This year there has been a lot written about the importance of collecting aged debts, at a time when parents are finding it increasingly hard to pay their bills. I always find it amazing that they wouldn't dream of filling up their car at a petrol station and then drive off without paying for it, but will happily go on holiday for a week and in the same breath tell you that they can't afford to pay their nursery fees!
To be fair, the majority of our customers are good payers, but following the old 80:20 rule, the minority are the ones who can really cause problems and are often the ones you spend a lot of time chasing. The very nature of the relationship between nursery staff and the families they support can make it very difficult to have those awkward conversations with parents when they have not paid their bills. So, what can you do to help improve your level of aged debts?
My managers will probably be giving a wry smile as they read this, as over the last few months this has been a hot topic. We have introduced a direct debit system to try to avoid the problem altogether, but this has been enormously time-consuming and does rely on your bank being happy to allow you to access the scheme, which smaller businesses may not be able to do. There are some companies who will collect direct debits on your behalf, but the charges can be significant.
But the first line of defence must be in ensuring parents are challenged as soon as they miss the first payment date. If room staff are not comfortable with this, then the manager may have to lurk and pounce on parents before they beat a swift retreat. We have introduced chip and pin machines in all our larger nurseries; although there is a cost involved, it has helped with some of the worst payers, who at least can bring a credit card in and transfer the debt from your nursery to someone whose business is to lend money.
Persistence also seems to be essential, with a clear system of reminder letters, followed by the threat of court action to those who do not pay and have no good reason. We offer payment plans to parents who have genuine problems and are willing to discuss this in detail and work out how they will get back on track.
Those who ignore your requests or will not talk to you, may take more note if you explain you will have to terminate their nursery place and/or pursue the debt through court. Unfortunately the court system rarely results in any significant repayments. But it's important to send out the right message to other non-payers that you mean business. We have worked hard to tighten up our procedure for aged debts; now we just need to ensure everyone is applying it. This is always the hardest part of getting fees in and it is a matter of keeping at it, and remembering that we would not like to work for nothing, so there is no reason for parents to use our services for nothing. Good luck to everyone in collecting all payments at this time of year.