How does payment work when you first start using childcare?

[nannynick]

When you first started using your childcare provider, how did the payment work?

For example, a nursery may have wanted a deposit to secure your child's place. They then may have wanted a month's fee in advance. They may have wanted something in advance and the rest they billed at the end of the month.

You though were paid by your employer at the end of the month, so between you starting work and you getting your first payment from your employer, how did you manage to pay childcare fees?

If you use a childminder, did they require payment in advance, or were they happy to wait until your employer paid you?

What about a nanny, they are often paid in arrears but that can be weekly, or monthly. So did you need to pay your nanny before your employer had paid you?

Do most providers require advance payment, or are many happy with alternative arrangements?

The reason I am asking is that many providers, especially nannies, do say that at the end of the month they are left waiting for some or all of they pay. How can that resolved? Is the answer to be paid in advance instead of in arrears? Is that what prevents the issue occurring with childminders and nurseries, or does it just create other issues?

I manage a nursery and our terms and conditions make it clear that payment is required on the 1st of the month in advance for the month ahead
By the 15th you will the getting a reminder and a late penalty charge will the added
If you haveht paid by the last day of the month then your child's place will be suspended until you do pay, with full fees still being charged
Unpaid fees chill get 3 letters then you will be taken to court
I don't know any childcare providers that allow you to pay in arrears

I'm a childminder.

When a new family start with me they pay a deposit of 50% of the monthly fees which is taken off the final invoice.

Payment is monthly and in advance.

But I'm self employed so set my own terms. Nannies are employed and when I was employed payment was in arrears.

Thinking about it, one option would be to agree a payment date mid month, say 14th of each month.

I do think some of it is a respect issue. People view childminders and nannies as 'babysitters' (nothing wrong with babysitting by the way you just don't have to jump through a gazillion hoops to do it).

Yes you have a point, nannynick. But I would not really want to pay our nanny a month in advance because our timetable is sometimes unpredictable and extra hours are booked a week in advance. But if hours were fairly regular, then it would keep the nanny happy to be paid a month in advance.

I can not imagine that anyone would pay a nanny a month in advance, yet it does seem to be the case with nurseries. Maybe that helps to make nannies more popular - does it, or is it not really a factor when deciding to employ a nanny?

If parents paid in to a Government scheme their childcare cost, then the Government paid the childcare provider... would that work? If the payment from parent to Government took a couple of days and the payment from Government to provider took a couple of days, would that cause financial trouble for providers?

Isn't that the way childcare vouchers work?

No but you are on the right lines. Childcare vouchers is only up to a certain amount, £243 a month max per parent, so whilst for some it may pay the full cost of childcare, that would not be the case for everyone, especially employers of nannies where the nanny could be earning £1500+ a month.

The new scheme is called Tax-Free Childcare. If anyone has a spare half hour and wants an interesting read, then this pdf is the results of some research about how well the new scheme is being communicated to parents and providers.

We do not know exactly how payments will work yet but I feel it will mean that all providers need to adapt to how the payment scheme does eventually work. Therefore it is interesting to see how different providers currently expect payments to be made and in what time period and if that is before, during or after childcare is physically provided.

I started getting childcare vouchers whilst on paid mat leave so by the time I went back I had accumulated nearly £1000 worth and I used that to pay the deposit and advance fees .

Great that childcare vouchers can be built up whilst on maternity leave. What happens when someone does not get those, how do parents afford to pay childcare fees in advance?

I wouldn't be very enthusiastic about waiting to be paid by the government
They are already very bad at paying the EYG and the EYPP payments
Our Lea charge penalty fees for making a mistake or missing deadlines but will quite happily miss their payment day
I've also had very bad experiences with student finance and colleges trying to get fees paid for their students
I would much rather parents paid he then claimed it back from the government.
We already have enough hoops to jump through

Nannies are paid in arrears like most employees.
I paid mine on the last Friday of the month. Usually, but not always, I had already been paid as on a set date.
I used childcare vouchers for some of it too and organised these slightly earlier in case it took a couple of days to come through.
I would never leave a nanny waiting for her pay. They have bills to pay too!

Hi nannynick

I would think that another thing to throw into the mix with nannies is payrolls and 'Real Time Information' to HMRC. I have a term time only after school nanny, so her pay varies month by month. I outsource the payroll to a payroll provider (so pay monthly rather than weekly as the payroll is prohibitively expensive to run weekly). I am not allowed to pay my nanny till the payroll has been run, as they have to provide hours worked etc to HMRC first. So say 24th of the month I need to give the info to the payroll provider (which is likely to include an estimate of the last few days of the month), they run the payroll and give me the documents on 26th/27th, so I can pay at the end of the month. I would not like to have the payroll run earlier because it would be too inaccurate for things like overtime/sick days etc.

The time of the payment (arrears or not) would never be a factor for me in choosing which childcare.

However I would not want to pay a nanny in advance because I would have a huge amount of hassle if he/she left the job mid month. With a nursery it is just about possible they may go bust half way through a month, but highly unlikely, so you know you will get the childcare you are paying for. Sadly, with some nannies, they may leave with little notice (and even if you have a notice period written into a contract, if they don't turn up there is not a lot you can do) or they may have a long period off sick during the month, etc etc.

Nannies have always been paid in arrears, I can't see that changing. What may need to change though is when they expect to have the money. End of the first week of the following month may be more realistic than end if the month.

Interesting about payroll dates. Wonder if HMRC considers the pay date to be the start of the money transfer or the date the pay should be in the recipients account.

I did my own payroll on the RTI system. You choose your own date to pay, it is not set by HMRC. the RTI system means they know instantly what you are doing, and as I did it myself I could do it all on the same day.