To charge or not to charge? Why deposits and retainer fees are essential for your childcare business

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The NDNA insight report published in February 2014 states that the mean occupancy of nurseries in England is 74%. As occupancy is the key factor in creating a sustainable childcare business, charging both deposits and retainer fees are essential for:

–          Helping to maintain your occupancy levels

–          Allowing you to adequately plan to fill places in the future

Many nurseries ask new parents to pay one month’s deposit before their child starts at the setting. This deposit is normally refunded when the parent decides their child will leave the nursery, or it can be used to pay the last months fees instead.

Why you should charge a deposit

The advantage of charging a deposit is that it discourages parents from removing a child from your setting unexpectedly and then you having difficulty filling that place mid way through the term.

To save any disputes over how much is refundable to the parent and when, it is good practice to cover these details as part of a formal contract that both parties sign when a new child starts at the nursery. The contract should include what length of notice a parent must give to get their deposit refunded (usually four weeks) and how they must let you know they wish to terminate the contract.

If the parent decides to end the contract immediately and withdraw the child from your care then they must pay the fees in lieu of the notice stated within the contract.

Why you should charge a retainer fee

A retainer fee differs from a deposit as it allows a parent to reserve a place at a nursery for their child that could be offered to someone else. The retainer fee can be charged for the weeks that you are waiting for the child to start, therefore you do not lose any money if a parent chooses to delay the date that their child joins your setting.

If circumstances at your setting change and you are no longer able to offer parents the place they have reserved, the retainer fee must then be repaid to parents. Equally, if those parents change their mind and decide not to take the place up, the retainer fee is not usually refundable.


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