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Collecting and processing payments —your center’s financial health depends onit. It can also be one of your most time-consuming and unpleasant administrativetasks. Fortunately, it’s an area where thesmart use of technology can providedramatic benefits. This article will discusstechnology for everything from simpleinvoicing to sophisticated onlinepayments. You’ll learn keys to success —and pitfalls to avoid.

Effective accounts receivableand billing systems

The first and most important technologyfor managing and collecting fees is aneffective and efficient accounts receivablesystem. When we first began workingwith child care centers almost 25 yearsago, virtually all bookkeeping was donewith paper and pencil. Today, the vastmajority of centers use management andbilling software either designed specific-ally for child care programs or a general

purpose accounting software. Hopefullyyour center has accounting software thatprovides the basic functionality you needfor managing tuition and payments such as the items below:

Accounting Software Feature Checklist

■■ Maintain complete running history ofcharges and payments with accountbalance constantly maintained

■■ Produce easily understood invoices that can be printed or emailed

■■ Generate an aging report of who owesyou money and for how long it has been owed

■■ Posting of recurring charges withautomatic calculation

■■ Posting of late payment fees and charges for extra hours with automaticcalculation

■■ Quick entry method for payments andproducing bank deposit slips

■■ Audit trail of when and by whomtransactions were posted

■■ Ability to track security depositsseparately from current charges andpayments

■■ Year-end tuition paid statements

If your current account software is missingimportant features such as these, you maywant to consider replacing it with a systemthat is better suited to the needs of yourchild care program.

Even with an excellent accounting system,fee collection can be time-consuming; butthe work involved can be dramaticallyreduced by offering parents the ability topay electronically.

Electronic payments

Offering electronic payments makes sensefor most child care centers and school-ageprograms! Why? Because your center cancollect payments more quickly and withless effort; and parents love theconvenience as well as perks, such asairline mileage, that they get when theypay by credit cards.

Electronic payments can encompass notonly credit and debit card payments, butalso payments by direct bank accountdebit via the Federal Reserve AutomatedClearing House (ACH) network.Electronic payments can be preauthorizedto be made automatically on a recurringbasis or your parents can do somethingeach billing cycle to initiate their payment.Parent-initiated transactions can beprocessed by your staff or directly byparents online.

Pre-authorized recurring vs. Parent-initiated one-time payments

Since almost all child care and preschoolprograms collect fees on a regular cycle,

28 TECHNOLOGYEXCHANGE JULY/AUGUST 2008

using technology toimprove fee collectionby Doug Schoenberg

Douglas Schoenberg is CEO of SofterWare

Inc. He has spent over 25 years working

with technology for child care center

administration and pioneered the use of

electronic fee collection by child care

centers. He has written numerous articles, contributed

to several books on child care administration, and

presented at dozens of national and regional

child care conferences. He can be reached at

dschoenberg@softerware.com

Reprinted with permission from Exchange magazine.Visit us at www.ChildCareExchange.com or call (800) 221-2864.Multiple use copy agreement available for educators by request.

▼■ Keying of card data that is time-consuming and prone to keying errors

■ A method of securely storing card datafor future transactions

■ Separately keying payment data intoyour accounting system — this alsocreates the need to reconcile amountsbetween systems

■ e-check (ACH) processing

Stand-alone processing solutions —Many of the benefits of electronicpayments diminish if you use paymentprocessing solutions that do not integratewith your accounting software. Typicallythey require you to:

■ Enter and maintain the sameinformation, such as parent names,addresses, etc. in two places

■ Don’t ensure that amounts paid matchbalance due

■ Reconcile transactions betweensystems

Non-secure and PCI compliant systems— Because most child care payments will

be made from the same account or creditcard each billing cycle, it is highlyadvantageous to have the ability to storepayment account data for future use. Ifthe data is stored on your computer, it iscritical that it is encrypted to protect itfrom unauthorized access. An evenbetter method is for account data to bestored on a PCI-compliant servermaintained by your processing servicewith a solution that allows you or yourparents to initiate charges to the storedaccount without needing to re-enter thedata.

Debit cards — Don’t confuse debit cards,which are processed through the creditcard networks with ACH transactions.In both cases the funds are deducteddirectly from the parent’s bank account,but debit cards will incur a discountpercentage, similar to credit cards.Typically, ACH transactions incur just aflat per transaction charge (typically lessthan $.50) which usually is quite a bitless expensive than the debit card fees.

TECHNOLOGY 31JULY/AUGUST 2008 EXCHANGE

Final thoughts

We hope you now have a better under-standing of the various tools and technol-ogies that can be used by your center toimprove fee collection. Here is a quicksummary of the most important points:

■ The foundation of effective fee collectionis appropriate billing software.

■ Electronic payments, whetherpreauthorized for recurring payments orparent initiated, can reduce time andeffort spent on fee collection.

■ The simplicity, security, andadministrative efficiency of your onlineprocess can often be the most criticalaspect of a successful solution.

With a better understanding of thesubtleties of transaction processing you are well on your way to ensuring that your center has the right solution in place. The benefits of convenient andefficient processing of electronic paymentscan truly be significant for both parentsand your center.

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