How to Keep Childcare Tuition Income Flowing Despite COVID-19

Childcare Tuition during Coronavirus / COVID-19 Crisis Header

Remember last year, as your childcare program’s fiscal year was wrapping up and you were setting up your budget for this year? You reviewed all of your expenses, you looked at historical trends for utilities, you checked the condition of your technology, your supply stock, your returning students, how many new students you could accept…

After all that research, you crunched the numbers and calculated how much tuition you would need to charge to cover your expenses and grow your program. And now this.

Childcare Center Budget During Coronavirus Graph

While some childcare centers have accumulated a healthy cash reserve for times like these, most depend on the tuition they collect each month to cover their expenses, including payroll. And while some centers can weather a month-long quarantine, most can’t.

Parents who are fortunate enough to have remote work options aren’t as keen to drop off little ones at day care these days, and parents whose shops and businesses are shuttered for the foreseeable future due to Coronavirus / COVID-19 certainly don’t require your services right now.

How does your childcare program stay afloat without the income you were planning to generate?

Absorbing Revenue Losses Over Time

Financial hits like this can be a little easier to absorb over time rather than losing it all at once. Think of it like the cost of a house or a car. Very few of us make those types of purchases in a lump sum with cash because we can’t afford it. Our mortgages and car payments break up that cost over time, which makes those items more affordable for us.

To turn your all-at-once revenue loss into something you can manage over time, try a voluntary tuition credit program.

Voluntary tuition payments and credits

Parents working from home are still earning that tuition income. You're just not getting it

Some parents are fully equipped to work from home without disruption to their income. That means the cash they normally pay to you in the form of childcare tuition still exists. You just aren’t getting any of it because you’ve had to close.

With the right messaging and incentives, you could open up that cash flow again right away.

Here’s how it works:

Create an initiative to request voluntary tuition payments in exchange for future credits to their accounts. Parents can contribute to future child care payments and receive a special credit or discount once you resume normal operations.

Parents who agree to continue childcare tuition payments will have those payments credited to their accounts.

Once your program reopens, those payments will be applied to their next few (or several) bills. To provide an incentive, parents who participate will receive a discounted tuition rate for a specified period of time. See below:

Parent 1 pays 100% of normal tuition and receives a 10% tuition discount for 10 weeks.
Parent 2 pays 75% of normal tuition and receives a 7.5% tuition discount for 7 weeks.
Parent 3 pays 50% of normal tuition and receives a 5% tuition discount for 5 weeks.
Parent 4 pays 25% of normal tuition and receives a 2.5% tuition discount for 2 weeks.

Sound too complicated? You can simplify it by offering a set discount - say 25% - for the first tuition payment due after you reopen. Only you know what your program can afford, so when you calculate the credit incentives, keep that in mind.

Because some parents are out of work right now, and there’s just no money coming in at home, they aren’t great candidates for your tuition credit program. Those parents will, however, start paying tuition again once they are able to return to work, and that helps steady your cash flow and protect your enrollment.

How to Promote Your Tuition Credit Program

Promote your tuition credit program to parents who can afford it

Desperate times call for desperate measures, some creativity, and a heavy dose of honesty.

  1. Make it clear that, although your business is taking a huge hit, you are committed to providing the same excellent care and service that your families enjoyed until COVID-19 came along and turned our world upside down.
  2. Help them understand that your staff is invaluable to you, and they need to be taken care of during this challenging time. After all, your staff becomes like family to their little ones.
  3. Explain the structure of your new childcare tuition credit program clearly and in detail, and provide contact information for parents who may have additional questions. Some parents are going to be able to afford it, and when presented with this deal, they’ll see the future financial benefits and go for it.
  4. Emphasize that your new program is completely voluntary, because you’re painfully aware that some folks are without a paycheck right now. You can work with those families in other ways once they are able to return to work, and you’ll respect and protect their privacy regardless.

Still not sure what to write? Try something like this. Feel free to copy and paste it, and tweak this template for your needs:

Subject: Important update from NAME at ORG NAME

Dear ORG NAME families,

I hope this message is finding you and your family safe and healthy during this difficult time. Our staff here at ORG NAME is eagerly awaiting the return to normalcy, whenever that may be.

The economic impact of this current public health crisis has been especially severe with regard to our business and our staff. To make some of our financial losses easier to absorb over time, we are asking for volunteers to participate in our new Voluntary Tuition Payment & Credit Program.

Through this program, you can prepay your tuition, so once we reopen our doors, you will have already paid your bills for several weeks. In addition, you will receive a discount for a period of time once classes resume.

This program is entirely voluntary, but by participating, you will be helping our efforts to reopen our doors at a moment’s notice. When you volunteer, your money will help us:

  • Pay our facility costs, like rent/ mortgage, utilities, and security.
  • Pay our staff so they and their families can make ends meet for the next few weeks. (Believe it or not, even during our current shutdown, our team is continuing to brainstorm fun activities and ideas, so when we reopen, our program will be better than ever.)

How can you enroll? Use our online form to sign up (link to your online form), or contact me at EMAIL or PHONE. I’ll handle the rest.

We understand that the impact of Coronavirus (COVID-19) is affecting all of us. If you can’t participate in this program, please don’t worry! Once we return to normal, we will work with you until you are able to get back on your feet, too.

Yours in youth education,

YOUR NAME

Pro Tip: If you’re using EZCare or EZ-CARE2, creating a mail merge using the EZViewer and it’s batch email capability is the best way to reach a large group of families at once.

It’s hard to adjust to the “new normal,” and many of us are coming to appreciate our “old normal” a whole lot more. In just the same way, your parents will cherish even more the excellent service you provide their family and the positive impact you make on their child every day.

Is your organization a nonprofit, or do you fundraise throughout the year? Discover more creative ways to replace some of the tuition income in your revenue column.

Written by: Wendy Young on Mar 27 20

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