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As daycare providers we deal with a variety of clients and each client has different careers and responsibilities. Many daycare providers struggle with having teachers as clients because they have breaks (like summer vacation) and then you must figure out what to charge them, if anything, for the break. Also you must decide whether or not to hold a spot for their child until the child is able to return.  We asked the OwnADaycare on Facebook members, how they handle this situation. Our members who are also daycare owners responded to provide their suggestions:

• My clients who teach pay straight through from September through June. They have the ten weeks off during the summer, so during the school year all times off must be paid for.
• It is the same for everyone. I give them vacation time they can take. They have 10 days that they don’t have to pay for.
• I ask them to pay 50% of their rate during that time. I only do this for the summer though. They pay full rate during school year no matter what breaks/time off they have. I also do not give them any vacation time because of the reduction in rate during the summer. Whereas my other full time families get 5 days of vacation to use throughout the year. I think that’s fair.
• My contract with teachers is that they pay full-time during the school year. Holidays and school-closed days are still paid. If they want to hold their spot over the summer, I try to fill their spot with a school child just for the summer. If I can’t fill their spot, they need to pay half-price to hold it. Otherwise it goes to a new full-time child.
• I allow for one unpaid week each year. Usually they don’t pay Christmas vacation but do all others. For summer I will hold spot with a pre pay of 1 month. so basically they pay in maybe for August to September.
• I always offer an option of ‘pay only when you come’ or a less expensive ‘pay whether you come or not weekly rate’. You should stick to your contract. You don’t get to not pay your gym if you don’t go. My neighbor pays her daycare provider 2 weeks of paid vacation a year every summer.
• I allow mine a fixed part time rate in the summer months only. If they choose not to pay it, then they may lose their spot. I will not hold a spot longer than 1 week without payment.
• I currently don’t have any daycare parents who are teachers, but this is what I would do if I had some, I would just have them pay one day a week, just to keep their spot. They can bring their child that day or not but as long as they pay for 1 day, I’ll keep their spot open. If they want to bring their kid in more than 1 day a week, then I’d just charge my day rate for however many days the need that week. Then things resume as they were once school starts again.
• I have 3 school teachers in my care and they pay the weekly fee as if the children come or not to daycare. Most of them will bring their kids in at least 1-2 days during the Christmas/Easter break.
• For my teacher parents they pay for days off but if it’s a week off, they pay 1/2 of their tuition just as every other family who would take off.
• That usually involves several weeks off. To hold a spot for such long periods of time, I charge 50% of the regular weekly fee. If you decide you need to bring your child once or twice during your “off” time, you would simply pay the difference for the time he/she is in attendance.
• I charge whether they are here or not. I don’t end up with many teachers, probably b/c of this but I also don’t open up early enough for elementary school teachers.
• I have been taken advantage of from teachers. When I have been generous about the winter breaks or spring breaks and am expecting to have them throughout the summer for half rate, they do not want to pay me for my vacations or anything. So, I have somewhat changed my policies for teachers. They pay full rate during the school year, half rate in the summer and they can choose two days per week to bring their child. Same days all summer long in case I have others who need care. I also have learned to take my vacations during the school year and I don’t care if it falls on their break or not. I deserve a paid vacation.
• I charge a holding fee of $50 per week per child. They can bring their child or children during the week to use up the money if they wish. If they go over that amount they pay the difference. If they don’t bring them at all they still pay the $50. They can pay the end of each week or the start of the month.

