Deposit and payment in advance or arrears??

**alex__17** · 11-01-2014, 09:06 PM

I'm newly registered and having a few enquiries but am confused what to do about fee payment.

What do people do? I was told on the course to take a deposit and charge in advance.... If I ask for a months fees as deposit, which would be to pay off final fees when notice is given, I don't think I can also ask for the first months fees in advance too, I certainly wouldn't of been able to afford that for the childminder that looks after my son.

So what do people do? I was thinking either payment a month in advance, or a months deposit and payment at the end of the month for the hours actually attended.

Is this ok? Am I missing something vital and likely to get myself in trouble? Hoping because I'll take a month deposit if I get a non-payer I won't actually be out of pocket...

Just want to get it right and in writing and clear in my mind before having to go discuss it with parents.

Thanks for any opinions and experiences!

**dawn100** · 11-01-2014, 09:19 PM

It's a very personal decision and in the end its up to you what you do.
I take a months deposit to retain the place and is non refundable if they don't take the place it is used to cover first months bill and then I take payment in advance and any additional hours are added to next months bill. I chose this as like you when I used a cm I found it hard enough paying in advance with wages paid in arrears and waiting for tax credits to be sorted out, if I would of had to find a deposit I wouldn't of been able to afford to return to work. But I know there are cm's on here who think im in the wrong and that you should do what you have been recommended, months deposit and payment in advance. At the end if the day the decision is yours.

**moggy** · 11-01-2014, 09:30 PM

I don't keep a deposit (I take 4 weeks deposit to secure the place and refund against 1st month's fees). I charge in advance, 1st of the month for that calendar month (they area all very regular days/hours).
But, it only works that way if you are super strict about 'late/non-payment = no childcare'.
If you start letting the payment in advance slip a few days/weeks late (there are always excuses from parents) then you are leaving yourself open to problems as the money owed starts to add up, even if you threaten/add-on 'late payment penalties' (then if they do a runner you never get paid).
But it has always worked for me, so far, but I have only ever had very very nice parents who always pay on time (or even pay early!).

**lisbet** · 11-01-2014, 11:58 PM

I ask people to pay monthly or weekly in advance of care. First payment is due upon completion of the contract.

If I am holding the space for a while, then I always ask for the whole of the first month's fee and explain that if they do not take up the place as agreed then it will not be refunded.

If parents want extra hours then they pay for them in advance of care.

**ja-lula-belli** · 12-01-2014, 07:50 AM

Originally Posted by lisbet

I ask people to pay monthly or weekly in advance of care. First payment is due upon completion of the contract.

If I am holding the space for a while, then I always ask for the whole of the first month's fee and explain that if they do not take up the place as agreed then it will not be refunded.

If parents want extra hours then they pay for them in advance of care.

I do the same. I will not provide care unless payed for in advance.

I do not want to be in the position for chasing money owed.

Ja-Lula-Bell*****minding

**pinkellifun** · 12-01-2014, 08:08 AM

I did a mixture of both - I chose to request a lower deposit amount, £100, and then ask for one month's fee in advance. There are quite a few childminders round here and I am the only one who does this, everyone else ask for fees in arrears. It's a personal choice and one that you have to be able to manage on. At the end of the day, you have bills to pay yourself so you need to do what's best for you.

**miffy** · 12-01-2014, 09:41 AM

Originally Posted by moggy

I don't keep a deposit (I take 4 weeks deposit to secure the place and refund against 1st month's fees). I charge in advance, 1st of the month for that calendar month (they area all very regular days/hours).
But, it only works that way if you are super strict about 'late/non-payment = no childcare'.
If you start letting the payment in advance slip a few days/weeks late (there are always excuses from parents) then you are leaving yourself open to problems as the money owed starts to add up, even if you threaten/add-on 'late payment penalties' (then if they do a runner you never get paid).
But it has always worked for me, so far, but I have only ever had very very nice parents who always pay on time (or even pay early!).

This is exactly what I do and I am super strict about fee payments - no payment no child care. Since I started charging this way I've not had anyone mess me around.

Miffyxx

Simona · 12-01-2014, 10:54 AM

Originally Posted by dawn100

It's a very personal decision and in the end its up to you what you do.
I take a months deposit to retain the place and is non refundable if they don't take the place it is used to cover first months bill and then I take payment in advance and any additional hours are added to next months bill. I chose this as like you when I used a cm I found it hard enough paying in advance with wages paid in arrears and waiting for tax credits to be sorted out, if I would of had to find a deposit I wouldn't of been able to afford to return to work. But I know there are cm's on here who think im in the wrong and that you should do what you have been recommended, months deposit and payment in advance. At the end if the day the decision is yours.

You are not wrong regarding the deposit...what I admire and respect is your concern about whether parents can find a hefty sum for a deposit

Yes it is big but it would be refundable and cms then have the guarantee that if parents do not pay fees they have something in hand to sustain their business without loss and without recourse to legal proceedings

What would be good to discuss is if cms have had any problems getting a deposit...personally in 20 years no parent has ever questioned it because of the guarantee it is refunded
If a deposit is not possible what other means are there to ensure we do not get parents running away without paying us fees? they maybe the minority but a big problem when that happens

**bunyip** · 12-01-2014, 12:34 PM

I think what you do will ultimately depend upon the balance between financial self-protection and what the local market will stand.

