Deposit help

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07-09-2015, 08:11 PM
Kittycat

Deposit help

I had a family come to me looking for childcare this February with a start of August
I took a deposit, which I then use as my last months fees paid in advance when they terminate.
Child has only been with me a week & parent has paid this month in advance but as her work are not being flexible she has found a job with more flexible hours elsewhere & no longer needs childcare
I know this is probably a yes, but I would assume I would need to refund her back the working fees she paid me this month as her deposit was her termination fee in advance & she has given me notice today
Just what I need when I have bills to pay, having to refund money:(
08-09-2015, 09:51 AM
bunyip

Depends on the contracted terms which cover the deposit. Unfortunately, I know a lot of CMs just write the deposit £figure onto the contract and leave it at that. I make it clear that the client will lose the deposit if they withdraw the child from my care before a full month's care has been seen out.

As an aside, we should never be tempted to 'dip into' anyone's deposit money. Put it in a separate account and don't touch it. Apparently, because we're a business, a deposit never actually 'belongs' to us unless/until it becomes forfeited by the terms which cover it. In a legal sense, we only hold a deposit 'in trust' until that point, so spending it and not being able to repay could be seen as "theft" in law. We also have a legal duty to protect it against personal bankruptcy. This often comes up with landlords who can't repay tenants' deposits (and frequently try lame excuses to say the tenant has lost the deposit for some pathetic reason like 'wear and tear'.) That's how I got to find out, through a discussion in my local pub involving one chap who was letting out a house and the pub's resident 'legal expert' couple. Apparently, landlords are supposed to place deposits in some sort of scheme or account, which keeps the money protected even if the landlord goes bankrupt. The solicitors seemed to think all small traders/self-employed should be doing the same, though I've never heard of CMs doing that. :huh:
08-09-2015, 10:55 AM
Simona

Quote:

Originally Posted by bunyip

Depends on the contracted terms which cover the deposit. Unfortunately, I know a lot of CMs just write the deposit £figure onto the contract and leave it at that. I make it clear that the client will lose the deposit if they withdraw the child from my care before a full month's care has been seen out.

As an aside, we should never be tempted to 'dip into' anyone's deposit money. Put it in a separate account and don't touch it. Apparently, because we're a business, a deposit never actually 'belongs' to us unless/until it becomes forfeited by the terms which cover it. In a legal sense, we only hold a deposit 'in trust' until that point, so spending it and not being able to repay could be seen as "theft" in law. We also have a legal duty to protect it against personal bankruptcy. This often comes up with landlords who can't repay tenants' deposits (and frequently try lame excuses to say the tenant has lost the deposit for some pathetic reason like 'wear and tear'.) That's how I got to find out, through a discussion in my local pub involving one chap who was letting out a house and the pub's resident 'legal expert' couple. Apparently, landlords are supposed to place deposits in some sort of scheme or account, which keeps the money protected even if the landlord goes bankrupt. The solicitors seemed to think all small traders/self-employed should be doing the same, though I've never heard of CMs doing that. :huh:

Your friends are correct Bunyip
I can say I too did that following advice... but once a solicitor pointed out 'how a deposit refund should be made' I never looked back.

it seems to me that when someone decides to become a cm the first questions are about becoming registered and going through that Ofsted process.

My personal belief is that these are important questions too:
how do I run and viable and sustainable business?
how do I have a contract that leaves parents in no doubt about fees, late payments, deposits and fee increases?
how will my contract prevent having to address matters by legal action?
how will my home based business work, what are the benefits and legal expenses I can claim?

I believe that investing a little money in getting proper 'financial' training prior to registering is money well spent and can always be put through the books once the business is up and running.

