Can Childminders ask for a Retainer and a Payment Depost?

[Louise70]

Hello, I am new to childminding and would be grateful for your help please, as a parent is visiting me on Monday morning and I want to get my facts correct.

Can Childminders ask parents for a Retainer Fee and a Payment Deposit - (equivalent to the agreed notice period, which in my case will be 4 weeks), if being paid monthly in advance? The Payment Deposit will be refunded to the parent at the end of the contract, as long as their are no outstanding fees.

Or do you think it is too much to expect parents to pay both the Retainer and Payment Deposit before childminding takes place?

I've read about some of the horror stories of non payment and just want to protect myself at the start and at the end of the contract?

I hope this makes sense. Thank you

Louise

[Kiddleywinks]

The way I work is:
A deposit is required to confirm a contract, and is refundable against the last 4 weeks fees (some do the first weeks fees), unrefundable if parent cancels before starting or within the first 6 months

If I have the space available now, but the start date isn't going to be for a while (more than 4 weeks), then a retainer is also paid. This is half fees and unrefundable unless I cancel the contract before starting.


Finding fees monthly in advance can be difficult for parents, particularly if they are returning to work after a long time, so I will usually suggest paying the fees weekly for the first few/couple of months until they get sorted financially, that way, I still have the deposit (never start without one), and the fees are still being paid in advance, albeit weekly.

If the start date is 2 or 3 months in advance, then parent can pay in increments before the start date to 'build up' their account

[Louise70]

Thankyou for your help Kiddleywinks. As I am just starting out, I'm finding it a minefield because every childminder seems to do things differently and I just need to work out how I will run my business, whilst not wanting to upset any parents but covering myself at the same time.

I just would like to clarify one more thing. When do you start asking for a retainer from? Is it from the day the parent tells you they want you to care for their child until the start date or do you charge from the date of the contract until the start date, or can it be either?

Again hope this makes sense.

Thankyou

Louise

[Kiddleywinks]

The deposit is due on the day we sign contracts.
Signing contracts confirms that the parents want me to look after their child/ren, and I confirm I will hold the space for parents.

If the start date is more than 4 weeks in advance but no more than 3 months* of signing the contract, the retainer (half fees) is payable from the contract signing date

*This is my rule as I personally don't do contracts more than 3 months in advance.
There are too many variables for parents and myself that can change the arrangement so once I commit to a new contract I wouldn't mess parents around. I would be unhappy guaranteeing a space more than 3 months ahead.
If a parent contacts me with a long start date, I tell them I will put them on my waiting list and will contact them nearer the time to check if their circumstances have changed or if they still require a space. That way, no one feels 'abandoned' or 'ripped off' should things change.

Edited to add:
Just as a side note, personally speaking, I have found that parents that are much more willing to part with money to secure a place, are much more reliable than those that are still ummining and aahing about whether they want a childminder or not. Parting with money seems to organise the wheat from the chaff as it were - Don't know if it's just me

[bunyip]

Hello, I am new to childminding and would be grateful for your help please, as a parent is visiting me on Monday morning and I want to get my facts correct.

Can Childminders ask parents for a Retainer Fee and a Payment Deposit - (equivalent to the agreed notice period, which in my case will be 4 weeks), if being paid monthly in advance? The Payment Deposit will be refunded to the parent at the end of the contract, as long as their are no outstanding fees.

Or do you think it is too much to expect parents to pay both the Retainer and Payment Deposit before childminding takes place?

I've read about some of the horror stories of non payment and just want to protect myself at the start and at the end of the contract?

I hope this makes sense. Thank you

Louise

Hi Louise

The first thing I'd say is I think you're wise to start out using deposits/retainers/payment in advance as ways of protecting yourself and your income. Too many new CMs are so desperate to attract clients (or to be 'liked') that they bend over backwards and practically hang out a flag saying: "here I am - come and rip me off".

I suppose the answer to your question is that you can ask for whatever you like: you can ask for a deposit, a retainer, you can even ask for the moon, but you have to judge for yourself what you can reasonably expect to get (and that's a business judgment, not an ethical one.) Asking for too much might just be a deal-breaker: what then?

It is hard to know what (and how much) you can ask for.

