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Running a child care program is one of the most rewarding things you can do - and one of the most financially challenging. According to research from Rasmussen University, most child care programs see a net profit of just 5-10%. And with high staff-to-child ratios required by state licensing (in infant classrooms, for example, most states require one adult for every three to five infants), there's not a lot of room to absorb revenue gaps caused by late payments.
The good news? There are systems you can put in place to protect your cash flow - and none of them require chasing down parents at the end of the day.
Here are three ways to encourage families to pay on time.
1. What's the best way to reduce late child care payments?
The most reliable way to get paid on time is to take the decision out of everyone's hands by setting a policy that requires families to enroll in automatic payments via credit card or ACH transfer. With a strict policy in place, you remove the need for manual follow-up entirely.
Yes, this feels like a bold move. But plenty of directors have made it work by framing it as a convenience rather than a demand: "We require automatic payments so your family never has to worry about a missed invoice." Most parents are already used to autopay for subscriptions and utilities. Child care shouldn't be any different.
Famly supports automatic billing directly within the platform, making it easy to set up and manage for your whole roster of families.
2. Can Famly automatically remind parents to pay?
For programs that prefer a softer approach, or for families who opt out of autopay, automatic payment reminders are a great middle ground.
Rather than relying on staff to send manual follow-ups (which is time-consuming and easy to forget), Famly lets you schedule reminders that go out automatically before and after a payment is due via push notification, in-app notification, and email. Families get a nudge, and your team doesn't have to be the bad guy.
Think of it as a friendly tap on the shoulder. After all, most late payments aren't intentional. Usually it’s the result of life getting a little too busy. A well-timed reminder is often all it takes to encourage parents to jump into action.
3. What should I do if my parents still pay late?
Even with reminders in place, some payments will still arrive late. That's just the reality of running a business with a lot of moving parts. Some directors opt to have a fee for each day that payment is late. Others might opt for a flat, one-time fee that gets charged a certain number of days after payment was due. Regardless of how you choose to handle late fees, the key is having a clear, consistent policy so families understand the expectations - and consequences - upfront.
Famly now supports automatic late payment fees, which means the system calculates and applies them for you. No manual math, no uncomfortable conversations, no exceptions made out of awkwardness. It’s up to you on how much, setting it in the backend, communicating to your families up front, and then simply letting Famly track the rest.
Plus, when late fees are automatic and consistent, they feel less personal - it's just a policy.
What this looks like in practice
The common thread across all three strategies? Taking manual - and emotional - labor out of the equation. Everyone benefits when payment expectations are clear, communicated in advance, and enforced by your software rather than staff.
To get started, set your policies, document them in your parent handbook, and make sure families know what to expect before their first invoice arrives. Then let Famly do the heavy lifting.
Looking for an example of how to communicate this? Check out this except of the Billing & Finance section of our parent handbook template to give you inspiration on how to word your billing policies.
Feel free to use this example or tweak it based on your program’s needs.
The big ideas
[Template] Billing, payment, and finance policies
Tuition & fees
Full-Day Monthly Tuition:
- 5 Full-days a week:
- Toddlers: $___ per month
- Preschool: $___ per month
- 3 Full-days a week:
- Toddlers: $___ per month
- Preschool: $___ per month
Half-Day Monthly Tuition:
- 5 Half-days a week:
- Toddlers: $___ per month
- Preschool: $___ per month
- 3 Half-days a week:
- Toddlers: $___ per month
- Preschool: $___ per month
Accepted forms of payment
At this time, we only accept the following methods of payment:
- Credit card (American Express, Visa, or MasterCard)
- Direct bank transfer (ACH)
*We strongly encourage all families to set up automatic payments for your own piece of mind. To set up auto pay in the Famly app, follow these instructions.
Payment due dates
Tuition is due the ____ day of the month.
Late payment policy
Tuition is considered late on the ___ business day. On the ____ business day, a late fee of $___ will be added to your next invoice. The school reserves the right to suspend attendance or in some cases, immediately dismiss the enrollee for non-payment of tuition.
Sick days & holidays payment policy
We cannot provide refunds for a children’s absence due to illness. We know that common colds and bugs can come up at any time, but due to the usual last minute notice, we cannot give you a refund, as staff schedules and required classroom ratios are already set. Of course, if there is a long-term illness, we will work together with the family on a case-by-case basis.
If your child is missing childcare because of a vacation or holiday, we must know ___ days ahead of time. Otherwise, you will not receive a refund. Again, this is due to staff scheduling and required classroom ratios.
Setting clear policies and enforcing them can help you spend less time tracking down payments in your evenings - and allow you to focus more of your energy doing more of what you love.
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