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Late payment - happening too often (cm)

(45 Posts)
MUM2BLESS Wed 02-Jan-13 21:25:24

I have policies and procedures in place, which includes payment policy. Over the years I have introduce a late payment fee.

Looking back I would have asked for payment in advance from ALL parents.

Even though I have the late fee payment in place I am still getting payments in bits and also late payments. This has been happening quiet a bit over the years. I deal with five families.

In 2013 I really want to nip this in the bud.

If I send invoices out late I allow extra time for payment. This can be very fustrating as I have bills etc to pay.

How long do you allow late payment before this is addressed? Its not an easy topic to bring up.

MUM2BLESS Fri 04-Jan-13 22:46:55

Thanks HSMM.

HSMM Fri 04-Jan-13 21:17:37

I have just included a note in my monthly newsletter to say thanks for all the prompt payments over Christmas. I know this will shame my late payers into paying immediately. In the past however ... I have had to stand face to face with a parent and refused care until they paid. It's hard.

MUM2BLESS Fri 04-Jan-13 20:29:46

Some sound advice given thank you to all.

I think I may need to address this late payment in my newsletter. Anyone got any wording suggestions, PLEASE.

How many times does it need to happen before you take it a step further? after the newsletter warning?

New Year need some changes.

MrAnchovy Fri 04-Jan-13 19:45:47

Thanks @ZuleikaD

MrAnchovy Fri 04-Jan-13 19:45:16

... It could be done via bank transfer.

Not if you don't have telephone or internet banking.

Mr Anchovy tell me more about the daily fine not being legally enforceable? what area (where you live or by cms?) What other fees could i impose, maybe £10.00 per late invoice, would that be ok? I thought it was up to the cm what they charged. thanks for your comments

It's nothing to do with where you live or what you do: a clause in any contract that seeks to impose a penalty on a party for a breach of contract (rather than simply reimburse the wronged party for his foreseeable loss) is unenforeceable in English law.

But I have changed my thoughts on this since the beginning of the thread - if £5 a day works for you then put it in your contract. The fact that it is not legally enforceable is only going to be relevant if it ends up in court, in which case your relationship with the parent is over anyway.

I've just realised that the term "legally enforceable" might be causing some confusion - it doesn't mean that you are doing anything wrong or breaking any laws by having a penalty clause, or by demanding payment of the penalty by the other party. It just means that if the other party refuses to pay the penalty and you take him to court, the court will say he doesn't have to pay it (but he will of course have to pay the original debt, if that was due) and that will be the end of the matter (except for any award of costs).

breatheslowly Fri 04-Jan-13 19:01:18

I'm not a CM I was thinking more from the POV of things I pay for. I pay DD's nursery fees by direct debit and our cleaner by standing order. These are always paid on time as a result. I get an invoice from our window cleaner and pay by cheque/cash. I regularly forget to pay, don't have my cheque book, don't have cash.

I have also read a number of these threads and the advice given and worked on the late payment policy for an afterschool club where a small number of parents were taking the piss and we used the new, more draconian policy approach to crack down on it as it was taking up too much staff time chasing debts.

MUM2BLESS Fri 04-Jan-13 17:38:45

Watching this space for some more comments.

ZuleikaD Fri 04-Jan-13 16:07:50

@ Mr A
Have NCMA changed their standard contract again?
Mine (purchased last Jan) has a section on page 3 under Charges that says, "Late payment fee of £___ per day/month"

Blondeshavemorefun Fri 04-Jan-13 15:17:23

personally no - but i do have in my contract that if i am paid late then the employer will be paying any fees i occur via my bank

MUM2BLESS Fri 04-Jan-13 12:38:24

Its a bit long ,,,

Breathslowly I did not know you could transfer such a large amount of money at a time. The reason why I mentioned that previously, was because sometimes your told that I could only get ........ amount of money (from the cash point) at a time. It could be done via bank transfer. Tell me more breath..... have you had problems with late payment? how long have you been cm for? asking as you seem very thorough in what you are saying..... I am learning from that.... thanks. I will look at reviewing my payment policy to include heavier fine for late payments (great idea)

blondeshavemorefun thanks. I know that sometimes payment may be late for a valid reason, but if this happens often over the years then thats when things need to be addressed. At the end of the day I still have my committments to pay...... Have you dealt with late payment often?

