Late Payment: How to Handle Tuition Tardiness
Anyone ever have to deal with the problem of late payment and tuition tardiness? Something along the lines of:
- The season just started and already families have missed their first payment
- The season is well underway and a family has a big sum owed plus their continued monthly tuition
- A family never finished paying for last year, has started classes this year but still owes you
Sound familiar? What do you do to eventually get that money?
Get Some Perspective
Let’s get some context and establish a few things about your studio and your options. Answer these quick questions:
- How many students do you teach, and how important are timely payments? (and by timely we mean the doors to your business open or close based on that income, as opposed to having some financial cushion and being able to keep teaching while figuring out this late payment)
- Are you a newer studio? Open 0-3 years, 3-5 years, 5-10 years?
- How strong are your relationships with your dance parents, and is your tuition problem one rogue family or a developing trend?
- Does late tuition affect your ability to pay your teachers, if applicable?
These questions might seem a little scary to answer, but they’ll give you important insight into your (immediate) financial needs.
Having a Financial Cushion to Handle a Late Payment
Is hard! Especially for smaller or newer studios who rely heavily on timely tuition payments or are just getting their feet on the ground and need to spend money on additional growth.
The problem is, in both scenarios, you also need to maintain your dance parents’ trust and have a positive reputation, which can get hurt (big time) if you enforce collection on a family. Classic Catch 22: you either lose money from tuition or you put your future money and students at risk by alienating one or several families.
So it has to be a judgment call! Unfortunately there’s no one simple answer.
Being flexible should always be your first approach, so you can try to resolve both the tuition problem and keep (or strengthen) good relationships with parents. Do you have the ability to set up a payment plan and spread out the past dues over several months?
There are plenty of examples of families who are going through tougher financial times but their kids LOVE dance and you can see the positive effect it has on them. It’s worth it to try and figure out solutions for these families!
Some ideas for financial flexibility could be:
- Providing scholarships in exchange for office work
- Providing scholarships in exchange for event planning (recital…..)
- Crediting tuition for in-kind services
- A referral program, where if a family can bring an additional student to the studio, they receive discounted tuition
Your ability to use a payment plan depends on the size of your studio and how you manage your expenses: can you keep the doors open if you don’t receive this full amount of money for a few more months? If so, and your budget can handle that extra strain, this is a pretty good start for handling this late payment problem.
Maintaining Strong Relationships
In most studios we talk to, the great parents outnumber the bad by a landslide. It’s always the few who cause problems one way or another. Is that the case at your studio?
If you’ve got one tough family with a consistent late payment problem, especially if it’s coupled with behavior or drama problems, you should seriously consider letting that family go. Many veterans studio owners will say the same thing: you’ll notice the stress relief so fast you’ll wish you had done it sooner.
Yes, it’s important to keep in mind that letting a parent go might affect your other parents. BUT, if in the long run it is easier to run your business, and the business feels like it’s operating on a more positive note, that cut is a no-brainer. Plus, if this one family has been causing you problems, it’s very likely other parents have noticed and might not miss the troublemakers that much.
Now, what do you do if late payment problems seem to be a developing pattern among your dance families?
Time to nip that problem in the bud. Schedule a parent meeting, send out an email reinforcing the penalties of late payment, bring it up during parent-teacher conferences. There are a number of ways to send a direct message that consistent late payment is unacceptable, and that there will be consequences for families not fulfilling their responsibilities to your studio.
You Have the Power
No matter what decision you end up making remember this: if a parent has signed a contract agreeing to providing you with a sum of money in exchange for your services (teaching them or their children dance), you have the ability to send them to collections and enforce the contract.
The big (and TRICKY) question is: would it be worth it for you and your studio’s reputation to pull that card and get that money?
It’s a hard problem to deal with, because studio owners are people who love their art, love teaching, and aren’t in the business of causing confrontation. You’re in the business of DANCE.
But at the end of the day, you are a business, and some veteran dance teachers will tell you that sometimes it takes that call to collections in order to get the money that you need to keep your doors open.
Your Responsibilities as a Teacher, and Your Responsibilities TO Your Teachers
“If I enforce a tuition penalty and have to cut a student from the studio, or prohibit them from performing in the recital, then it’s the student who suffers because of their parents. And the student’s dance experience is the whole point of running my studio!”
We all want dancers to have the best experience possible. To learn the value of practicing, taking criticism, coming out of their shell, and having the confidence to own the stage.
But your studio CAN’T EXIST if you’re not making money.
The combined tuition from all of your students goes towards supporting an entire community of people: you, maybe your family, your teachers, maybe your teachers’ families, and then all of the dancers and their families who get to have a dance experience thanks to your studio. Everyone’s contributions count!
So sometimes you have to think about the bigger picture when it comes to enforcing penalties for late payment. You can’t not pay your teachers because you haven’t received tuition! That’s an unacceptable situation, and not one that you should have to deal with.
If your teachers’ salaries are at risk, it’s time to take some action.
Get Ready for Next Season
Maybe your studio is at a point where you just can’t take the risk of sending a parent to collections, or you really want to try to find a different solution to the late payment problem and will bite the bullet this season.
What’s the move? Start rewriting and preparing next year’s studio policies NOW. Sometimes policies aren’t clear enough or aren’t easily enforced, so parents feel like they have some leeway on their payment schedules.
NOPE. They shouldn’t! You’re providing a valuable service, and should expect to be compensated for your time and effort (and patience haha). Chart out new policies like:
- Instead of monthly payments, 3 larger payments over the course of the season
- Incentives for paying for the full season all at once (like a discount, or an extra private lesson)
- Checkpoints for tuition payments and clearly defined penalties for missing checkpoints, like not dancing in a community event or not being able to attend class after a certain amount of time
Does this route hurt a little more than the more direct routes? Yes. Is it still a valid option? Yes! Every studio’s situation is different, and we can’t know what factors are influencing your personal business decisions.