Ideally, you want payment in advance, plus a deposit so the client can't give notice at the end of a month and disappear over the horizon. But this means parents are effectively paying 2 month's fees in advance whilst themselves (usually) being paid their salary/wages in arrears. A lot of people simply cannot manage this, and it isn't always related to their income. Mid-high earners are frequently the ones who stretch themselves over credit, mortgage, and all the other things they 'need' (in my day, parents used to love us in other ways that didn't cost money, which was just as well cos they had none - but that's a different rant

) Though I must say, it is always a bit galling to hear clients pleading poverty whilst thumbing their latest i-wotsit-phone or complaining their new tattoo is giving them jip.

The sad truth, borne out by a billion threads on this forum, is that if you don't get paid in advance you can't count on getting paid at all.

My bottom line is that I refuse to work for free. So I take payment in advance, with no payment = no care, and yes I will turn them away at the door if not paid. I balance this by offering clients monthly/weekly or even daily payment arrangements. Having had a couple of parents sh4ft me over their signed contracts, sincere promises then failing to start, I take a deposit to ensure they start - but refund it if they see out the first month. This means someone could give notice at the end of a payment period and walk away without settling for the notice period. This is a risk, but one I'm prepared to take, as I can cope so long as I don't ever get stuck having worked for free. I'm not suggesting other CMs will feel the same as me though.

**Chatterbox Childcare** · 12-01-2014, 12:35 PM

I have payment due on the 1st of each month one month in advance, never in arrears but I don't take a deposit

Simona · 12-01-2014, 01:21 PM

Great comments here...
can I ask how do cms deal with the fact that if drawing funding from their LA this is paid in arrears...often a term in arrears...does this cause a problem?

**bunyip** · 12-01-2014, 02:20 PM

Originally Posted by Simona

Great comments here...
can I ask how do cms deal with the fact that if drawing funding from their LA this is paid in arrears...often a term in arrears...does this cause a problem?

Ours is paid partly in advance and partly in arrears, with (of course) nothing paid in the holidays. I've simply set up an online account with my bank as an 'escrow' in which to hold the money, then 'pay' myself a portion of it week by week - so I don't overspend at first and run out too soon IYSWIM.

Actually, LA funding raises some interesting questions on taking deposits, since so much of the LA funding rules is about only charging for hours which are actually delivered, and not putting additional expectations on parents who draw the free provision. I wonder if LA's would frown on CMs for taking deposits for some purposes?

**lisbet** · 12-01-2014, 02:30 PM

Originally Posted by Simona

Great comments here...
can I ask how do cms deal with the fact that if drawing funding from their LA this is paid in arrears...often a term in arrears...does this cause a problem?

Our council pays in four weekly installments, often part way though a calendar month. They have been late with payments on a couple of occasions and I have reflected that under the terms of my usual private individual's contract I would have been charging hefty late payment fees and withdrawing care.

**dawn100** · 12-01-2014, 06:07 PM

Originally Posted by bunyip

Ours is paid partly in advance and partly in arrears, with (of course) nothing paid in the holidays. I've simply set up an online account with my bank as an 'escrow' in which to hold the money, then 'pay' myself a portion of it week by week - so I don't overspend at first and run out too soon IYSWIM.

Actually, LA funding raises some interesting questions on taking deposits, since so much of the LA funding rules is about only charging for hours which are actually delivered, and not putting additional expectations on parents who draw the free provision. I wonder if LA's would frown on CMs for taking deposits for some purposes?

For the reason you mention above about not being allowed to take deposit and parents can walk away with no notice some cm have really been left short so are no longer offering funded places.

Simona · 12-01-2014, 06:15 PM

Originally Posted by bunyip

Ours is paid partly in advance and partly in arrears, with (of course) nothing paid in the holidays. I've simply set up an online account with my bank as an 'escrow' in which to hold the money, then 'pay' myself a portion of it week by week - so I don't overspend at first and run out too soon IYSWIM.

Actually, LA funding raises some interesting questions on taking deposits, since so much of the LA funding rules is about only charging for hours which are actually delivered, and not putting additional expectations on parents who draw the free provision. I wonder if LA's would frown on CMs for taking deposits for some purposes?

I noticed in mine you are not allowed to charge parents a registration fee...no mention of deposits (I suppose we could not charge for the funded hours but OK if parents want more than 15) despite the fact we actually subsidise the childcare!!
funding is paid in arrears...all in all not very sustainable for CMs but there we have the 'flexibility' parents so much want of us!!

**Kirstylob** · 13-01-2014, 11:42 AM

Could you charge a month in advance and charge a deposit pay in instalmemts? I now always charge in advance after being stung by a non payer for nearly 2 thousand pounds. I do appreciate its hard to find the money in advance so thats why I offer payment of deposit in instalmemts.
Its really up to you.

**smurfette** · 13-01-2014, 01:10 PM

Originally Posted by Kirstylob

Could you charge a month in advance and charge a deposit pay in instalmemts? I now always charge in advance after being stung by a non payer for nearly 2 thousand pounds. I do appreciate its hard to find the money in advance so thats why I offer payment of deposit in instalmemts. Its really up to you.

Yes I did this recently and had the deposit within a month to help young parents out