Payment can be a hot-button issue when it comes to childcare. Whether it’s chasing payments, endless trips to the bank, or juggling many different forms of payment, collecting and managing money is one of the biggest administrative headaches that owners and directors face.
If you are currently providing childcare services, then you should have figured out a payment system of some sort by now— but is it truly the best option for your business? Just because it works does not mean it works for you as best it can.
In this article, we’ll take a detailed look at the advantages and disadvantages of each of the most common payment methods for childcare centers. Whether you’re looking for a new solution or curious about whether you’re truly using the best one, read on to make sure you understand all of the pros and cons of each method.
Cash
Some businesses like to keep things simple and believe that cash is king. But is it really? While cash may seem like the most straightforward payment method on paper (no pun intended), it can actually be one of the more complicated options when considering all of its implications.
Pros of cash payments
- Funds are received instantly.
- No additional fees.
Cons of cash payments
- Easy to misplace.
- More prone to theft, and there is nothing you can do if this happens.
- Inconvenient for parents because they need to make a trip to the bank.
- Requires investment in a high-quality safe for storage.
- Need to visit the bank to deposit into your account.
- Requires counting.
- Need to ensure you always have change on hand.
- Keeping accurate records can be complicated.
- Difficult to detect counterfeit money.
- Lack of recorded activity may make you more likely to be audited.
Cheques
For many childcare providers, cheques have been the preferred payment method for quite some time. They offer a balance between the conveniences and security of banking with the tactile feeling and simplicity of paper.
Despite their popularity, cheques are not without their flaws. Although they can be more convenient than cash for both providers and customers, there are still inconveniences and things that can go wrong with this option.
Pros of cheque payments
- Minimal (or zero) processing fees, depending on your account type.
- Can be postdated and submitted at once for an extended period of time (e.g. a semester).
- Depending on your bank, you may be able to deposit them electronically through an app.
1/4 of millenial parents have never written a cheque.
Cons of cheque payments
- Easy to misplace.
- May need to visit the bank to deposit into your account.
- Parents need to remember to write a check or have their checkbook on hand.
- Can bounce, which will take a few days to detect and may result in you being charged a fee.
- Customers can stop payment any time after a cheque is written before you deposit it.
- With digital payments becoming more common, younger parents may not even have checks.
Credit or debit cards
Most businesses tend to offer credit and debit card payment options due to the convenience it provides for customers, although many childcare centers have been resistant to add this method. This provides those willing to go digital with payments an easy way to stand out from the competition and add value to their customers.
Some providers are hesitant to add these payment methods due to things like transaction fees or upfront work to set it up, but many consider this an investment in making things more convenient for their customers. Additionally, there are also advantages for business owners when compared to older payment methods.
88% of parents depend on technology to make finance management easier.
Pros of credit and debit card payments
- One of the most common and preferred payment methods.
- Parents can earn rewards points that their credit card offers.
- Parents can pay tuition even if there is not enough money in their bank account at the time of payment.
- Fraudulent or incorrect information can be detected quickly.
- No need to visit the bank.
- Payments will not bounce due to insufficient funds (i.e. checks).
- Easy to process payments on the spot since parents are likely to have their credit or debit cards when they are at your center.
- Can be integrated with bookkeeping software for easier accounting.
Cons of credit and debit card payments
- There is a processing fee per transaction that will either be paid by you or passed along to your customers.
- You may need to purchase physical equipment (sometimes these can be free but with higher transaction fees).
- Need to take precautions to keep credit/debit information secure.
Online payments
Online payments are a fairly broad category that includes many different ways of transferring money over the internet, such as e-transfers, PayPal, credit cards, direct debit, and so on. With the convenience of paying any time and anywhere, centers are increasingly adding or switching to online payments to make the process more convenient for their customers and themselves.
Pros of online payments
- Can be paid any time.
- Payments can be made from home or on the go.
- Can be set up to be paid automatically.
- One of the most common and preferred payment methods.
- Can be managed through a childcare app that you use for other aspects of your business (e.g. HiMama).
- Parents can earn rewards points that their credit card provides.
- Payments will not bounce due to insufficient funds (i.e. cheques).
- Fraudulent or incorrect information can be detected quickly.
- No need to visit the bank.
42.5% of parents use autopay for everything.
Cons of online payments
- There is a processing fee per transaction that will either be paid by you or passed along to your customers.
- Need to ensure you are following proper security protocols to protect customer information.
- Less tech-savvy parents may be resistant to using this method.
Interested in adding online payments to your childcare center? Fill out the form here and discover how HiMama can delight your customers with online payments, daily reports, and improved communications today!