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Due to the downturn in the economy, more and more parents must get their daycare payments subsidized by the government. As a daycare owner, you must realize that there are both advantages and disadvantages of caring for children whose daycare payments are paid by the state. We asked the OwnADaycare on Facebook members, “Do you accept state paid clients and if so what are the pros and cons?” Our members who are also daycare owners responded to provide their varying opinions:

• Cons – getting paid once a month after the fact, the turnover of children in some cases. Pros (at least with the program I am with)  support from the subsidy office, free construction paper, paints, gloves, crayons, markers and more twice a year, assistance with problem behaviors, and the BIG one SUPPORT above all from the gal in the charge of the program. It is so nice to send a child home with an illness and if the parents complain the programs BACKS us providers up.
• The money is always guaranteed each month. You may get paid 2 months behind, but then you have that money coming 2 months at the end too.
• I am in Michigan and usually wait at least 6 weeks to get initial payment, and it is yours, not their, responsibility to make sure every T is crossed and I is dotted, or they will gladly NOT write you a check.
• It is a pain because in my state you have to wait a month for your first check but I still take them. I went into this business wanting to help people (by giving good child care for a decent price), staying home with my children, and supporting my family. I can still do all three and take state kids. But if you need the money right away then it may not be a good idea. Plus side is if they quit without any notice you still receive a check for a month. Gives you time to replace them.
• I don’t take clients with state pay.  I have been burned twice by it. If they don’t work, you don’t get paid and you won’t know until you turn it into the state. I had a mom bring her daughter every day, and I ended up getting paid for 2 days and I couldn’t do anything about it. It’s not worth all the paper work and time and then wondering if the parents are holding up their end of the deal.
• I refuse to do the paperwork in order to have state aide families. I have had nothing bad experiences in the past either with the families themselves taking advantage and constantly trying to break the rules or by the state paying next to nothing — no thanks
• I do take state paid children. Co-pays must be paid in advance. I did get burned once by a system abuser, but over all have had pretty good luck with the program here in Nebraska. Pro: once a month payment. Con: Paid after the fact. Only pays for time actually in the daycare. No holidays or vacation pay. My private pay families pay a flat rate in advance.
• I don’t do it because it takes more than a month to be paid by the state. I can’t afford to do that. I wish it was a better program for the families needing the assistance, and for those of us who provide care.
• I have a facility so too many state subsidized children is too much of a loss in income and too much paperwork for the price you get paid. However,  we do have a few and will continue accepting them, just will keep it at a minimum so it balances out. It’s like $160 less per month per child in WV. About 2 weeks to get a check, and once a month payments. We do get paid for a whole month if they are here at least 13 days. Just do your math
• Pros in NJ: I get paid if they are sick, if it’s a holiday, and if they leave early I still get full day pay. Full spots! Cons: Payment takes a month to get started, and then comes every two weeks AFTER I care for them. I do not get reimbursed if they suddenly leave my care, or move. I am paid the state rate, and not my private rate which is higher. While Private clients pay more, if I have a spot to fill I do not mind filling with a state child, I just budget carefully.
• It’s a pain!! They pay a month later. Parents have to pay a certain percentage so you need to keep track of that be sure to dot your “I’s” cross all your “t’s” I got ripped off 2 grand because of a parent that lost the aid. She didn’t make up the difference and the state stopped paying me and never told me they dropped her.
• I have good families but the con for me is the cap on unexcused absences. If they no show and the family has used up their max of unexcused absences I don’t get paid. I also don’t like the blatant misuse of the subsidy dollars.
• We have to wait until end of month to turn in and then it takes 10-14 days to get money. Once you have it going, it’s not too bad. BUT we can only charge the state what we charge our other families. Even if I can get $23.00 a day from the state, in my small town area I can only get $18-20 a day, so that’s what I have to charge the state too. And my state (IL) is in financial crisis and I have to wonder when I’ll get my check.
• It really depends where you live. In BC, Canada, it isn’t too bad. There is some paperwork at the beginning that you and the parent have to fill out. Then it takes minimum 2-3 weeks to be processed then another 1-2 weeks to get paid. The pros are that you get paid every month. You submit the paper work on the first of the month and you get paid 1-2 weeks later. The cons for me is that if there is a problem, and you the provider phone, they can’t tell you anything other than there is a problem and that the parent has to phone, so then you are waiting on the parent to phone. If the parent doesn’t submit all the paperwork or they get cutoff, you have to rely on the parent telling you the truth. I have had both success and failure with subsidy families. But I will continue to accept subsidy. Just make sure you get a deposit from the parent. That way if they lose their subsidy you have something for payment!

