To most people, managing preschool billing begins and ends with the collection of payments. However, as any business owner who's ever been there would admit, the collection process is just the tip of the iceberg.
Here are a few pointers to consider when setting up your preschool billing system.
Managing Preschool Billing
Set the Right Rates
Starting right at the beginning, how do you set a childcare rate that is viable and agreeable for both your business and the parents?
You can begin the process by working out your expenses - factoring in all costs ranging from your rent/mortgage, staff wages, food costs, insurance, utilities and staff training to furniture, toys, books, policies and procedures, office supplies and marketing material.
Once you have worked out the costs and added a desired profit figure to it, you’d still need to consider if it is affordable to the parents you are targeting, and competitive compared to what other providers in your area are offering. Check out this article from Entrepreneur for a detailed account on how to go about setting your prices.
Decide on the Frequency of Billing
One of the major factors that affect your cash flow is the frequency of your billing. Whether you opt for attendance-based billing or a pro rata system, make sure you set the billing cycle in such a way as to reduce the time gap between when you have to pay your suppliers and when you receive money from your customers.
For instance, if you use a pro rata system, consider billing in advance for each month, rather than waiting for the end of the month. This can create a safe buffer against late payments and help keep your cash flow positive. Similarly, when it comes to ad-hoc sessions, try to invoice the parents promptly for the extra sessions, without delaying it till the end of the month.
Do Not Shy Away From Digitisation
There could be times when you know your existing system of juggling ledgers and spreadsheets is just not working for you. But the very thought of bringing on a new technology, footing the additional costs and getting all the staff on board might end up giving you cold feet.
However, the entry of tailor-made invoicing systems for the childcare industry has made the entire process of digitization much easier for childcare providers. New-age childcare invoicing systems are easy to use and affordable compared to the expensive accounting systems which often require extensive staff training.
Switching to a digital platform can take a substantial load of work off your shoulders and automate most of the tiresome and repetitive elements of the billing and invoicing process. From generating invoices and tracking the payments in real-time to sending out invoice reminders, there’s quite a bit of work that an invoicing system can help you do more effectively.
From setting the right fees to implementing a smooth invoicing system, paying attention to the little nuances right at the outset can help you recover payments quickly, maintain a healthy cash flow and manage your childcare business efficiently.