Carole’s 10 top tips to safeguard your nursery from bad debts
Your occupancy is likely to be at its highest at this time of year. Having more fees to manage and less time to manage them could lead to an increase in bad debt.
Carole is our Customer Relationship Manager and her role is primarily to ensure that you are having a positive experience whilst you are using our services and products and to resolve any issues for you as quickly as possible. Carole has received a lot of questions lately with customers asking how they can improve their fee collection processes, so she wanted to give you her 10 top tips on how you can use Connect Childcare to help avoid bad debt as after all, the higher the bad debt expense the lower the income.
Carole’s background is in Early Years Childcare and she has worked in the sector for 26 years. Carole owned her own nursery for 12 years and then went on to be employed by a number of large childcare groups. Carole used Connect Childcare products every day in her job as an Area Manager of several nursery settings. Her knowledge of Connect and the Childcare sector enables her to support you in a range of areas.
You can have the best nursery in the world – a glowing OFSTED report, full occupancy and happy children – but if the money isn’t coming in, the pressure can build quickly.
Here are my 10 top tips to safeguard your business from bad debts, keep the cash flowing and relieve the headache of constantly chasing your parents.
Invoice properly and in good time –
It’s vital that your own invoicing is clear and correct, and doesn’t provide any opportunity for the customer to delay, for example by not having clear bank details or entering the wrong amount. Invoice promptly and follow up with reminders to help your customers along. You can send your invoices by email using the communications module of Connect Childcare. Avoid printing your invoices out and giving them to the staff to hand out, the parent who doesn’t want to pay will say they never got it. Using the comms module leaves an audit trail.
Set Payment Terms –
Thirty-day terms are standard for most businesses, but you can set whatever terms you like. Ensure that your terms are clear, in writing and understood by the parent.
Set specific payment dates –
Establish specific payment dates. For example, set your payment dates to the 1st of each month. If the child starts in the middle of the month, you can charge for a part month initially and then a full month afterwards. This will minimise your admin going forward. Start as you mean to go on with new customers. Set zero-tolerance expectations when they first sign up. If you have a fee increase, make sure you give parents 3 months’ notice and clear instructions. This should give them time to update their payment methods (some parents may use standing orders).
Set reminders for yourself –
Once you have set your specific payment dates you can add in diary reminders for every 30 days to send out your late payment letters. Making reminders and getting on with it each month turns fee collection into a habit — not an exception.
Set up widgets on your Connect Software –
‘Aged Balances by Site’ – This widget will show you the aged debt figures broken down by each site.
‘Aged Balances by Site Group’ – This widget will show aged debt for the site groups, this is all of the sites within a region, for example, North West.
Set reminders for your team –
Add a reminder to the key person and/or room leader to ask the parent to pop to the office to see the manager at the end of the day.
Be mindful not to mention the debt issue for confidentiality reasons.
You can learn how to add iConnect reminders here.
Collection Policy –
Establish a collection policy and develop a series of letters and actions that your company will take for late paying customers. For example, if the customer is 30 days late, send a polite reminder letter. Follow up with a letter seven days after this and again 14 days later. When the account becomes 60 days overdue a third stronger worded letter is sent, perhaps telling the customer that while you value their business, you must get paid.
- Letter 1 – Gentle reminder that their fees are overdue
- Letter 2 – Risk of losing place if fees they are not paid by a particular date
- Letter 3 – Exclusion if bill is not paid by a set date.
You can add letter templates to the communications module which even allows you to auto-populate with information such as the parent’s name and the outstanding balance.
You can learn how to set up templates within comms here.
Extra Sessions –
When a parent wishes to book extra sessions, get them to pay upfront. If your parent owes you money, do not allow them to book without paying their outstanding balance first.
Implement a Direct Debit Service –
By working in association with our trusted partner, Bottomline, the UK’s leading Bacs approved Bureau, we have developed a fee collection service that not only ensures money is collected on time but also automatically updates your Connect Childcare system to eliminate hours spent reconciling bank statements.
The solution is suitable for all nurseries, from the smallest of out of school clubs, to the largest nursery chains with their own Service User Number (SUN), providing a lower cost, more secure and simpler way to manage direct debits. Once a direct debit agreement has been set up with a parent, you will be able to automatically collect monthly fees from within your existing Connect Childcare platform. Whether fees vary month on month or are fixed, payment can be taken from a customer’s bank account automatically, making life easier for both the parent and for your nursery. Contact me about Bottomline today.
Utilise ParentZone for fee collection –
Our integrated parent app, ParentZone gives parents the opportunity to view and pay their outstanding balance by card, straight from their phones. We have teamed up with WorldPay to provide a solution with preferential rates to help you to get Parents paying fees on time in a secure manner. The pricing for this is as follows:
• £0 Setup fee
• £0 Monthly Fee
• £0 Minimum charges
• 1.4% +20p on transactions
• £29.99 PCI compliance fee renewed annually