There are a few training courses available for cms and the focus on running a business....I attended one recently as a refresher and it did not cost the earth.
Also looking at receiving good advice from an accountant is also money well spent
I know many cms would never consider doing that but how sure are they of claiming all they are legally entitled to claim?
08-09-2015, 11:24 AM
smurfette

I'm still confused if for example a
Child doesn't settle
In the first few weeks .. Do you refund the deposit then? I suppose what bun yip does makes sense .. If moved in first month it's forfeited ... Because you need a month to see if they settle don't you ?!
08-09-2015, 04:48 PM
bunyip

Quote:

Originally Posted by smurfette

I'm still confused if for example a
Child doesn't settle
In the first few weeks .. Do you refund the deposit then? I suppose what bun yip does makes sense .. If moved in first month it's forfeited ... Because you need a month to see if they settle don't you ?!

Here follows an edited extract from my policy on admissions.

Quote:

No agreement to provide a service shall exist until both parties have agreed and signed a contract. I may require the payment of a deposit and/or retainer in order to reserve or hold a place for future use. In addition to any other payment, I normally require parents to pay a non-refundable* deposit of £50 to secure a place. I may request a non-refundable* deposit of more than £50 and/or charge a retainer fee to hold a place available for a child at a later date which is more than four weeks away from the date the contract is signed. This deposit (and retainer, if charged) will not be refunded if the parents fail to take up the place on the agreed date; if they terminate the contract before the end of the four week settling in period; or if I terminate the contract within that period for reasons of unacceptable conduct by the parent or child (e.g. threatening behaviour, racial abuse, or other unacceptable behaviour.) If I terminate the contract within the four week settling in period for any other reason I shall refund the deposit (but not the retainer), less any outstanding payment for fees which may be due to me. Otherwise, at the end of the four week settling in period, I shall count the deposit as credit toward the next payment of fees. [To explain: I regret the need to do so, but I have been obliged to introduce this deposit to offset the costs, time and paperwork that I have to undertake in preparing to admit a child. I have had instances where I have done all this work and incurred costs, only to be let down by parents at the last minute.] A retainer will not be refunded under any circumstances, as this is a charge for holding an available place which could otherwise have been used by another family. Childcare vouchers and third-party funding agreements will not be accepted in payment of deposits or retainers. Parents should refer to HMRC any questions they have about making Tax Credits claims in relation to deposits/retainers.
08-09-2015, 08:26 PM
smurfette

So basically your deposit is unrefundable in any circumstances unless you terminate it.. So let's say week three of settling in, they cancel having paid a four week deposit and a month in advance. What would you refund ?

I kinda think it's not fair if they decide they don't want the space in some ways.. What if you were a terrible childminder and were really unreasonable or something.. Just trying to see from their side. I had a baby who wouldn't settle screamed all day and because she was more than 18 months I felt that was just her nature (poor kid always looked miserable) and she was past the making strange state.. I just couldn't cope any more with two others and so told mum she wasn't settling with me. (She knew anyways ). She lifted her out there and then because she saw no point in leaving her unhappy and she was studying so could manage Til she got something else sorted. I refunded the money for the rest of the week (not sure if I took a deposit as it was near when I started) as I felt sorry for the mum.. I suppose the point is you can have that in your contract and then decide to refund at your discretion?
09-09-2015, 06:30 AM
Kiddleywinks

Quote:

Originally Posted by smurfette

I suppose the point is you can have that in your contract and then decide to refund at your discretion?

Exactly (thumbs up)
T's & C's, policies and procedures, they don't cover every eventuality, so we are still able to use our own discretion.
09-09-2015, 07:47 AM
Simona

Quote:

Originally Posted by smurfette

So basically your deposit is unrefundable in any circumstances unless you terminate it.. So let's say week three of settling in, they cancel having paid a four week deposit and a month in advance. What would you refund ?

I kinda think it's not fair if they decide they don't want the space in some ways.. What if you were a terrible childminder and were really unreasonable or something.. Just trying to see from their side. I had a baby who wouldn't settle screamed all day and because she was more than 18 months I felt that was just her nature (poor kid always looked miserable) and she was past the making strange state.. I just couldn't cope any more with two others and so told mum she wasn't settling with me. (She knew anyways ). She lifted her out there and then because she saw no point in leaving her unhappy and she was studying so could manage Til she got something else sorted. I refunded the money for the rest of the week (not sure if I took a deposit as it was near when I started) as I felt sorry for the mum.. I suppose the point is you can have that in your contract and then decide to refund at your discretion?