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Daycare owners can cut daycare business costs by bartering, or exchanging services with other businesses. We interviewed Don Mardak, CEO of International Monetary Systems, one of the largest barter organizations in the United States to find out how daycare business owners can benefit from bartering.

OwnADaycare: What are some basic tips you can provide when it comes to saving money on the costs of operating a daycare business?

Don Mardak: Evaluate accounts payable and convert those cash payments to trade transfers. Expand your referral network. Barter clients tell their cash paying clients about your services.

OwnADaycare: How can daycare providers save money through a bartering system?

Don Mardak: Utilize the services available through barter instead of cash services.Refer non-member businesses that you would use to IMS, so that you can start to take advantage of that barter relationship

OwnADaycare: Please explain how bartering works for daycare owners.

Don Mardak: The daycare center would set the number of enrollments it would accept. IMS would fill that quota. Billing could be set up automatically to transfer the funds out of the enrollee’s account directly to the daycare’s account. The daycare maintains control over its business model. The only difference is how it is reimbursed for its services.

OwnADaycare: What types of goods or services can daycare owners obtain in a barter exchange?

Don Mardak:

• Bookkeeping
• Payroll services
• Carpet cleaning
• Office supplies
• Advertising
• Games
• Books
• Water purification systems
• Painting
• Office furniture
• Supplemental healthcare services for employees
• Building maintenance and repairs
• Answering services
• Attorney services
• Vehicle maintenance
• Balloons and party supplies
• Catering
• Collection services
• Computer sales/service
• Drain cleaning
• Drapery cleaning
• Dry wall & plastering contractors
• Electricians
• Floor mats
• Food distributors
• Handyman services
• Landscaping
• Locksmiths
• Gym mat/exercise mats
• Mirrors
• Mold suppression
• Mosquito spraying
• Pest control
• Printing services
• School supplies
• Signs
• Trophies plaques awards

OwnADaycare: What types of goods or service might a daycare owner provide in a barter exchange?

Don Mardak: The same level of service offered to any of their other clients.

OwnADaycare: How does a daycare owner get started with a bartering exchange? Can you provide any resources?

Don Mardak: Go to www.imsbarter.com, complete the on-line application. Once the application has been approved and cleared through the underwriting department, a barter bank account is opened. A Trade Broker is assigned to manage the account with the client and conducts a complete orientation.

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Daycare owners can cut daycare business costs by bartering, or exchanging services with other businesses. We  interviewed Don Mardak, CEO of International Monetary Systems, one of the largest barter organizations in the United States to find out how daycare business owners can benefit from bartering.

OwnADaycare:  Please explain what bartering can do for daycare businesses.

Don Mardak: Those in the daycare industry can utilize barter to boost sales production. It’s easy, it’s smart and it works like a charm. Savvy childcare centers owners are discovering that bartering is a great vehicle for using daycare openings, attracting new customers, and generating barter dollars that can be used for advertising and other business expenses.

OwnADaycare: How does bartering work?

Don Mardak: In its simplest form, bartering involves an equal trade. One business swaps a good or service for another. Through professional barter exchanges—where members pay a commission fee for goods or services traded—more complex trades are possible.

Here’s how bartering works: a business lists a good or service for trade through the barter exchange. In return, the business receives a trade credit based on the dollar value of the good or service offered. It can then use those trade credits to “purchase” goods or services offered by other members. As a result, that business is hooked up with a rich, varied network of actively bartering businesses.

OwnADaycare: What can trading do for daycare businesses?

Don Mardak: Bartering enables businesses to trade daycare services for the goods and services they need for themselves.

Gaining New Customers

Bartering can also provide you with a new vehicle for marketing your business. Barter exchanges bring new buyers and sellers together, potentially creating a new customer base. And barter can positively impact your bottom line. Companies that actively barter may do as much as 5 to 10 percent of their business annually through trades.

