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Running a childcare business involves numerous back office functions. The US Small Business Administration has outlined a comprehensive guide you’ll need to run a childcare business. Unfortunately, not everyone is equipped with specialized knowledge and skills in business operations, which includes child care billing.
If you want your child care business to really succeed, it is crucial to know the basics of running a business and making sound financial decisions.
What is Child Care Billing?
Child care billing is an important area that requires special attention. The billing process controls cash flow and generates funds for your operations. If you are able to collect money in a timely manner, you’ll have enough funds to run your business, whether it is a daycare, preschool, after school or any other child care program. Operating a daycare entails a lot of expenses; hence, you need cash on hand. Effective billing ensures a healthy financial standing which is crucial to the success and growth of your business.
Billing involves numerous tasks such as checking the billable hours, preparing and sending out invoices, tracking unpaid invoices, and creating reports. Without a clear billing strategy, billing can easily become a nightmare.
Here are some effective strategies to help you manage and optimize how you bill parents.
Establish Clear Policies
Many child care operators tend to be lax or even feel some guilt when collecting payments. This should not be the case. You need to establish and implement clear policies, such as the payment methods, schedule and scheme.
Determine the pricing for all services and products offered by your childcare center. Display the price list so parents can easily refer to them anytime. They should be posted in the lobby, brochures, or websites.
Ideally, parents should be oriented on the payment policies before enrolment. Keeping them informed about the policies is crucial, especially when you enforce them later on. Considering the cost of child care, some parents might have a hard time paying off their dues but you have to be firm with your rules. While you want to be compassionate to parents, being consistent in your policies can avoid late payments and uncollected bills.
Automate your billing
Evaluate your office billing and accounting procedures and see how it can be digitized. Automation can greatly improve billing efficiency and payment collection. Considering the hectic schedule and busy lifestyle of working parents, many prefer automated billing because of its ease and convenience. Instead of paper-based invoices, parents receive them electronically through email. It also allows online payment which is a lot easier for parents.
Experts at Prime Child Care Software share that there are numerous IT solutions specifically designed for child care centers that streamline billing. These powerful IT solutions come with useful features like digital time-in and time-out tracking for the children (and staff), scheduling recurring invoices, sending reminders and late payment dues, paperless billing directly drafted from the parents’ bank accounts, recording of client information, tracking and managing invoices, and a lot more.
The use of technology can greatly unburden you from these time-consuming and repetitive administrative tasks. Hence, you can devote more time on core functions.
Offer Incentives
People just love to receive prizes. To encourage parents to pay on time, you need to offer incentives. This could be in the form of discounts or add-on services. Evaluate your business to find out how you can make it more cost-effective. Look for processes that need to be improved so you can afford to offer perks to parents
On the other hand, you should also implement penalties for late fees to deter parents from paying belatedly. However, make sure that this is included in your policies and that parents are well-aware of it. When implemented properly, you can greatly reduce later payments. You also save yourself from the hassle of chasing payments and doing follow-ups on delinquent accounts.
Minimize Errors
When it comes to finances, parents are extra careful, making sure that everything is in order. Hence, accuracy and consistency are crucial in billing. Any errors in invoicing can cause confusion and distrust. Parents can raise questions that can delay their payment. Hence, errors should be avoided at all times. You should also ensure that invoices are sent as scheduled and that parents receive them consistently. This way, they have no reason not to pay up their dues.
Fortunately, billing software can help minimize errors. This technology allows daycare operators to create invoices based on centralized databases. With automation, manual intervention in the billing process is reduced.
Offer Various Payment Options
Every parent has a unique lifestyle – the same is true when it comes to preferred payment. Some prefer to do it online, while others like to pay cash or check. Consider accepting online payment gateways and credit cards, at the same time, on-site payment options. There are also auto-pay options wherein parents can enroll their bank accounts into the system. They get billed and deducted automatically. Again, this is beneficial to both the parents and your business; for parents, auto-pay removes the possibility of incurring late payment penalties while for your center, you are guaranteed timely collection.
By offering different payment options, you’ll make it easier for parents to pay. They can choose a payment method that is suitable to their schedule and lifestyle.
You may also like: Steps to Efficient Invoicing
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