Snazzynewyear thanks. Nurseries I find will have heavier late fees etc. I guess they are dealing with more parents. After how many days would you refuse to care for the child (of late payment)

cece thanks. I do allow extra time if I am late sending out invoices. Last month I did send them out early.... I guess I have let this drag on too long. Time for change now.

Mr Anchovy tell me more about the daily fine not being legally enforceable? what area (where you live or by cms?) What other fees could i impose, maybe £10.00 per late invoice, would that be ok? I thought it was up to the cm what they charged. thanks for your comments

Thank you to everyone for supporting me in this. Thank you very much.

MrAnchovy Fri 04-Jan-13 12:08:59

however you can make multiple payments of £10,000

Most banks have a daily limit of £10,000 too.

MrAnchovy Fri 04-Jan-13 12:05:28

It's in my contract, Mr A - a standard NCMA one that the parents have read and signed.

Have NCMA changed their standard contract again?

Surely it's enforceable if they've agreed to it?

In order to be enforceable a late payment charge must be a reasonable estimate of the costs you will incur. Now it is reasonable to say that you will incur a one-off cost, and there is a precedent in the law that applies to business-to-business transactions which sets a statutory one-off charge of £40 for debts below £1,000 and £70 below £10,000. But it is NOT reasonable to keep adding £5 a day - even on a bill of £2,000 that is an APR of about 150%!

Note that I'm not saying that you shouldn't put £5 a day in your contract, this probably has the desired effect of making people pay on time. I'm just saying that if the relationship falls apart and you end up in court, if your contract says £5 a day you are likely to end up with nothing.

What is really needed is some clever words that impose the £40 penalty but give a rebate so that it accrues at £5 a day, and after a further 7 days late you suspend childcare and/or add 10% to the daily charge.

trinity0097 Fri 04-Jan-13 08:07:09

I think there is a limit of something like £10,000 per transaction from a bank unless you do a CHAPs payment, however you can make multiple payments of £10,000. I doubt any CM bill would be more than £10,000 unless they are REALLY late payers!!!!!!!

Could you ask the parents to set up a standing order for the amount to go direct into your bank account?

ZuleikaD Fri 04-Jan-13 06:38:22

It's in my contract, Mr A - a standard NCMA one that the parents have read and signed. Surely it's enforceable if they've agreed to it?

MrAnchovy Fri 04-Jan-13 00:12:08

I know this is a big problem for some childminders, and there does need to be an effective stick and/or carrot to get some people to pay.

But a daily fine is not legally enforceable and so cannot be best practice in this area.

What you can do though is increase your charges for providing childcare while a payment is outstanding which would have a similar effect.

cece Thu 03-Jan-13 23:36:35

I have two cm.

I pay both of them in advance.
One I pay the same fee each month, as she takes the annual fee and divides it by the 12 months. She therefore gets the same money each month. I then have a regular payment set up to her the same time each month. If she is closed for illness then I take it off the next months invoice. Likewise if she does extra hours beyond the contracted ones then I pay her at the end of the month and add it to the next payment.

The other one I also pay in advance. They Husband wife cm) are very prompt with their invoives and have a late payment fee. I always pay it within 24 hours of getting the invoice emailed to me.

Snazzynewyear Thu 03-Jan-13 23:28:11

See, I find this astonishing as I use a nursery and have always paid automatically by direct debit every month. Can you ask them all to switch to direct debit / standing order, maybe get a form printed up to give them the details so it's easier? One thing you could do is stipulate this for any new starters from here on. Then eventually all your payments will be automatic.

breatheslowly makes a good point that, as things are, once one £5 penalty has been incurred they have no incentive to hurry up and pay. I would go with a per day penalty, plus state that after X days of no payment the child will be refused entry. FWIW I would be hugely embarrassed to think I had paid my child's carers even a day late and would not see late fines as in any way unreasonable. I don't get to pay for my cinema tickets the week after I've seen the film. Why should it be any different for you?

CinnamonCandle Thu 03-Jan-13 23:18:18

MUM2 thank you for answering my question. I think I will check with CM, having seen this thread, as the timing is quite tight.

