When it comes to subsidized child care, have you ever been caught holding the bag? That is, being responsible for a financial shortfall because someone else did not live up to their end of the bargain. Perhaps a family left without making the co-payment for their final month. Or, maybe your state agency paid less than expected and you’re unable to collect the remaining balance from the parents. In either case, it’s an unenviable situation to find yourself in when child care services have already been provided and you’re left with little chance of getting paid.
In order to provide a quality early childhood experience for all the children in your care, each family needs to pay their share. When you’re not collecting full payment for subsidized care, that impedes your ability to keep good teachers, maintain the playground, provide enrichment programs, offer healthy snacks, etc; the list goes on and on.
So what could you do to keep from getting stuck holding the bag? Last week, we talked about taking Deposits for Summer Child Care. This week we’ll take the deposit concept further and show you how to make sure subsidized care gets paid in full.
Daycare Policies & Subsidized Care
In order to ensure payment, consider adopting a policy that requires a deposit. The deposit would be paid in advance and used to cover the co-payment for their last month. In other words, when a family eventually leaves the center their prepaid deposit would be refunded to pay their final month of child care.
If you’re already using Procare Software® it’s pretty easy to do. Just record a deposit fee along with the payment received. This will give them a deposit on account. You can place the funds in your regular checking account or you might prefer to put the money into a separate savings account used to pay yourself later, when the family departs.
Down the road, at the time their child withdraws from your program, simply charge their final copay fee and refund the deposit to leave them with a balance due of zero. This truly is a win-win situation. The family will benefit by not having a final payment to make and being able to leave on good terms, while you’ll have peace of mind knowing your revenue flow has not been interrupted.
Unpaid Agency Fees (DHS, DFACS, etc.)
Requiring a deposit from the family could also help if the subsidizing agency does not pay the full amount expected. If your policy is this amount becomes the responsibility of the family, all or part of their deposit could be used to pay off the difference. With the Agency Accounting module from Procare, you could easily transfer the balance to the parent and show a deposit refund to again bring the balance back to zero.
Accept Automatic Payments
Another way to make sure both subsidized and private pay families pay on time is to use an automated payment processing service like Tuition Express®. That way payments are electronically transferred from parent bank accounts or charged to a credit card and you can rest assured knowing you’ll never get caught holding the bag again.