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Nov 5, 2013 3 min read

Dealing with Declined Daycare Payments

Procare By: Procare

Has the “empty pocket syndrome” ever struck at your child care center, daycare or preschool? It goes something like this: You accept payment from a parent, in good faith, and provide quality care for their children. But later, you discover there wasn’t enough money in their account to cover their check or auto-draft payment, or their credit card ended up being declined.

So, the parent’s pocket was empty and now so is yours. Ouch!

In a perfect world, your child care business would never have to deal with payments gone bad, sometimes known as non-sufficient funds or NSF transactions. But still, there is good news. There are ways to minimize your risk and simplify the process of reversing a payment, when needed. You may even want to charge the parent an extra processing fee and resubmit a request for payment.


Avoid Paper Checks

If you’re still accepting paper checks for payment, you are placing yourself at risk of having people write bad checks. Sure, you’ll eventually find out, but it may take a week or two before your bank notifies you of the issue. By that time, you’ll have already taken care of the children and end up chasing after the money.

Automate Your Payments

Moving to automated payments (whether by credit card or ACH auto-draft) simplifies the process and reduces your exposure. First, families know the payment will come out of their account on the agreed upon day. Second, if they don’t have the funds available, you’ll find out quickly — usually within a few days. And, if you accept credit cards, it won’t matter if they have money in their bank account or not. Another positive aspect of credit cards is that even if they are declined, you typically find out right away.

Simplify the Process

Using an automated payment processing service, like Procare Software’s Tuition Express, not only simplifies the way payments are collected; it also makes it easy to process returns, when needed. Since Tuition Express is fully integrated with Procare, payments are instantly recorded to each parent’s account. Any declined credit cards or NSF transactions are quickly reported and a reversing entry — along with any additional fee you may wish to charge — is added to their account. Then, you may immediately proceed with processing the payment request again (this time with the extra fee added) or choose not to process them right now and talk to the family about the situation.

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Procare provides comprehensive child care management software with the power to help you take control at every point of your business.