Through research with our child care members, we know that being paid late (or not at all) is one of the biggest contributors to cash-flow stress in their centres.
With parents leaving fees unpaid or ‘centre hopping’ (leaving a trail of unpaid fees behind them), operators are being left with growing amounts of money outstanding. This worrying trend is not a new phenomenon in our industry and is one that does not appear to be slowing.
Unfortunately, there’s no ‘silver bullet’ when it comes to improving on-time payment. Like all of us, parents are faced with multiple living expenses, and child care fees may be considered just another bill in the pile. Unsurprisingly, feedback suggests that single parents or parents in casual employment appear most often on the outstanding account report as the cost of living adds increasing pressure on already ‘cash-strapped’ parents.
What centres can do, however, is start the relationship with the parents off on the right foot, so that payment expectations are crystal clear.
The easiest way to do this is through a solid set of terms and conditions. Much like a contract that you would sign when applying for a new credit card, your terms and conditions spell out what is expected from both parties that are entering into an agreement.
As well as ensuring parents understand their responsibilities, your ‘Ts & Cs’ provide your centre with a set of enforceable rights that are designed to reduce your centre’s exposure to risk when things don’t go according to plan.
Your enrolment forms will already have a series of agreements and consents when it comes to health matters and other roles and responsibilities. For most centres, by simply adding in some additional clauses, you’ll be better equipped to know who you are dealing with up-front. You’ll also be empowered to swiftly recover late or unpaid fees with less fuss.
With the right contract wording on your side, you’ll be able to take actions such as:
- Conduct pre-placement credit checking;
- Have the Child Care Benefit paid direct to the centre;
- Pass on collection costs to the parent should it become necessary to engage a collection agency, and
- List a default against the parent if necessary so that it shows on their credit record. The listing can be amended to “Paid” when the parent attends to the account.
Another essential in your toolkit: a properly worded reminder letter that can be swiftly issued to parents who are overdue. This is an essential step in the fee recovery process.
Sometimes, there’s no way around it, and you’ll just need to ‘make that call’ to request payment. Many businesses find this challenging, time consuming and awkward, and have limited success (even more so in the not for profit sector). On top of that, the Australian Competition and Consumer Commission (ACCC) has a strict set of guidelines that outline when, how often, and on what grounds you are able to contact someone who owes you money.
Our trusted and experienced debt management partner Optimum Recoveries is ready to assist CMS members with:
- Water-tight credit policies and legally binding terms and conditions tailored specifically to meet the needs of CMS members in the child care industry;
- Sample reminder letter templates; and
- Assistance with recovering overdue debts.
As a registered and experienced debt collection agency, Optimum Recoveries are experts in securing outstanding payments in a respectful, timely, and professional manner (as well as ensuring everything is done ‘by the book’).
To get in touch with Optimum Recoveries, members can call 1300 556 937 or email them at email@example.com. Don’t forget to mention you are a CMS member to secure your discount.