Not necessarily...and depends on how you describe your deposit in your contract.
It also depends on what you take a deposit for....usually it is for 4 weeks
Nurseries take a lump sum deposit to put children on the waiting list.

A small deposit can also be called a 'registration fee' which is definitely not refundable but you cannot charge that to some parents who access the free entitlement as per DfE guidance.
A registration fee usually covers all the administrative tasks before you sign a contract and covers your costs of printing contract policies etc etc.

We all do thinks differently and can only support with ideas but deposit are a serious matter

You asked what would happen if a parent gave notice because their child did not settle...that would depend on the order in which you sign the contract, settle in, get first fees and deposit.
In that instance you can expect a parent to give appropriate notice then leave.

A deposit is also a safeguard against non-payment, it should be refunded at the end of care when all 'fees' have been settled and not taken as 'fees' when parents give notice...it is refunded at the end on care..
.

The best way to be sure you have Terms and Conditions that are legally binding is maybe to get professional advice.
Do research it until you find the right solution for you

What does your contract say on deposits?

Good luck
09-09-2015, 12:47 PM
Kittycat

I am still confused 😔 initially I started taking four week deposits to use as a parents termination fee in advance as I have had in the past parents leave & just not pay me, so it was security that this deposit was their termination month in advance.
I've never had a child start one week & terminate the next & don't have anything in my policies about not giving back deposits as parents know I use this as my termination fee

I'm unsure what to do😐
09-09-2015, 06:44 PM
bunyip

Quote:

Originally Posted by smurfette

So basically your deposit is unrefundable in any circumstances unless you terminate it.. So let's say week three of settling in, they cancel having paid a four week deposit and a month in advance. What would you refund ?

I kinda think it's not fair if they decide they don't want the space in some ways.. What if you were a terrible childminder and were really unreasonable or something.. Just trying to see from their side. I had a baby who wouldn't settle screamed all day and because she was more than 18 months I felt that was just her nature (poor kid always looked miserable) and she was past the making strange state.. I just couldn't cope any more with two others and so told mum she wasn't settling with me. (She knew anyways ). She lifted her out there and then because she saw no point in leaving her unhappy and she was studying so could manage Til she got something else sorted. I refunded the money for the rest of the week (not sure if I took a deposit as it was near when I started) as I felt sorry for the mum.. I suppose the point is you can have that in your contract and then decide to refund at your discretion?

In my case, I nearly always just take the £50 deposit. The extra '£50 per month' is more of a deterrent: it makes parents think twice before they book too far ahead. (Frinstance, I get parents wanting to book September school runs in January, at which point they're still 4 months away from the LA confirming the school place.)

If I were a terrible CM (what do you mean "If"? I am a terrible CM :laughing:) .................

I think in the case of the screaming baby you highlight, or any genuine non-settling cases, I'd almost certainly use my discretion and refund the deposit. Or I'd ask them to give it a bit longer, but extend the settling period where they could still give immediate notice. I really just want parents to give it a chance and not feel they can bale out without making any sort of effort.

If they wanted to leave after 3 weeks but I felt they had no good reason, then I'd charge them for the actual time used and retain the deposit, which as I say would probably be just the £50.

What I got sick of was parents who'd want to secure a place months ahead, then pull out just before it started. The worst case I had was a family for whom I reserved 2 places for over a year "on trust". They gave notice after about 2 weeks. There were a lot of weird issues involved (including freaky anxious mum; bad handling of finances; lying about their financial position; problems with the children they refused to acknowledge; and it all culminated in her giving me notice as a "by the way..." when I told her I'd had cancer treatment but had been declared fit to return to work immediately) and I never got to the bottom of it all, but they were totally selfish and very inconsistent about it - not just to me, but also to the local preschool.

