How to Deal with Unpaid Daycare Fees

Running a daycare may be more interesting than running a grocery store, but it’s still a business. And for you as the provider, unpaid daycare fees mean the difference between struggling through a month and smooth sailing.

It’s not always easy to deal with them and to have understanding for parents while keeping your business’ best interests at heart.

That’s why we’ve prepared a list of helpful tips for dealing with unpaid daycare fees, and acing communication /and/ collection.

Policies

The best thing you can do is address your procedure on overdue payments in your daycare’s rules. This way you have a reference point in case you need to send a demand letter, and parents with unpaid childcare fees can’t say that they didn’t know what your policy is.

Make sure you include the policy on unpaid daycare fees in the contract that parents will sign prior to enrolling their child into your daycare. If you use a debt collection agency, state that clearly and outline the terms.

As with many things, the best thing you can do to resolve an issue is prevent it in the first place.

Writing a Demand Letter

So you’ve tried speaking to the parent in person, and nothing. Maybe they keep coming up with excuses (and maybe the excuses are completely valid), but focus on your business and write them a demand letter.

There is no need to be confrontational, no matter how frustrating a situation may be. Sometimes unpaid daycare fees really are a result of misfortune, but have a paper trail just in case.

This is where your policy comes in hand, as well as the contract. Remind the parent of the terms they agreed to, advise them on how to proceed (pay immediately, within a few days, get in touch with you, etc.) and state a clear date after which their child will no longer be able to attend your daycare.

A demand letter is not easy to write, especially if you run a small daycare and you know all the families, but you need to keep your cool.

This is why daycares often outsource this paperwork. It allows them to focus on doing their job without worrying about diplomacy when handling unpaid daycare fees.

This can be a pricey option, which is why it is good to look into ways of earning extra revenue like Hopping In, which helps you fill your unused daycare spots (both full-time and part-time).

Debt Collection Agencies

Sometimes there’s just no other way. Depending on your policies, the child may still be in your daycare or you had to tell parents not to bring them anymore.

However, the fees are still unpaid.

The most effective way to deal with this is to use a debt collection agency. Keep in mind that this is not an agency that buys debts – debt collectors help you collect overdue fees.

The benefit of using a debt collection agency for unpaid daycare fees is that you don’t have to handle the issue yourself, and it makes your daycare seem more professional about business transactions.

Before you hire an agency, make sure you do your research and talk about their strategies. You don’t want an agency that collects debts for corporations and bigger business, and that is going to be aggressive in their dealings with your customers.

Make sure that the debt collection agency’s methods are ones you can get behind without shame or resignation, and if you do end up working with them, state that in your daycare’s policy.

Big No-Nos

Once again, this depends heavily on the size of your daycare and your infrastructure.

If you’re an owner who doesn’t get in touch with families, you can retain a degree of remoteness necessary to handle this professionally.

But if you are a jack-of-all-trades owner that is also the manager and part-time caregiver and full time anything, be careful about how you approach the issue.

Children (especially older ones) should never be brought into it. All communication with parents regarding this issue should be kept solely between you and them. Don’t send notes or letters via kids, no matter how busy everyone’s schedule is, and don’t make the kids feel your frustration.

Remember that this is a business issue and the moment you start working with kids, it has to be put on pause.

The next thing you shouldn’t do is explain yourself. Some daycare owners (especially those who have in-house daycare) feel the need to explain that this money puts the roof over their own family’s heads.

This is a given. Everyone works because money helps them live well. And of course you like taking care of the parents’ kids, so there is no need to state that before reminding them of their financial responsibilities.

Finally, like we always say, running a daycare is great – even when it’s not very relaxing. And finding an effective way of dealing with unpaid daycare fees can help you get one step closer to where you and your center want to be.