Unpaid tuition fees can cause lot of financial burden on Child Daycare centers, Kindergarten preschools and even K-12 schools. Many child care centers attempt switching to a pre-paid model but it results in loss of enrollment as most parents prefer a post-paid model.
To recover their money, some child care centers try taking the matter to a Small Claims court, but of course that requires significant preparation, fees, stress and time. Time, which could have rather utilized on the daycare and getting new clients. Even if you win a small claims court judgment, it does not guarantee a payment as many parents are either fall into the low income bracket category or they are experiencing a temporary financial problem ( like loss of job, medical emergency bills, etc.).
Low cost Collection Letters offered by collection agencies is an excellent way to collect money from your past due accounts. There is a huge difference between parents getting a letter from a child care center verses getting it from a collection agency. Communication from a collection agency means this is just the starting of collection process, a lot more is still to come. Parents will dig their pockets deeper to get rid of the collection agency from their back.
Check this: Cost of hiring a collection agency
There are some unbeatable advantages when using a collection agency:
1. Five diplomatic collection letters are sent out at an average cost of $15 per case. In this price they also perform scrubs like “USPS Change of Address” and “Bankruptcy”. This enables the agency to send letters to the latest address of the parent. If a parent has filed for bankruptcy and is exempted from paying debts, you will be informed.
2. If the amount remains uncollected even after the Collection Letters service, with your permission these accounts will be forwarded for Collection calls or to file a Legal Suit to recover your money. These services are contingency based.
3. Collection agencies allow a parent to make payments in installments, online or over the phone. Installments approach facilitates parents of lower income group and those having temporary financial issues, to get more inclined into making payments.
4. An online portal provided by good collection agency allows you to submit debts easily and quickly. It is recommended to submit an account for the Collection Letters service after the debt has been 60 to 120 days past due.
5. It is also recommend that you should add in your initial “Childcare Center-Parent” contractual agreement that the parent is responsible for any and all costs of collection on an unpaid bill, not limited to late fees, court fees and the collection agency fees. Even if you do not attempt to recover the amount spent on collections, still a large portion of money coming back, which otherwise would have been a 100% loss.
6. Ask the collection agency if they have a diplomatic and an empathetic approach for collections, it helps to maintain your positive reputation. There will be always be some parents who will get very upset the moment they get a letter from you or the collection agency, but it does not mean you should write off that debt fearing a negative reaction. You have the right to recover your money to help run your own business.
7. A collection agency ensures that they comply with collection laws like FDCPA, TCPA and all state collection rules and regulations.
Forwarding a case to the collection agency, means you can keep your 100% attention running your Child Care center and let the collection agency experts work as an extension to your business to recover the bad debt.
If you need a collections agency to take care of your account receivables: Contact us