It's easy to say (and frequently true) that parents who really want you will find the money. But there are also some genuine people who cannot afford large up-front payments (just as there are some who can afford them who won't try. ) Bear in mind that with payment in advance, together with a payment deposit, you're asking them to pay a fairly large bill 2 months in advance - and they're almost certainly getting paid a month in arrears by their employer. Is that the kind of money you or I could find at the drop of a hat?

I'm not saying don't do it - I'm always advising CMs to protect themselves this way - but you may need to compromise or be a little flexible if it's going to be a deal-breaker. You may need to prioritise. You also need to decide how strict you will be. For eg, I've known CMs with payment in advance and a payment deposit in place, who let clients 'dip into' their deposit money as some sort of credit amount if they can't manage the payment in advance on time. You may see this as 'being flexible' or taking a risk at the top of a slippery slope.

In summary:
Payment in advance - ensures you get paid for the work you actually do, since you don't have to worry about arrears and clients disappearing with unpaid bills.
Payment deposit - protects you against a client giving immediate notice and leaving you searching for a replacement without the buffer of a month's income.
Start-up retainer - part-payment to 'hold' a place until a child starts. A 'swings & roundabouts' measure. It's not 'free money': you do have to have the place available and be open to charge a retainer. Parents often dislike this idea of "paying you to do nothing" and especially if you have more than one vacancy at the same time. CMs often come to regret setting up a retainer for a future starter, especially if they then get an enquiry for an immediate starter having already promised the place. I tend to see retainers as an unhappy compromise, but some see them as a necessary compromise to insure against the uncertainty which is inherent in what we do.
Start-up deposit - an alternative to a retainer, to 'hold' a place until a child starts (I actually keep the deposit until the lo starts the full contract, rather than just the settling-in month, after a bad experience with a client who was just 'testing the waters'.)

[Kittycat]

I feel a bit awkward asking 2months fees
So what I do is if the child starts with in the month I ask a £50 non refundable deposit
Over a mth £100
If child starts within week I invoice in advance for the mth ahead, payment in advance before child starts.
Child leaving 4 weeks notice and fees, if parents not happy to pay this, then I have actually used their fees they have paid for the months child care as termination notice and stopped minding with effect,
Harsh but needs must when you run against difficult parents

[dawn100]

You will get lots of different answers to this as everyone has different ideas and opinions and different needs on how much security they need.
I personally don't do retainers as things can change even in a couple of months, so I will only hold a space if its start date is within a month and then I ask for non refundable deposit. An example of why I don't is just before Christmas I had an enquiry for end of march start date, 2 days a week mon and tues, then a week ago their worked confirmed the days they were to work and it was a wed + thurs, I don't have the vacancies for these so had to turn them away, yes I would of had the retainer and deposit but you know for sure the parents wouldn't of been happy about me keeping the money - it wasn't their fault work took so long to confirm and it would of left them out of pocket and wouldn't of been good advertising for me when parents went around moaning also since jan I've had an adhoc child who looks like they might be becoming permanent so I would of lost out on this child.
You need to do what you feel is right for you and only you can decide that.

[alex__17]

I asked a very similar question the other day, so changed my mind and decided to take a deposit of £100, then ask for a month fees in advance. My question is what if the family pays in advance fine, then at the end of one month, they give notice with immediate effect even though you have a 4 week notice period, yes they wouldn't owe for child care but you are left in the lurch... I guess there's no way to protect yourself against that is there?

[bunyip]

I asked a very similar question the other day, so changed my mind and decided to take a deposit of £100, then ask for a month fees in advance. My question is what if the family pays in advance fine, then at the end of one month, they give notice with immediate effect even though you have a 4 week notice period, yes they wouldn't owe for child care but you are left in the lurch... I guess there's no way to protect yourself against that is there?

This is where the 'payment deposit' would be the protection. It means the CM always holds a month's fees in addition to being paid in advance. When they give notice, you can use the payment deposit as the final month's fee.

But, as previously noted, it does mean asking for more cash up-front than many families can reasonably afford.

I don't take a payment deposit. Not ideal, but a reasonable risk for me in my situation. I do insist on payment in advance. The way I look at it, if a parent leaves on immediate notice without payment in lieu, I can afford to swallow that - but I refuse to accept payment in arrears because that means the risk of working for free if they don't pay.