Unpaid tuition fees can cause lot of financial burden on Daycare Centers, Kindergarten, Preschools and After school child care centers. Many daycare centers attempt switching to a 100% prepaid model but it generally results in a loss of enrollment as most parents prefer a postpaid model.
After adequate reminders to parents an amicable resolution seems impossible. Some daycare 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 a child care center wins a small claims court judgment, it does not guarantee a payment as many parents either fall into the low income bracket category or they are experiencing a temporary financial problem ( like loss of job, medical emergency bills, etc.).
In most cases, without the help of a professional collection agency, daycare centers are forced to writing these overdue accounts receivable as a complete loss in their accounting books. Collection agencies can recover money diplomatically and amicably while preserving the reputation of your daycare.
Need an Experienced Daycare Collection Agency: Contact us
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 it 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.
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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 parents to make payment in installments, online or over the phone. Installments approach facilitates parents of lower income group and those having temporary financial issues, into making smaller 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 180 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 all costs of debt collection on an unpaid bills, 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 should come 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 and improve its cash flow.
7. A collection agency ensures that they comply with collection laws like FDCPA, TCPA and several state debt collection 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 unpaid accounts receivable: Contact us