Guide to Introducing Automatic Payments to Your Center
In order for auto-pay to be successful, parents must participate. There are several issues to consider when introducing automatic payments in your center. This guide offers a brief discussion of the most significant issues you should consider.
Optional vs. Mandatory
The ultimate goal for any center offering recurring or automatic payments is to have 100% of parents paying their fees in this way. By achieving full participation, the center can ensure that collection problems are a thing of the past and that fee collection will no longer require significant time and effort.
At first, the idea of making this your standard form of payment may seem unrealistic; however there are many health clubs, sectarian schools and other organizations that work in this way. With an appropriate education childcare centeraign, it is possible to gain acceptance of electronic payments without losing enrollment. Ask yourself whether parents who are happy with their child care arrangement would really remove their child over a policy change like this.
If you are uncomfortable with taking such a big step, you can still introduce an auto-pay program on an optional basis. Many parents will still appreciate the added convenience and a small incentive (see Pricing Policy) can help increase participation. You still may wish to make auto-pay the standard payment option for any new families enrolling and thereby allow you to gradually achieve full participation.
When introducing automatic payments you may want to evaluate your pricing policies and consider what changes, if any, you wish to incorporate to motivate parent participation.
Discounts – One of the strongest incentives for parents to participate in auto-pay is receiving a discount. However, offering a significant discount may offset much of the cost-saving benefits. If done at a time when you would be revising fees anyway, you can achieve a discount by simply increasing fees more substantially for parents who do not participate.
Credit Card Option – Since the discount percentage on credit cards makes it a more costly payment option for the center, you may wish to provide a rate differential between parents paying by Bank Draft and Credit Card. This allows you to offer the option of credit cards (which is really very popular with parents) without having your bottom line suffer. This also allows you to make the bank draft the parent’s lowest cost and therefore most attractive option.
Relatively small discounts can still provide the desired incentives. A typical fee structure might be:
Besides changes in pricing to encourage participation, there are a variety of other techniques to encourage parents’ participation. Here are just a few:
- Raffle – Enter everyone who signs up for auto-pay by a certain date, a chance in a raffle ($250 credit, gas grill, or some other appealing item).
- Security Deposit – If your center charges a security deposit you may wish to waive this requirement for families participating in auto-pay. Automatic fee collection largely eliminates the need to hold a deposit, since the principal purpose of the deposit is to allow you a cushion in case a parent leaves owing you money. If you don’t currently require a security deposit, you can consider implementing a policy requiring a deposit for families that do not participate.
- Waive Registration Fee – Even a small incentive like waiving a registration fee can provide a strong motivation to encourage parents to enroll.
- Gift – If your center offers any center products for sale such as T-shirts, coffee mugs, etc. You can use these as a low cost incentive. The few dollars invested will rapidly be recovered in saved time and energy.
Overcoming Parent Fears
Any time people are faced with something new they will naturally be reluctant. The key to achieving maximum participation is parent education. Use the marketing materials we provide to help explain auto-pay, but also try to lay the groundwork by talking to some of your more vocal and influential parents to involve them in the introduction. Once some parents feel comfortable with the technology, others will be willing to give it a try.
Educate your staff. Before introducing the program, present it to your staff (including teachers). If they understand the benefits, they will be able to do a much better job convincing parents to participate. You may even want to provide them a small incentive for getting a parent to enroll.
Although there will be many questions and concerns, remember that most families will already be using similar technology to pay some other bill (health club, newspaper subscriptions, mortgage, insurance, utilities) in a similar manner. Also, today’s young parents are generally much more comfortable with electronic transactions such as credit card, ATM, etc.
Sample Plan for Introduction of Automatic Payments
Review our marketing kit and decide on:
- An introduction date
- Offering credit cards & any pricing policy changes
- Promotional incentive
- If auto-pay will be mandatory for all or only new enrollments
Discuss the plan with a few parents to build support and gain feedback prior to introduction.
Conduct an education session with your staff so they can explain the benefits to parents.
Send every family a letter introducing automatic payments (or use our Simply your life with automatic child care payments brochure), along with an authorization form.
Follow-up with parents to answer any questions or concerns they have and ASK THEM TO SIGN-UP!