As financial conditions worsen, maintaining a positive cashflow will become more challenging. We are working with a number of nurseries throughout the UK to take a more systematic approach to fee collection to monitor cash flow more effectively. With solid cash management systems in place, nurseries can help ensure outstanding childcare fees are paid in a timely manner so arrears don't escalate out of control.
Recently, Daniels Silverman canvassed 28 of its nursery clients on their concerns for 2011 and found that 86 per cent expect the year ahead to be financially tougher than 2010 because of increased tightening of household finances. It also revealed that 82 per cent of parents had expressed concerns to their nursery about their financial situation. As a result, the nurseries surveyed were predicting a rise in payment arrears.
Cashflow will therefore be paramount to a nursery's survival and ability to thrive. A very important aspect of managing cashflow is to operate with a clear set of terms and conditions. Many nurseries fail to include their terms and conditions on their child admission forms. But you can only implement conditions that were known at the time of registration.
The fact that many nurseries are conducting business without clear, accepted terms and conditions from their customers means they could face serious consequences if queries or payment disputes arise. It is imperative to be sure your terms are effective and will prevail if debt recovery action is required.
PROVIDING BACK UP
Stephanie McGahan, owner of Park Avenue Nursery and After-School Care in Kent, has been working with Daniels Silverman for nine years. She says, 'When parents are behind with their payments, they get a letter explaining that the debt will be passed to a debt collection agency should they not pay in full immediately.'
This kind of back-up gives nursery businesses peace of mind, and lets them focus on their core business of providing high quality childcare and managing their nursery. Ms McGahan says, 'Caring for the children comes first, so it's reassuring to know that aspects of cashflow management are being taken care of.'
Once the debt has been passed to a collection agency, it is no longer a focus for the nursery. Often an initial letter to parents is enough to spur them into action. 'Having the support of a debt collection agency is very persuasive in encouraging prompt payment and they will do the chasing if I need to refer the case to them.'
Here are our tips for what to include in your terms and conditions to get quicker and more effective payment of debts, and recover interest and other late payment charges from late payers:
- - Clear payment terms - that is to say, the right to recover interest and debt collection charges incurred in securing payment
- - The right to refer disputes to your local County Court if there is a dispute (so it is more convenient for you to give evidence)
- - Make sure that both parents sign and accept your terms and contract details.
Further information