OwnADaycare: How do barter exchanges work?

Don Mardak: Barter exchanges typically charge a one-time membership fee. Barter exchanges offer the advantage that they don’t require an even trade. You can use credits accumulated for one item to trade for several different items that together add up to your total credits.

Be aware that barter and cash transactions are the same in the eyes of the Internal Revenue Service. Both are taxed equally. In fact, bartering exchanges must report goods and services sold through barter to the IRS.

Like sales, bartering offers no guarantees. Some trades happen quickly, others take some time. Also, the amount of certain goods and services available may fluctuate during the year.

You must weigh the disadvantages against the advantages. Bartering turns your downtime or excess space into valuable commodities. It increases sales while enabling you to purchase the goods or services you need without dipping into your cash.

And you don’t have to limit bartering to business. Bartering can be a great way to finance a vacation!

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Dealing with Bad Checks in Daycare

Many daycare business owners spend way too much time dealing with bounced checks and other collection issues. Dealing with return checks can be one very frustrating aspect of your child care job . However, by creating a solid returned check policy or preventing bad checks in the first place, daycare owners can reduce bounced checks.

How to Create a Returned Check Policy

It is important to make your payment policies clear in the event that a client’s check is returned. Many daycare providers list in their daycare contracts that the family is responsible for ALL fees incurred as a result of the bounced check. This means all returned check fees and overdraft fees if applicable.

A simple returned check policy might state the following:

“Checks can be made payable to XXX Daycare with a returned check fee of $35.00 per returned item.  Payments on returned checks (check total, returned check fees, and related fees) must be paid by cash or money order or certified check, immediately. If the client has written 2 or more checks that are returned to us for NSF (insufficient funds) you MUST pay all remaining school year fees by cash or money order.  There will be no exceptions to this policy.  Returned checks that are not paid in full will be turned over to the State’s Attorney’s Office”.

What to do When you Receive a Bad Check

The first step is to send a return check notice. This is one of several important daycare forms to have on hand. The notice might read: Your July 27, 2010 tuition payment of $400 was returned for non-sufficient funds.  Per our agreement, there is a $35 fee for any returned checks.  This fee is to be paid in cash by August 5, 2010. At XXXDaycare we allow 2 bounced checks before we insist on another form of payment. This is your 1^st/2nd returned check.  You may/may not continue to pay your tuition with a check. Please make your payment in any of the following forms: CASH or CREDIT CARD. Thank you.

If this notice is ignored and the client does not make good on the check, (even as early as 7 days in some states) you may forward it to a State Attorney’s office in the county where the check was accepted for prosecution. Contact your local State Attorney office regarding any forms that need to be completed. This will begin the process of prosecution/collection

Preventing Returned Checks

Rather than dealing with return checks, eliminate them completely from your daycare business. You can do this one of two ways: Collect payment up front or invest in child care software.

Payment up front means that the policy states that the client’s payment options are cash OR money order and are to be paid before the child can receive services. For example, your contract policies may that you will request payment every Friday for the upcoming week.  In some cases, daycare providers may choose request payment up front for the entire month. Monthly payments may not work for many families. However, to calculate the monthly fee, calculate the total number of working days in the month and multiply it by the daily rate you charge.

Child care or daycare software can help eliminate returned check issues. The software can collect payments in person or online using the following methods:

• Set up recurring ACH (Automatic Clearing House) transactions which are bank to bank transactions. In this way, payments are automatically deducted from the client’s checking or savings account and then deposited into your daycare’s business account.
• In person Point of Sale Transactions (POS). POS transactions allow you to process payments by swiping the client’s credit or debit card on-site.
• Set up recurring credit card transactions. In this type of transaction, the client’s credit or debit card is automatically charged on a recurring basis.

Above all, remember that first and foremost daycare is a serious business, and if you don’t get paid, your business suffers.  Protect your business. Be polite, yet firm, in enforcing all policies.

