That’s right “Collections” are a major part of the childcare industry. Even the large corporate childcare centers have to employ collection agencies or creditor right attorneys to assist them in maintaining their financial security.
Did you know that your budget must reflect a non-collection of fees percentage? As a word to the wise be sure to make a truthful guest as to the percentage of fees that you will lose through non-collection.
This process requires a big LOOK IN THE MIRROR! And honesty. Ask yourself, Do you really follow through with your collection process? Do parents move from your center without providing you with a two weeks notice? Do your parents leave and leave the bill behind too?
To reduce losses, most child care centers require that parents pay in advance. However, subsidy programs do not pay in advance, and losses can occur in both collection of the parent co-pay and through changes in the parent’s eligibility. Most child care centers serving low-income communities experience at least a 5-percent loss through non-collections.This adds a significant burden on operations, and you should strive to minimize it as much as possible. Unless you have planned for it, you probably cannot survive a loss rate above 10 percent.
Although you want for your daycare business to be successful, you will have to build your program by implementing some foundational collections procedures and they MUST be spelled out on your childcare contract and ENFORCED BY YOU!
Here are a few steps I recommend to have a successful financial organization.
#1 Review your contract for the following mistake:
Over 98% of providers fail to include a section for the parent’s name, address, phone number, and identification (DL# and SS#)directly on the contract. This important step is commonly overlooked because the provider usually asks for this information on a separate “enrollment” form. Your contract should be a”stand alone” document.
#2 Provide a Written Collection Process for you and your clients
Create at least 3 letters for collections
#3 Be sure that your clients knows how to withdraw from your program successfully and what happens if they do not withdraw successfully.
When you have steps like these in place you can make judgement calls without getting your feelings involved. These will lead to a healthier financial organization for DAYCARE SUCCESS.
Here is a link to ProviderWatch. ProviderWatch is an authorized consumer-reporting agency that operates in compliance with the Fair Credit Reporting Act. Their team of legal advisors keeps ProviderWatch updated on any changes in state and federal laws to ensure their system stays legal!
As a matter of fact, my full collection policy along with 70 other templates, worksheets and spreadsheets are available in my CHILDCARE SUCCESS KIT! Get My SECRET Weapon that helps me stay focused and making money in my childcare business CLICK HERE
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