To answer your question, the after school club I used to use switched to voucher/bank transfer only. Getting paid in cash must be a pain if you rely on it for direct debits etc. I don't remember anyone complaining.

Blondeshavemorefun Thu 03-Jan-13 22:55:14

I can't believe how many cm's get paid late sad

Quite frankly If i didn't get paid at the end of the week or month and not a very good reason and severe grovelling from the parents I wouldn't be working for them the following week/month

I have bills to pay and without my salary I would be in financial shit tbh

Mumtobless - def impose a £5 a day late fee / actually i would prob charge £10 late fee - there is no reason why parents should pay you late sad

As new year simply send out an email /newsletter stating that some parents are slow in paying so you have reviewed your policy and that the few parents who pay late will be incurring heavy fines

breatheslowly Thu 03-Jan-13 21:33:09

You can ask for whatever you want and whatever suits you. I find that paying regular amounts by bank standing order the easiest - though this obviously depends on having enough money in my account to cover it. We don't have a cash machine near us so cash is a pain, but obviously some people have more cash in their lives.

The most I can transfer from my bank account in a day is £10,000 and I think this is pretty standard, so I doubt that you would hit a limit like a cash point.

The problem with your existing £5 per late invoice is that, once an invoice is late, there is no incentive to get it paid quickly as there is no further penalty. Therefore £5 per day with a refusal to take the child after a certain point is a much better incentive to get them to pay quickly.

I think you should rewrite your policy and give it out to the parents with a brief covering letter stating that following a review you have decided to change your late payment policy. Those parents that pay on time will know that the change is not directed at them and if you want to you can say as you hand it out "I've had a few late payments recently so needed to rewrite my policy, but obviously I haven't had any late payments from you and really appreciate that" to those parents you don't want to offend.

we bank transfer and childcare voucher the voucher usually takes a day or two and the bank transfer is immediate so usually do it around 29th of mth. moajority is bank transfer anyway.

I think its unacceptable to pay late - and am so cross with myself for doing so today and cant believe people do it reguarly.

IwishIwasmoreorganised Thu 03-Jan-13 21:19:57

We used to do a combunation of bank transfer and childcare vouchers to our last CM. No problem that we used different banks.

It was great and hassle free.

MUM2BLESS Thu 03-Jan-13 21:17:25

I know you can only withdraw via cash machine, a certain amount of money

Is it possible to transfer any amount of money via bank tansfer into someones bank account regardless of the bank you are with, or is there a limit on how much can be transferred?

Is it rude to ask a parent to do bank transfer/vouchers rather than cash, if you are being paid in bits?

Sorry to go on. I am looking at my options.

I accept cash, vouchers, cheques and bank transfer.

Bank trans if the easiest as my bank is in town (paying in cash)

Thank you for your comments so far, really really appreciate your precious time smile

neither childminder has charged a late fee that I know of that we have used but hadnt ever paid late.

previous cm charged in arrears each mth sometimes was 4 wks and sometimes 5wks she never gave an invoice and had to ask or text to ask how much I owed.

current one pay in advance by 1st of mth same amount each mth and if she has been on holiday/sick or we have (pay 50%) she refunds in form of cheque (I pay her some cash and some childcare vouchers so dont get into issues with tax avoidance for this - use rest childcare vouchers for nursery) - although cheque refunds are bit nightmare think I have 2 sat here and another one to come from the xmas bank hols as rarely go to the bank but oh well they will pay some next mths bill.

Very very embarassingly and am mortified I realised with everyone being ill at home and xmas I hadnt paid her for Jan - I usually pay at same time as do nursery on line as they invoice me and hadnt yet - so very quickly did bank transfer online when got to work as its instant - she hadnt text or rang me to highlight it so perhaps she isnt aware - first day back tommorow in 2 weeks so big apologises but def a one off.

YourHandInMyHand Thu 03-Jan-13 21:01:37

If most parents are good at paying and it's just a minority (I had same situation), be sure to thank them profusely for always paying on time when you hand out the newsletters/ explain about late payment fees. wink They will then know you appreciate them and realise it's not aimed at them.

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