One of the major issues that daycare providers must content with is collection problems.  With the more traditional methods such as using cash or checks, parents are sometimes late and occasionally write checks that bounce.  To combat late payments and bounced checks, many providers turned to using payment coupon books or automatic processes such as automatic withdrawals, PayPal, or credit card.
Checks or Check
Before the advent of many of the automated processes, the only way for a customer to pay daycare providers was with cash or a check.  Unfortunately, this created all kinds of collection problems.  A receipt had to be generated to show payment, the parent might struggle with on-time payments, or they might even write checks that had insufficient payments, which could result in penalties assessed to the day care.
Payment Coupon Books
Payment coupon books are booklets set up with reminder slips that include the name, amount, and date due. Though it helps some parents to stay organized there are still a host of problems.  First, these do require the daycare providers to pay to have these printed.  It also does not alleviate some of the other collection problems such as checks with insufficient funds.  Plus, it doesn’t work if parents don’t use it.
Automatic Withdrawals (ACH)
To combat late payments and bounced checks, many daycare providers turn to automatic processes such as automatic withdrawals from bank accounts (ACH).   With this method, receipts and late payments are eliminated because parents instruct their banks to allow the daycare to make automatic withdrawals for the specified amount at regularly scheduled intervals.  However, though the daycare does not have to deal with bounced checks, insufficient funds can still be a problem.
Some daycare providers are looking to PayPal to also help solve some of these problems.  The customer can use a PayPal account to pay on-line, which is a huge convenience factor for some parents.  Obviously, there is no need for a receipt and insufficient funds are usually not a problem.  If funds are not available in the PayPal account, the difference is drawn from the bank account or from a credit card account.  Like the automatic withdrawal, parents can also schedule the payments in advance.
Credit Cards
Finally, some daycare providers allow for their customers to pay using credit cards.  This can be done in person or on-line.  It eliminates bounced checks, but a customer can have a credit card rejected due to credit limits.  Like automatic withdrawals and PayPal, credit cards do not require a receipt and can be regularly scheduled to avoid late payments.  There is, however, a small fee associated with each transaction for the vender – usually around two percent.
Over the years, daycare providers have learned that automated processes such as automated withdrawal, PayPal, and credit cards have solved many of their collection problems.  Unlike with cash or checks, late payments and insufficient funds are greatly reduced.  However, no method is perfect, and daycare providers must weigh the benefits of each before choosing the preferred.  They should also be prepared to accept more than one method.