Making Decisions about Your Business 5
how much income you must earn to reach a break-even point. Also, check your
area for the average rates and the types of child care services provided by competi-
tors to determine if your rates should be higher or lower. Be careful about offering
low tuition to attract customers. Your competitors may feel that you are manipulat-
ing your prices to steal their customers, and families looking for quality care may
wonder how you can offer a quality program when your rates are so low.
Schedule Tuition Payments
Once you set your tuition rate, you need to determine how you want families to
pay their child care fees. Most family child care providers have payments for child
care set up on a monthly, biweekly, or weekly schedule. You can determine which
schedule fits your needs as well as the needs of the majority of your families. A
weekly or biweekly schedule seems to be the most popular because most payroll
systems are set for employees to receive their paychecks on this schedule. Be sure to
decide on the payment schedule at the beginning of enrollment and stay consistent.
It is a good idea to set one payment schedule for all of your families to follow.
There may be families who request a different schedule to help them maintain their
budget; it is your decision whether or not to accept an alternate schedule.
You may choose to accept payment by credit card, by automatic deductions
from bank accounts, or by cash, check, or money order. Research the charges you
will incur for credit card and automatic check deduction transactions to determine
if these fees are reasonable. Depending on the number of children you enroll, you
may be able to include this fee in the tuition or charge a service fee for families
who choose these transactions. Once you decide when and how you will receive
payments, you need to set up a payment collection system. This can be as simple as
creating a payment drop box or being available to take payments in person when
tuition is due.
Receipt of Payments
Be sure to record all of the payments your families make. Preprint receipts on
your computer, or buy them at an office supply store or from Redleaf Press—for
example, see the Redleaf Press receipt on page 6. Creating a customized receipt for
families is most professional. Document each payment you receive and make a copy
of all the checks and money orders for your records. This will help you prepare an
end-of-year statement to give to each family for their taxes and will also help you
when it’s time to prepare your own taxes. You may also want to keep a running total
for each month, which will help you when totaling your annual tuition income.
See chapter 7 for more information about budgeting.