While your main focus is delivering healthy early education, billing is at the core of what drives your childcare business. Beyond keeping your doors open, efficient billing practices and on-time payments help to maintain positive relationships with families, reduce administrative overhead, and improve overall satisfaction.

In this overview, we’ll help you get started with setting up billing for your childcare business—including choosing the right childcare billing software, key components of the billing process, best practices to follow, challenges you might face, and any legal considerations.

How to Get Your Childcare Payments Process Started

The right childcare billing processes are essential for maintaining steady cash flow and avoiding any operational roadblocks. Whether you’re just getting set up or you’re an established business looking to streamline the way you handle payments, there are some basic steps to take to start:

• Decide on tuition rates

• Set your terms and conditions

• Automate and track payments

• Consider challenges and legalities

Key Components of Childcare Billing

Tuition rates

Determining appropriate tuition rates is a crucial first step—consider factors like the age range of your students, the number of days they attend, and any additional services you provide. The tuition you collect will need to cover expenses like any rent or facility costs, staff payroll, supplies, and more, so take the time to think about this carefully. Communicate these rates clearly to parents, and consider a section on your website dedicated to outlining tuition costs and what this tuition includes.

🛝 Need more help determining your pricing strategy? We’ve got you covered. Check out our free resource, How to Price your Child Care Services.

Billing cycles, payment terms, and enrollment costs

Consistent billing cycles and clear payment terms are essential to avoiding payment hiccups. Decide on the frequency of billing, whether it’s weekly, bi-weekly, or monthly and ensure parents are clear on the terms. No two families have the same needs, so consider offering flexible payment options to accommodate the different needs of different families. 

You may mandate an enrollment fee or a deposit for a family to secure their child’s spot in your program. Clearly outline these fees and deposit costs to parents during the enrollment process and ensure they understand whether or not these fees are refundable.

Other potential bills and fees: drop-in care, late pickup, half weeks, and as-needed care.

Best Practices for Childcare Billing

1. Integrate a billing software with your enrollment systems

Simplify your operations even further by integrating your billing software with your enrollment systems. Better yet, select a software that offers both.

The ideal solution will allow you to automate the process for charging application fees, enrollment fees, or tuition deposits as soon as a new family applies for your center. Tools like Playground kickstart the billing process right from the application stage, which sets the tone for your relationship with families moving forward.

Reduce manual effort, minimize error, and ensure you're always paid right on time.

2. Establish clear communication with parents

Maintaining clear and open communication with parents is essential for smooth billing processes. When you communicate your billing policies, tuition rates, due dates, and any late payment penalties, parents are less likely to miss payments and awkward conversations can be avoided. Automated reminders are another way to avoid the need to chase payments or charge late fees.

3. Automate recurring payments

Use billing tools to automate tuition collections and even make autopay mandatory. Your childcare business is a business like all others and shouldn't suffer financially just because of the industry you operate in. The right solution ensures that payments are processed automatically with ease, making it easier for parents to complete payments and reducing the time you need to spend on balancing books and following up on outstanding payments from parents.

4. Handle late payments and overdue accounts

Implementing a late payment policy ensures payments are made on time while creating an additional stream of revenue for your business. Reduce late payments by implementing automated reminders and upcoming payment notifications. A clearly outlined late payment fee structure will help keep parents mindful of the repercussions too.

• This helps to enforce payment deadlines but also eliminates the need for administrators and employees to manually calculate and track fees.

• Playground's late-fee dashboard allows you to charge—or waive—late fees before they post to a families account.

5. Utilize online payment portals

An online payment portal serves as the gateway between you and your parents. Not only does an online portal offer convenience for busy parents, it provides you a central location to oversee all payment activity for your business. Playground features like invoicing, payment tracking, and reporting means parents can pay their balance through both a mobile app and a secure, web-based payment processor.

6. Offer multiple payment options

Flexibility is key to accommodating the needs of different families, making your childcare services more accessible. Whether it’s accepting different payment frequencies or allowing payments to be made through mobile vs web, consider the different ways your business might approve for payment processing:

• Cash and checks

• Credit and debit cards

• ACH bank transfer

• Peer-to-peer (P2P) payment apps like Venmo or Zelle

7. Ensure data security and privacy

When it comes to childcare billing, robust data security measures are a must to ensure the protection of sensitive personal and financial information. With the right protections in place, you can be sure that both sensitive company and family data is protected against unauthorized access or data breaches. Running a business also requires compliance with relevant data protection regulations and laws to protect the privacy—and maintain the trust—of your clients.

