Top 5 Tips for Recovering Childcare Centre Debt

Chasing family debt is a laborious task.

From contacting declined families to answering billing enquiries and setting up payment plans and ensuring they are followed through – it can often seem like a never-ending process. This doesn’t even compare to the burden of chasing inactive debt, which can be a much harder task.

We’ve yet to meet a Centre Manager who likes performing these duties. Our team on the other hand – love it. Why? They love the challenge of continually helping our clients resolve overdue accounts.

With extensive experience managing declined payments and consistently recovering family debt we asked our Accounts Team what their 5 top tips would be for Services who are struggling with a growing debt ledger?

Here’s what they had to say:

1. Ensure that you have a process in place that will inform you when families default on their fees. Knowing when and who has debt on their account will allow you to begin the process of retrieving that debt immediately and reduce the possibility of a growing debt ledger.
2. Develop and implement a debt collection process that will ensure that declined payments are followed up immediately – allocate your team clear roles and responsibilities to each task in this process and hold those team members accountable for following the process. It’s no good having a process that isn’t followed and your debt ledger will suffer.
3. Provide your team with appropriate and thorough training and education on your billing cycle, CCMS software, payment methods available, Child Care Subsidy entitlements, reading statements etc so they can confidently discuss outstanding fees with families and answer any questions they may have as to their payment amount and process. Give them the authority to have these conversations with families and solve any issues quickly.
4. We know that sometimes life can throw families a few curveballs, so be flexible with your payment options for families should they default on their fees. If that’s creating a payment plan for a family, ensure they are aware of their obligations and the ramifications if they miss a payment. With payment plans, your team will need to be vigilant in ensuring the payment plan is followed through, with constant contact by your team until the debt is recovered – it can be a long process but it gets the job done and ultimately the debt is successfully recovered!
5. Finally, give your team an escalation point should a family refuse to pay their debt. It’s important to maintain the Centre Director/Family relationship, so as not to jeopardise the enrolment.

Our Accounts Team could go on, but don’t be fooled – it is relentless recovering declined family fees. You have to be vigilant and consistent in your approach otherwise, your debt ledger will continue to grow week on week until you end the financial year with a large debt, which ultimately puts pressure on cash flow and profit.

Want a little help managing your active and inactive debt? We’d love to chat with you. Just get in touch with our head of Accounts Tracey on traceyd@enrolmenthub.com.

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