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Handle Splitting the Bill

Dividing Childcare or Preschool Tuition Billing

In the childcare business, you work directly with families every day. No family is perfect, and they certainly are not all the same. Undoubtedly, you’ll face some uncomfortable family situations: separation, custody battles, financial hardship, and your typical, everyday drama.

How will splitting the bill work at your childcare center or preschool? Let’s take a look at some common awkward scenarios and how you can resolve them based on some advice we picked up from a few savvy center directors.

quote on postcard for splitting childcare tuition billing and invoices

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Managing Parent Separation

The US divorce rate is hovering around 51%, so you’re bound to come across parents who are going through separation and have special circumstances you may need to consider. Just know that you don’t have to accommodate everything when it comes to tuition billing.

To bill or not to bill separately.

Lincoln’s parents recently separated, and they’re not getting along. They’ve requested to be billed separately so they don’t have to communicate with one another. How do you respond?

Be careful. Your answer now will set the precedent for your level of involvement and the flexibility Lincoln’s parents will expect throughout their separation and well into their divorce. Here are two options:

  1. You can say, “Okay, I can do that,” but be prepared for this option to land you smack in the middle of a custody battle, with arguments over pickup days, disputes over emergency contacts, tense parent-teacher meetings, and more. It can get extra messy for your tuition billing if only one parent pays and the other violates your late payment policy. If you’re going this route, have each parent sign a separate service agreement acknowledging their share of the payment and outline the terms.
  2. Pro tip: With the right childcare management software, you can present the family ledger to charge each parent 50/50, 25/75 – whatever meets that family’s needs. This provides the flexibility parents request without putting you in the middle.

  3. Stay out of it. Explain that your center’s policy requires one tuition bill for the account and request that they make arrangements to pay each invoice with one single payment. This keeps you off their emotional roller coaster and relating to them on a professional level.

parents fighting over tuition billing

When only one parent drops the ball

Arden’s parents, Jamie and Shawn, are divorced. Last year, you allowed them to pay separately, and it went fairly well. This tuition billing cycle, Jamie didn’t pay her half of the tuition payment, and she’s now past your allowed grace period. She is not responding to your efforts to reach her. Now what?

There are two ways to handle this one:

  1. In this case, it’d be helpful if you had a separate service agreement for each parent for this year and a record of who paid what and when in your ledgers. That way, you’d know which parent you need to track down for payment. Reach out to Jamie and leave a message that you’d like to work with her on a payment agreement to help her catch up. If you still don’t hear back, message Jamie that Arden cannot attend on days she has custody until the balance is paid. Since there are separate service agreements in place, you can continue to allow Arden to attend on Shawn’s days.
  2. Keep your tuition billing simple, and just say, “Regardless of who did pay, Arden can’t attend until the balance is paid in full.” If you don’t have separate service agreements, this option is a no-brainer. It isn’t fair to Shawn to have to carry the full expense, but your bottom line can’t afford to take sides in their divorce!

Parents may ask for year-to-date payment statements for tax purposes. In situations where parents are separated, parents may request separate copies with their respective tuition billing and payments recorded on each. Keep in mind that this is a courtesy, but it is not required. Feel free to offer the statements you’d typically generate and advise them to reconcile them with their personal bank and electronic payment records.

struggling with tuition billing

Incorporating Extended Family

Many parents turn to their families for help with their children now and then. After all, it takes a village, right? Sometimes, the whole village wants to contribute to tuition payments – which is fantastic, but can easily become confusing in your ledgers. Just like when parents are separated, you don’t have to accommodate everything!

When a relative wants to pitch in

Grandma Cheryl picked up Colin today and told you that she wants to pay for 25% of Colin’s tuition. But just for this tuition billing cycle. What do you tell her?

First, that she is a saint. Second, that, if it’s a one-time or intermittent occurrence, she should provide the money to the parents directly. You don’t know what the relationships are like within the family or if Colin’s parents are comfortable with this – and with finances, things could easily get sticky. Plus, Grandma Cheryl is not the one who signed the service agreement.

quote on postcard about family tuition billing

Factoring in Subsidies

It’s no secret that child care is costing parents about the same as an average mortgage these days, so it should come as no surprise that some families may need financial assistance in order to afford child care. While need-based scholarships are a great way to help parents offset some of these costs, subsidy agency payments are quickly becoming the new norm.

Subsidies are handled differently, state by state and city by city. They may even be called something different, like “human services,” depending on where you live.

struggling with tuition billing

Keep low attendance from blowing your budget

Hadley receives subsidized child care and is considered a full-time student at your center, so you staff her classroom accordingly. This month, Hadley has had low attendance, but you will only receive payment based on how many days she attended. What does this mean for your budget?

Most subsidy payments are remitted to centers after care has been provided and, in some cases, subsidized tuition billing is based on children’s attendance. In situations like this, you might have to borrow from next month’s budget to cover this month’s expenses.

It’s important to factor subsidies into your budget proactively. One way to plan for this in the future is to work a month ahead when it comes to budgeting and planning your tuition billing. This way, you can start using last month’s subsidized payments to cover the coming month’s expenses, giving you extra time to adjust your budget accordingly.

Learn more about giving yourself financial wiggle room and make sure you’re covered throughout the year with this Childcare Pricing Guide.