments

Three Ways to Manage Childcare Payments

In an ideal world, you can easily attract new families to your childcare center, build strong relationships with kids and their families, develop quality experiences for children, supervise staff, and manage your billing processes without a drop of sweat on your brow. If that’s not the case for you, Smartcare is here to help!

1. Distribute detailed enrollment agreements every year

From overtime fees to vacation rates, have families sign your enrollment agreements. Make every policy, especially the financial details, crystal clear. Detail your program’s processes so parents understand exactly how and when invoices will be sent and how payments can be made. Be sure to thoroughly explain your late payment policy.

Take action to clarify the details. Make sure each payment clause is written out step-by-step. Cover your bases and be transparent by establishing a plan for every potential payment related scenario.

Your payment agreement section should dive into the following:

  • Dates and ways invoices are delivered, payment due date, and grace period
  • Methods of payment accepted including:
    • Cash
    • Check
    • Money Order
    • ACH — Automatic deduction from checking or savings initiated by your center
      Bank automatic payment from checking or savings
    • Debit card
    • Credit cards: VISA, AMEX, MasterCard, Discover
  • Late pick-up and overtime fees
  • Rate clarification for holidays, vacations, and other absences
  • A list of dates your center will be closed
  • Field trip and miscellaneous fees
    Late payment fees
  • Bounced check fees
  • Credit card transaction and processing fees
  • Expected registration or enrollment deposit due date

Be sure your enrollment agreement includes terms of service:

  • Define the services provided
  • Define the contract length
  • Explain processes for cancellation and termination
  • Confirm both center and parent rights to end the child care arrangement

Make sure your website and your family handbook include all the same details as your Enrollment Agreement. You want to set the stage for complete transparency, so all families will be successful.

2. Automate processes

One of the best things you can do for your program is to shrink your task list and wow parents by investing in software like Smartcare that are designed to streamline payment processes for program administrators and families.

These days, many parents are accustomed to paying their bills and taking control of their accounts online. Millennial and Gen X parents expect the efficiency and ease of online payments.

Software like Smartcare can also make your job easier and more efficient and ensure steady cash flow by automating billing and payments. Using software to manage payment processes will allow you to spend more time on the other challenges you face every day, instead of spending valuable hours manually doing work that can be automated by software designed by financial technology experts.

Want more tips on the benefits of a streamlined payment process? Visit SmartCare University webinar archives to learn Accounting Best Practices for Childcare Centers.

3. Send reminders

In general, parents want the best for their children and don’t intentionally want to have outstanding balances. However, we know they often need to be reminded. Give parents a nudge with automatically generated reminders about their balances. Sure, you can send out kind email reminders, put notes in backpacks, and personally remind them with a phone call or when they pick up. Seems simple, right? It can be, but it can also be very sticky for the adults who care for and educate children to constantly remind parents about payments.

Consider streamlining the process of keeping parents current on their tuition by using one of the same digital platforms that automate payments! Many of the same systems are designed to remind parents through email. By helping parents with friendly emails, you can take the sting out of tuition notices, save time, and make the process seamless.

There will always be times when you must confront parents about overdue balances. However, automating the billing process and providing real-time account balances 24/7 will reduce the number of outstanding balances; and the email reminders will prepare parents for the inevitable conversation should they choose not to comply with payment terms.

In conclusion, if you are having problems collecting payments, it’s never too late to start with these foundational tips. Restructuring your enrollment agreement can happen at any time; it can provide an opportunity to connect with parents to remind them of your center’s procedures. Automating your processes will be a welcomed addition to all your current parents, as will transitioning to clearer, more consistent communication.

Smartcare has a comprehensive, one login platform designed for easy use by administrators, teachers, and parents. You can manage records, attendance reports, and prospective family visits as well as automate billing and offer more payment methods to families.

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