15 Methods to Get Paid Now!

 

According to your calculations, your childcare center should make a profit if you have 5 children in your care.  You have had everyone sign contracts, explained policies and provided handbooks for the parents, and kept up your end of the bargain.  You have done your homework only to have a parent or a number of parents ask for a payment extension.  At first you are just so happy to be in business and don’t want to scare away your customers, therefore, you may be tempted to extend credit. 

 

Now it has been 30, 60, maybe even 90 days and still some of your customers are behind in their payments.  Meanwhile, your bills are piling up, and your creditors want to be paid right away.  Read on for some proven tips for success.

 

A client recently brought in their yearly paperwork.  In this paperwork was an overdue bill.  Stamped on this bill was, I thought a very effective message.  However, I would probably not use this until the bill was at least 60 days old.  Here it is.

 

THINK IT OVER

We are not complaining,

but suppose we

owe you $391.45 since 01/01/02.

What would you

want us to do?

 

Now onto the hints.

 

1. Require payment upon completion of the work.  Make sure there is a signed contract.  Make sure the charges are clearly stated. A great example can be found in my Forms and Contracts Used in Childcare ebook.
2. Have a payment agreement and make sure it is written.
3. Take credit cards or bank debit cards.  While this does cut into profit, you have a greater chance of getting paid.
4. Before extending credit, check credit worthiness. 
5. Make sure reminders are posted in the entryway of weekly payments due.  (No Names) Just a general reminder.  For example, Payment is due by Friday, July 4, for the month of July.
6. Place a payment deposit box near the entrance.  If you are busy with other parents or children customers can drop in the payment without waiting for you.
7. Offer discounts for early payment.  While this cuts into your profit, offering a 2-5% discount for early payment encourages customers to try and save money and pay.  Generally, the discount will apply if paid within the first 10-15 days.  This should be stated on the bill.
8.  Bill immediately.  In a childcare setting, you should not necessarily have to bill.  The parent should already know the prearranged cost of childcare for the period.  However, you may find that there are extra expenses or extra time that needs to be billed.
9. When accounts become overdue, charge a finance charge for accounts that are 30 days overdue.  Make sure to send out monthly invoices and charge finance charges on every invoice.
10. Stay on top of overdue accounts.  The longer an account is overdue, the less likely it will be paid. 
11. Speak with the owner.  Sometimes even good customers have hard times.  Don’t risk loosing a customer over this.  Ask the customer to make a partial payment.  Make sure the customer understands that you expect payment in full as soon as possible.  Express understanding.  Do not alienate this customer at this time.
12. Sending a collections letter.  This type of letter should include what the customer owes, what you want the customer to do, and what you will do if they do not pay right away.  You may want to get a lawyer involved if you send a letter and nothing happens.
13. Use of a collections agency can take the weight off your shoulders in debt collections.  However, this does come with a price tag attached to it, normally 30-50 percent of what they collect.
14. Offer to lower the total amount owed just to get payment in full at this time.  For example, if a customer owed $300, you may want to offer $225 as a total pay off if paid right away and in full.  You loose money, but at least you are paid some of what you are owed.
15. File a write of debt.  This is like a small claims court proceeding.  There is a determination as to whether there are any assets to attach to the bill.  You may not get cash, but you may get some other item that you can sell to get your money.

 

To be honest, every business gets burned once in awhile.  Try to do everything to prevent this from happening.  I even get burned once in a while.  Two years ago, I did taxes for a childcare center.  I worked with the boyfriend so I was not too worried.  My husband dropped off the taxes for me and did not collect the payment.  I am still trying to get paid.  I have sent a statement every month with finance charges and tried to call only to find out that the phone was disconnected.  I had one advantage.  I know where this person lives.  I stopped there yesterday.  I now have $20 toward the delinquent account.  We have an agreement that she will pay at least $10 until the bill is paid.  If I don’t receive payment, I will stop again.  The client felt horrible that I was at her door.  She explained the problems she was having.  I made sure I was professional, explained that I understand and there are no hard feelings.  Everyone has a rough spot once in a while.  You are probably thinking, why would I try and be nice to her?  Good question.   I still want her business.  I will just be smarter the next time and require payment before she gets her taxes.

 

I hope these hints help you avoid this situation.  If you are in a position where you have a bad debt yourself, make sure to have a payment plan in place.  With the payment plan, get a set amount that will be paid every month, even if it is only $5-$10 per month.  This helps the creditor know that you are trying to pay their bill.