Challenges in Childcare Billing

Tracking attendance and adjusting bills

Manually tracking attendance is a time-consuming task—especially for larger centers. Implementing an automated tool for tracking attendance means parents can check their children in and out using a tablet or smartphone, and you can access real-time attendance reports on-demand. Quickly generating attendance reports by student, classroom, or a specific time period helps with sourcing data for licensing and compliance requirements.

Playground’s automated attendance feature bills families in arrears based on the exact amount of time kids spend checked into your center or program.

For childcare programs who bill based on attendance, you can easily set up custom billing rates for kids based on their daily, hourly, or minute attendance. If you offer drop-in care, there’s a drop-in billing method that allows you to set up a way for families to reserve—and pay for—care in advance.

Managing subsidies and vouchers

If your child care center accepts subsidies or vouchers, managing these can add complexity to your billing processes. Familiarize yourself with the specific requirements and procedures for accepting and processing these payments. Ensure that your billing system can accommodate these subsidies and vouchers seamlessly. Playground makes managing subsidies and vouchers easy—say goodbye to double entry with multiple funnels for different programs and simple funds distribution.

1. When your center receives a subsidy or agency check, you can record the deposit directly in Playground.

2. Instantly allocate these funds to the students that receive the subsidies.

3. A student’s owed balance is automatically adjusted.

4. Generate custom reporting by date, agency, family, and child.

Legal considerations

Understanding state regulations and compliance

Childcare billing is subject to state regulations and compliance requirements. Familiarize yourself with the specific regulations in your state regarding billing practices, fee disclosures, and record-keeping. Ensure that your billing processes align with these regulations to avoid any legal issues.

Tax Implications for Child Care Providers

As a child care provider, you may have tax obligations related to your billing practices. Consult with a tax professional to understand the tax implications of your childcare billing, including reporting payroll taxes, deducting expenses, and any applicable tax credits or deductions. Many childcare providers will need to pay self-employment taxes and itemize deductions for things like a home office, supplies, food and snacks, and more.

📣 Tax season will be here before you know it. Learn more about preparing for tax season as a childcare provider with these six essential steps for confidently navigating the filing process.

Childcare Billing FAQs

How do I handle billing for part-time vs. full-time care?

When billing for part-time and full-time care, it's important to have clear policies in place. Determine how you will prorate fees for part-time care and communicate these policies to parents. Consider offering different rate structures for part-time and full-time care to accommodate varying needs.

What do I do when a family leaves my childcare service?

When a family leaves your child care service, ensure that your billing processes account for this transition. Communicate any outstanding balances and refund policies to the departing family. Update your records and billing system accordingly to reflect the enrollment change.

How do I resolve a billing dispute?

Billing disputes may occasionally arise between child care providers and parents. Establish a clear process for handling these disputes, including open communication, documentation of agreements, and mediation if necessary. Aim to resolve disputes amicably and maintain positive relationships with parents.

How do I choose the right childcare billing software?

Investing in reliable childcare billing software is the best way to simplify your billing processes. Decide on a software that offers automated invoicing, online payment options, and the ability to generate reports. Playground is a centralized billing software for all types of childcare providers, with features like:

• Automatic invoicing and flexible recurring payment plans

• Mandatory autopay so you never miss a payment

• Automatic tuition deposits and application fees

• Payout dashboard

• Subsidized care features

• Expense tracking

• Full-scope reporting, including profit and loss statements, top debtors, revenue summary, and end of year tax statements

Playground—your new, personalized billing assistant. 

Managing your business’ finances can take away from some of the most important tasks facing you. When every dollar—and second—counts, a central hub for child care management can be a lifesaver.

Using multiple softwares? The right software can help you consolidate your resources and avoid the hassles that arise from integration. Book a free demo today to see how Playground can step in to help create a successful, safe, and productive daycare environment.