26th November 2020 All Posts

5 Top tips – How to improve billing efficiencies and reduce debt

For a childcare business, billing can often be a bit of a headache. Even after the tedious process of sending out invoices, there’s no guarantee of on-time payments. It’s a time-consuming cycle but an essential part of the business. That is why it’s essential for nurseries to have an efficient billing process in place.

If you’re looking to get paid on time and worry more about your children than the bills, then here’s 5 easy steps for improving your billing process right now.

1. Set your terms

Within the child registration process, you should agree on a set of payment terms with the parent/carer(s). It’s the basis for good customer relations, it helps you avoid surprises, and increases your chances of getting paid on time. Ensure that your terms are clear, in writing and understood by the parent.

The terms should clearly state:

  • Your fees (including any add ons). If a child receives ‘free’ childcare and you are charging a top-up to cover your costs, you should clearly explain what their payments cover and why it is required. Here is a chance to sell yourself and all of the benefits of your nursery.
  • The types of payments you accept (e.g do you still accept cash/cheque)
  • A timeframe in which the parent is expected to pay the invoice. Thirty-day terms are standard for most businesses, but you can set whatever terms you like. 
  • The consequences if the bill is over-due.

2. Make sure your invoices are clear and concise

Your invoices shouldn’t provide any opportunity for the customer to delay, for example by not having clear bank details or entering the wrong amount. Invoice promptly and follow up with reminders to help your customers along. You can send your invoices by email using the communications module of Connect Childcare. Avoid printing your invoices out and giving them to the staff to hand out, the parent who doesn’t want to pay will say they never got it. Using the comms module of Connect Childcare leaves an audit trail.

This is dependent upon your overall billing process. There are two main types of bill format within the Connect Childcare system.
Detailed (eg. Detailed + Balance, Detailed + Brought Forward)
Summary (eg. Summary with Payments, Summary and Statement)
If you bill your parents on a ‘sessional’ basis, then a ‘detailed’ format is suitable, as it will itemise each session and its associated cost.


However, the ‘detailed’ bill format is not ideal for annualised bills. The reason is that once Connect has calculated the monthly bill, it divides that amount by the number of sessions in that month, regardless of its price.



As you can imagine, this will cause parents to query their bill, the most common query being something along the lines of “a morning costs £21, why are you charging me £19.74?” And if the annualised price per session is higher than the session price which can happen, then you can expect some angry phone calls.
One of the hardest things to explain to a parent is how their bill is ‘annualised’, so why not select a bill format that will help to prevent parent queries from happening in the first place?
A ‘summary’ bill format shows you the overall price for these sessions. 



It is then much easier to explain to the parent that the monthly bill of £355.33 is split between the sessions. 
You can find the list of bill formats by going to the Site Billing screen, highlighting your bill run, highlighting the individual bill(s) then clicking on Bill Format at the bottom of the screen.

Annualised’ bills are great for the parent. They give them the ability to budget with the bill being the same amount every month. Annualised bills assume billing for a full year and this year we have seen nurseries having to carry out a series of manual bill adjustments for the lockdown period, causing a lot of headaches.

In our 15 years of experience, we have come across lots of different fee structures but have found that using ‘sessional billing’ causes far fewer parent queries than if you bill them on an annualised basis. 

  • Sessional billing is where the parents pay the total session charges for the number of sessions that they booked in any given month, week or term, depending on how frequently you issue bills to your parents.
  • Annualised billing is where you take the weekly cost of the sessions, multiply them by the number of weeks you are open in a year and then divide that total by 12. This gives the parent the same bill total each month.  For example, £100 per week 8 52 weeks/ 12 = £433.33 per month.

3. Optimise your billing times

Establish specific payment dates. For example, set your payment dates to the 1st of each month. If the child starts in the middle of the month, you can charge for a part month initially and then a full month afterwards. This will minimise your admin going forward. Start as you mean to go on with new customers. Set zero-tolerance expectations when they first sign up. If you have a fee increase, make sure you give parents 3 months’ notice and clear instructions. This should give them time to update their payment methods (some parents may use standing orders).

4. Establish a Collection Policy

Establish a collection policy and develop a series of letters and actions that your company will take for late-paying customers. For example, if the customer is 30 days late, send a polite reminder letter. Follow up with a letter seven days after this and again 14 days later. When the account becomes 60 days overdue a third stronger worded letter is sent, perhaps telling the customer that while you value their business, you must get paid.

  • Letter 1 – Gentle reminder that their fees are overdue
  • Letter 2 – Risk of losing place if fees they are not paid by a particular date
  • Letter 3 – Exclusion if bill is not paid by a set date.

You can add letter templates to the communications module which even allows you to auto-populate with information such as the parent’s name and the outstanding balance.

You can learn how to set up templates within comms here.

5. Set reminders for your team

Once you have set your specific payment dates you can add in diary reminders for every 30 days to send out your late payment letters. Making reminders and getting on with it each month turns fee collection into a habit — not an exception.

‘Aged Balances by Site’ – This widget will show you the aged debt figures broken down by each site.

‘Aged Balances by Site Group’ – This widget will show aged debt for the site groups, this is all of the sites within a region, for example, North West.

You can learn how to set up widgets here.

Add a reminder to the key person and/or room leader to ask the parent to pop to the office to see the manager at the end of the day.

Be mindful not to mention the debt issue for confidentiality reasons.

You can learn how to add iConnect reminders here.

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About the Author

Campaign and Content Manager at Connect Childcare