I hate asking for deposits but it's not just that we lose potential income when parents change their minds at the drop of a hat. There's a lot of unpaid hours and admin goes into 'recruiting' a new client. That cost needs to be offset. But, above all, I always end up feeling a mixture of guilt and anger for the numerous genuine clients I turn down when I think I've booked a place for someone who then drops you lie a hot brci when it suits them.
10-09-2015, 07:19 AM
Kittycat

Quote:

Originally Posted by bunyip

In my case, I nearly always just take the £50 deposit. The extra '£50 per month' is more of a deterrent: it makes parents think twice before they book too far ahead. (Frinstance, I get parents wanting to book September school runs in January, at which point they're still 4 months away from the LA confirming the school place.)

If I were a terrible CM (what do you mean "If"? I am a terrible CM :laughing:) .................

I think in the case of the screaming baby you highlight, or any genuine non-settling cases, I'd almost certainly use my discretion and refund the deposit. Or I'd ask them to give it a bit longer, but extend the settling period where they could still give immediate notice. I really just want parents to give it a chance and not feel they can bale out without making any sort of effort.

If they wanted to leave after 3 weeks but I felt they had no good reason, then I'd charge them for the actual time used and retain the deposit, which as I say would probably be just the £50.

What I got sick of was parents who'd want to secure a place months ahead, then pull out just before it started. The worst case I had was a family for whom I reserved 2 places for over a year "on trust". They gave notice after about 2 weeks. There were a lot of weird issues involved (including freaky anxious mum; bad handling of finances; lying about their financial position; problems with the children they refused to acknowledge; and it all culminated in her giving me notice as a "by the way..." when I told her I'd had cancer treatment but had been declared fit to return to work immediately) and I never got to the bottom of it all, but they were totally selfish and very inconsistent about it - not just to me, but also to the local preschool.

I hate asking for deposits but it's not just that we lose potential income when parents change their minds at the drop of a hat. There's a lot of unpaid hours and admin goes into 'recruiting' a new client. That cost needs to be offset. But, above all, I always end up feeling a mixture of guilt and anger for the numerous genuine clients I turn down when I think I've booked a place for someone who then drops you lie a hot brci when it suits them.

This parent is the same, she came to me in February asking if I had a space in August which I knew I would, now she says her job is so inflexible and she has just got a new job with more flexible hours however my argument here is since Febuary she has known my working hours so if it was going to cause any issues with work etc why arrange childcare with me.
Also in a week she said her child didn't want to come here?
Parents clearly know that the deposits given are the termination fee in advance
Because it's only a week I am wondering if I could say that if a parent terminated within the first month the deposit is solely used as a deposit & not for the termination at that point or am i making this situation awkward
I hate fees
10-09-2015, 05:27 PM
bunyip
Quote:

Originally Posted by Kittycat

This parent is the same, she came to me in February asking if I had a space in August which I knew I would, now she says her job is so inflexible and she has just got a new job with more flexible hours however my argument here is since Febuary she has known my working hours so if it was going to cause any issues with work etc why arrange childcare with me.
Also in a week she said her child didn't want to come here?
Parents clearly know that the deposits given are the termination fee in advance
Because it's only a week I am wondering if I could say that if a parent terminated within the first month the deposit is solely used as a deposit & not for the termination at that point or am i making this situation awkward
I hate fees

You can't really turn back the clock and alter or 're-interpret' the original terms under which the deposit was taken and the contract signed.

I'm coming to the conclusion that we CMs fall into 2 types:-
1. The ones who start out very understanding and lenient, then are forced to toughen up their contracts, policies and procedures because they've been walked all over.
2. The ones who start out very understanding and lenient, then then carry on being very lenient and understand and keep being walked over time and time again for the remainder of their working lives.
:p

At least those who fall into the first type can have tight contracts, etc. but still can use their discretion on the odd occasion when they feel the circumstances justify a more gentle approach. :thumbsup: