The financial aspects of your childcare center are some of the most important but also some of the most challenging. It can be difficult to understand how to set your tuition rates, when to charge students, and how to collect those payments. There’s different types of payment methods you’ll come across and your center needs to understand what they are, how to process them, and which ones you’re going to accept. If your center is doing this process manually, it can take hours per week to work through and be frustrating for both staff and parents.

Through childcare management software your center will be able to better understand your billing process while making it more efficient and convenient for parents to pay. Whether you’re opening your center for the first time or have been in business for years, there are certain challenges you’ll come across as you navigate creating a billing and payment process right for you. This guide will walk you through how to establish your tuition rates, manage your invoicing and billing processes, and how to accept and collect payments. 

Tuition 

Establishing your tuition rate(s) is the first step in setting up billing and payments for your center. After all, you have to know how much to charge parents! 

As a childcare center, establishing tuition rates can be a difficult task. There can be uncertainty regarding the rates or policies to set, especially if you’re a new center. Figuring out what to charge is based on a wide range of variables. This guide covers the various considerations to take into account when setting your tuition rates and accepting payments. 

Considerations for Establishing Rates: 

  • Researching Competitors: Look at your competitors’ rates both within your neighborhood and throughout your city. Take note of what kind of discounts and promotions they offer. You want to charge competitive rates so you don’t become an outlier when it comes to cost. 
  • Schedules: Be consistent on what schedules you are going to offer. If you offer part-time, you may have trouble filling that child’s off days. If you offer a half-day rate and a full day rate, you need to decide how valuable each slot is and be mindful of how you are filling the rest of the half day. 
  • Age/Ratio: The younger the child, the higher the rate. Infants will be more expensive due to the ratio required of caretakers to children. As a child gets older, the ratios are higher, allowing the rates to be lower. Keep in mind that as children age up, they will need to change rooms. This is especially important for young children who age-up faster. You will want to manage your waiting list and get your pipeline ready to fill spots as children age up. 
  • Occupancy: Be mindful of how many rooms you have, the age group associated with each room, and the different levels of occupancy of each room. Try to keep the occupancy number as high as possible – 85% is a good target. The better you manage occupancy, the better you’ll manage revenue. 
  • Consistency: Be consistent about charging your rates. Whether they’re weekly, monthly, bi-weekly, etc. make sure they’re firmly established. Additionally, don’t charge parents different rates. Avoid this by putting your rates into writing and making your policies clear. 
  • Charging Fees: There’s a number of fees you may need to charge your families depending on the circumstances. Be sure to outline these in your policies and stick to them. These fees could include: 
      • Bounced payment fees
      • Late payment fees
      • Late pick-up fees
      • Registration fees
      • Deposits 
      • Meal fees
      • Supplies

Invoices and Billing

Manually managing your invoicing and billing processes can be a hefty task. This guide will help you establish a framework for when and how to accept payments along with the benefits of automation.

Establishing a Frequency

When it comes to invoices and billing, being consistent and establishing a frequency is key. Clearly outline and communicate to families when and how you will be expecting payments, including any additional late fees. Being clear and upfront will avoid misunderstandings later and give you more leverage to hold parents accountable. 

When deciding on your payment schedule, consider what works best for your center while keeping in mind what would work best for your parents and families. For example, while weekly payments might be easier for families, they might be more difficult for your center because that will take extra time each week for you and your staff to run billing. 

Weekly payments could help your center when it comes to unforeseen circumstances. With the COVID-19 pandemic, many centers who charged monthly rates may have had to issue refunds if they had to close their doors. However, with monthly payments your center has more of a safety net when it comes to paying staff. Consider your cash flow and the socioeconomic status of your parents when deciding what payment schedule works best for your center.   

For reference, at Kangarootime, we see that weekly payments are most common among centers. 

Once your rates are set, check in periodically and monitor the rates for each child to make sure they are still accurate. If a child’s schedule or age range changes, their rate might change. While it’s easy to set it and forget it, it’s crucial to be on top of your children’s rates to eliminate loss of revenue or confusion among parents. 

Benefits of automation

Automating your billing and invoices can be a huge time saver and give you and your staff more freedom.

When looking to automate payments, it’s important to know the source of the automation, i.e. how it’s set up and what it will do. This gives you a clear view of how your billing system is operating and saves you from having to manually input information. To automate your payments, implement a childcare management software at your center.

As technology advances, more and more parents are becoming comfortable operating their finances online. Online payments may help broaden the range of parents who would want to join your center and help increase the value of your school. 

A major benefit of automatic payments is that the system will automatically be able to charge payments and late fees. This allows for no lag time between payments as they go right into your bank account and cuts down on accidental loss of revenue. Additionally, your center will not have to deal with cash and can reduce the transmission of germs by getting rid of person-to-person contact. Automatic payments also mitigate the risk of theft and losing checks or cash. Through automation, you can understand your budget and cashflow more clearly as they will be more predictable. 

Collecting Payments

The typical types of payments you’ll see include: cash, check, ACH (Bank Account) and credit card. It’s best to keep all of your payments in one system or method to avoid confusion and make it easier to reconcile. 

A key part of collecting payments is making it convenient for the parents to pay. If the parents are able to pay via an app or online they can do it on weekends, at night, etc. Kangarootime offers convenience for parents through our smartphone Parent App. When paying in person, it’s at the center’s convenience and can make it harder to collect payments on time.

Try to find a balance between being human and payment due dates—you can always make exceptions to late fees but understand you need to run your business. Have a digital “paper trail” so you can see when fees were waived or when payments were late so you don’t get taken advantage of. Communication is crucial for a seamless and easy payment process. 

How Automation Can Help

Automation can help scale your childcare business. Kangarootime offers billing features that make it easy to notify parents and collect payments. Our software will send out three reminders when payments are due: 1. A new invoice; 2. A reminder on the due date; 3. Another reminder if it’s not paid. This way, staff members don’t have to chase down parents for payments and payments are more likely to be collected on time.

Kangarootime also provides an Aging Invoice Report. This report breaks down outstanding invoices, how long they’ve been outstanding, and who you need to collect from. This is important when managing your business so you’re aware of outstanding payments and can make sure you receive your required revenue. 

If your center is using Quickbooks as your accounting software, Kangarootime now has an integration with them to seamlessly send data from your KT account directly to your Quickbooks account. This saves hours of time for your staff and ensures the accuracy of your data. For more information on this new integration, click here. 


Kangarootime is the leading all-in-one childcare management software for daycares and preschools. With billing and invoicing capabilities, parent communication and staff management tools and classroom automation, Kangarootime helps childcare centers grow and scale. To learn more about optimizing your center with Kangarootime, visit kangarootime.com

Marissa Schneggenburger

Author Marissa Schneggenburger

More posts by Marissa Schneggenburger

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Kangarootime
One Seneca Tower, Floor 24
1 West Seneca Street
Buffalo, NY

U.S. Support: +1 (716) 261-9889
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