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Many want to make a day care center and make it as a successful business. And these dreamers engage in this line of business full time and thus are self employed for it. One of the reasons for this is to be able to earn more while one is staying at home. Other reasons include the drudgery of a nine to five job for another as a boss. So until and unless one performs actions in pursuing their dream, having as day care business will remain just that, a dream. But this need not always is just a dream for here are some steps to undertake in order for one to find the finances to realize that dream.

1) Business planning. Like in every business, a day care must be borne forth of a business plan. How one seeks to achieve business objectives is a key ingredient in making this business plan. Even though the business is operated from home, having a business plan is crucial in making this business work. The business plan is in a nutshell the product of diligent research and well thought out planning which would assist financial institutions in making a decision whether or not one would provided a loan for the business. It must include the general objective of the center, how it will operate efficiently and effectively, especially as it is home-based, and a financial projection of revenues for one’s business.

2) Business structuring. This details all the financial matters involved in the business. Costing the preparation, operation and eventual continuous increase in business is essential to make known to financial institutions how much money is needed for the business to make money. Also included are the operational expenses, supplies and educational expenses needed for the day care.

3) Also, owner’s equity needs to be provided since lending institutions would want some participation on one’s end in the financial aspect of the business and not merely operations. Thus one’s financial interest in the business must be provided to entice lenders to commit money for one’s endeavor. Thus investing in one’s own business would provide signals to the lender that the commitment to succeed is clearly evident.

4) Collateralize. In order for one to make a clear commitment to the success of the business, one needs to put up some form of collateral for the lender to be able to be confident that return of the money lent would be made. It would also provide two things, confidence in the success of the business and avenue for a lender to recoup the loan made. So by putting up as a collateral one’s home or vehicle, one is able provide an option for the lender to recover the loan costs if ever the business fails.

As one can see, reaching out to make the dream a reality is not an easy task to do. One has to make a business plan, structure the business, inclusion of personal equity in the loan or offering collateral are some ways to which a loan may be obtained to finance the dream.

See: How to start a daycare

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Money is important in starting any business. Starting your own daycare center is of course no exception. In fact, before you can start your own day care center, you have to make sure that you have enough finances and funds for it.

Most people have the great desire to start their own day care center but are unable to fulfill their dreams because they do not have enough start up resources. A good amount of investment is needed for getting the premises, furnishing the place, hiring staff and publicity definitely cannot be avoided. This is where people find themselves at a loss in arranging the finance, that is.

But, if you plan things the right way, the situation need not be so bleak. The US government offers grants for various small scale businesses and this can even be amounted to about a million dollars. According to the grant providing authorities, all small businesses whether at a federal level or at a state level are eligible for seeking government grant to help start their own businesses.

Starting your own day care center is considered as a small scale business therefore entitling you to apply for financial aids and to seek for government help to help you start up your business venture.

However, getting a grant itself is a completely different story. You need to prove to the authorities that your business is well-planned, and it is going to benefit the society in one way or another. You have to convince them that you will handle the business well and also provide them a timeframe on the prospected date you think your day care center will generate revenue and profit.

Grants are different from loans. You have to use them for the purpose stated, and you do not have to repay them to the government. For that matter, you can consider grants to be free money. Even if you have to put in a lot of efforts to apply and qualify for the grants, it is well worth it because it will help you establish a business that will be very profitable in the long run.

Needless to say, there’s a long queue of people applying for these grants year in and year out. That is the reason why you need to write a very efficient grant proposal, and clearly state and convince the official giving body on how you are going to manage your business and bring in the profits. You must want to seek help from a professional grant’s writer online or ask friends if they anyone they can refer you to.

The loans are an option too, when you are looking for financial aid to help in starting your day care center. They are much easier to get than the grants. All you have to do is approach your bank and submit your proposal. However, you must remember that you have to repay what the banks offer you, with interest. Still, this is a viable option for people who cannot secure grants and have the great desire to start their own day care business and start it now.

See: How to start a daycare center

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