Nurseries struggle to recover late payments
Tuesday, September 1, 2015
More than half of nurseries have had to write off debts from unpaid fees in the past year, a survey suggests.
Training and management software company Parenta’s childcare survey reveals that 54 per cent of respondents have had to write off debts from parents in the past 12 months.
The lowest amount of debt written off by providers was £150 and the highest amount given was £12,000.
Although the majority of providers (93 per cent) had a system in place to chase those that owed them money, most had a lenient approach to late fees.
One nursery owner was chasing £6,000 owed to them through a small claims court, with costs continuing to rise.
However, another provider’s zero tolerance approach to fees meant they had no parental debts because of a ‘no pay, no play’ approach to late fees.
Meanwhile, a quarter of nurseries admitted that they were often chased for money that they owed others.
Nurseries are also being forced to make up losses from under-funding of the free entitlement by pushing up fees for unfunded hours, or for babies and toddlers.
On average providers increase their fees every 16 months, with the most common increase between £1-2 an hour per child (31 per cent), followed by £0.10 - £0.99 (23 per cent). Eight per cent planned an increase between £3.01 and £5 this year.
There were more than 100 responses to the survey the majority taking part identifying as an independent nursery, pre-school or day care centre, 19 per cent part of a chain, and 2 per cent were childminders.
The survey reveals generating income is a struggle for many providers with four in ten nurseries reporting that they did not know or did not think that they would make a profit this year.
Allan Presland, managing director of Parenta, said, ‘Given the precarious financial situation that many nurseries now face, it’s shocking that more than half of the providers we asked have had to write off bad debts in the past 12 months. It’s even more unsettling to realise that this debt averages £2,991.
‘Undoubtedly, the sector is at a precipice. With 40 per cent of nurseries not expecting to make a profit this year, a funding crisis is looming. The Government must enable sustainability for the sector by ensuring that the 30 hours of free childcare are adequately funded, if we want a thriving childcare sector.’
