Are you using late pick up charges efficiently? If you are using the $1 per minute formula, you may want to rethink your approach.
Does it make sense to charge a $3 late fee for a parent who shows up 3 minutes late? From my point of view, the answer is probably not.
The $1 a minute formula is not enough to deter lateness or to compensate you for the extra cost of late pick ups. And worse yet, it may make your customers angry or give the impression you are greedy. To your customers, it appears to be a penalty, rather than compensation for extra work.
There is a better way. You can use late pick up charges to accomplish 3 legitimate business goals:
1) deter late child pick ups, 2) compensate you for the extra costs involved in late pick ups, and 3) increase customer confidence in your business.
But to get there, you may need to re-think how you do it. Here are some recommendations for a solid late pick up policy.
Consider and Communicate How Late Pick Ups Affect Your Business.
It is no secret that late pick ups are inconvenient for the provider. But there is more to it – late pick ups cost the provider money. You should not be afraid to recognize and communicate this fact to your customers.
If a parent arrives late, employees may have to work late, and may be entitled to extra or overtime pay. The provider or center will have to stay open longer than expected, keep lights on, and maintain quality supervision of the child beyond scheduled business hours.
Extra care to a worried child may be required, and some providers or centers may have to pay for extra time in their business space.
End of the day operations, such as cleaning and safety inspections, may have to be delayed, or prolonged, and management of the business is hindered by this extra work.
Consider the Parents Point of View.
Parents are your customers! If you own a child care business, you need to take care of your customers.
Parents, like all people, often run into unavoidable end of the day scheduling problems. Their own work may run over schedule, they may have transportation problems, or personal issues may force a late pickup. Because of these everyday troubles, some late pick ups are unavoidable.
After a long day at work, like all people, parents can be irritable and stressed at the end of the work day. And like all people, parents are sensitive to wasteful spending, and frequently spend a lot of effort trying to save money where they can.
Consider the Goals of a Late Pick Up Fee and Accomplish Them.
As a business person, your goals with a late pick up fee should be:
1) make the fee is expensive enough to deter late pick ups where possible;
2) make sure it is effectively enforceable.
3) compensate the business for the extra expenses incurred in a late pick up, and
4) give the customer confidence that you are not trying to rip them off.
Why the $1 per Minute Formula Misses These Goals.
The common practice of charging $1 per minute for a late fee is a classic example of a failure to meet these goals.
Topping the list of reasons to not use a $1 a minute late fee is that it causes unnecessary stress to parents. If they are running late, they will be thinking “i’m wasting money!!!” at every stop sign, every red light, and every time they have to wait for another car.
The stress of this minute by minute fee will accumulate quickly during the parent’s drive to the provider, and does not help your business. It will be viewed as a penalty, not compensation for extra work. The parent will relate the building stress they feel with your business, and it will be a negative feature of your business to them.
Secondly, $1 per minute plan is not a real deterrent. Before there is a late pick up problem, the parents see the fee as a $1 problem. Parents will always feel they can talk you out of the $1 charges, and it will not affect the way they schedule their day because it appears at first to be a very small sum.
Third, a $1 per minute late fee is not realistically enforceable. There will always be arguments about whether a parent was 4 or 6 minutes late. Does the clock stop when they pull into the parking lot, or when they first hug their child? And whose clock do you measure the late fee by? What if the clock is 2 minutes off?
if you have to argue with a parent about whether they are 3 or 5 minutes late, you may waste 15 minutes of your time trying to get $2, and make the customer angry at the same time.
Of course, that sort of late fee cannot compensate your business for the extra costs of a late pick up, because it actually causes you to waste even more time trying to collect it.
How to Use a Flat Late Pick Up Fee To Accomplish Your Goals.
Justify a late fee to the parents in advance.
In your parent orientation, you should describe to the parents the business schedule, and be clear about when the child care must end.
Tell the parents what you do after all the children are gone, and why it must be done at a certain time. Get the parents to agree and understand that you must get things done, must clean up, must discuss the days issues with employees, and must go home yourself. Make it clear to the parents that it costs you money when they come late.
By clarifying the schedule and the end of the day work with the parent up front, you can get their agreement and understanding as to why the child care portion of your day must end at a certain time.
Once you have convinced the parent that you need to close operations at a certain time, point out 2 or 3 ways it costs you money if this plan is screwed up. For example, tell them you need to pay employees, or how you need postpone cleaning work, and keep lights on.
Don’t be afraid to tell parents directly that you cannot lose money and provide quality care. They will understand and agree.
If you fail to justify the need for a late fee clearly, it will create bad feelings between the provider and the parent. But if you do justify it, parents will not protest.
Charge an Effective Flat Fee.
Once you have justified the reason for a late fee, charge a flat late fee that is an effective deterrent, and one that compensates you for the extra work for those times when it is unavoidable.
Once you have justified the need to end the day at a certain time, you are in a good position to get the parent to accept a late fee that will prevent late pick ups, or at least compensate you for the extra expenses involved in working extra time.
A flat fee for a late pick is best for this purpose. After all, if a parent is 2 minutes late, it probably causes you as much of a problem as if they were 15 minutes late.
Thus, a flat late fee of $20 (for example) for parents who come 1-15 minutes late makes sense to you as a business owner. It also makes sense for the parent if you have justified it in the parent orientation.
And perhaps best of all, the flat fee approach will avoid arguments when it comes time to enforce it. The parent is either late or not, there will be no question of how much the late fee should be.
Further, a flat fee will prevent angering your customers on a minute by minute basis. It will eliminate the minute by minute stress felt by the parent that is inherent in the $1 minute idea.
If a parent knows they will be late under a flat fee agreement, they will think – “I’m going to be late, I have to pay $20 to compensate the provider for the extra work.” That is much better for you than a stressed parent speeding through a stop light trying to save a dollar on the way to your business.
As a business owner, that is what you want – a recognition that you are doing extra work and must be paid for it. You do not want your late fee to be viewed as a stressful minute by minute penalty.
You Are Free to Choose the Amount of a Late Fee.
You are free to choose the amount of the late pick up fee. There is no limit, other than a customer’s willingness to agree to it. To select the correct amount, you must be able to justify it, and get the parent to agree to it in the parent / provider contract.
You can charge one flat fee for the first 15 minutes, and then more for the second 15 minutes of late pick if you want. Or you can just choose one flat fee for all late pick ups. As long as the parent understands and agrees, it will work.
If you choose a flat late fee that is high enough, and efficiently enforced, the parent will take extra steps to get their child picked up on time. But on those occasions where a late pick up is unavoidable, it will compensate your business for the extra work, and avoid angering your customers. By meeting these goals, you can use late pick up fees effectively.
-Christopher Dort, Esq.
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