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How to deal with non-payment of school fees

The risk of non-payment of fees by parents of leavers can be a real concern for many independent schools. Therefore, you need to reduce that risk or take appropriate action when the worst happens.

The impact of the COVID-19 pandemic is still affecting many people's incomes and rising costs are putting increasing pressure on household budgets. Against this backdrop, it's more important than ever for creditors to keep a close eye on their debtors. That means being aware of the risk of a debt becoming overdue or not being paid at all.

For the independent school sector, this is a particular concern in the lead-up to the summer term, when many students will be approaching their final days in school. Of course, most parents will happily meet the payment deadline. However, those under financial pressure may be tempted to delay payment or, if their financial position doesn't improve, end up defaulting on the debt.

The good news is that, when a parent is unwilling or unable to pay the school fees that are due, there are several options available to you.

Ensure you have robust credit control processes in place

Prevention is always better than cure. Therefore, pre-empting a potential default by sending timely reminders and/or engaging personally with the debtor can pay dividends. It's also vital to keep thorough records. If you do have to take things further, having access to clear, written evidence will be essential.

The most important thing to do is to act promptly. Your finance team should contact the debtor as soon as they miss the payment deadline. Remember, the longer you leave things, the more difficult it becomes to recover the debt, particularly if the school year has ended and the student has left permanently. Even professional debt collection agencies have much more success recovering debts that are less than six months old.

Offer a debt management plan

Financial difficulties can be temporary, particularly if the debtor's inability to pay is linked to cash flow issues that have arisen because they're self-employed or run their own business. Offering the parent a debt management plan before their child leaves the school can be a good option. A payment plan can be drawn up, with regular reviews of the debtor's financial circumstances to see if it's appropriate to increase the instalments or ask for the balance of the debt to be settled.

When to consult a debt collection agency

The simplest and most effective way for an independent school to recover unpaid school fees is to instruct a professional debt collection agency. Their expertise and experience can achieve positive results and, if you choose an agency that works on a commission-only basis, it's a cost-effective way to go.

When choosing a debt collection agency to work with, it's important to think about the reputation of your school. Will the agency always act with tact and integrity to ensure that your good name is protected?

For total reassurance, it's a good idea to choose a debt collection agency that's a supplier partner of the Independent Schools' Bursars Association (ISBA), which signifies that they're a trusted name in the private education sector. They should also be a member of the Financial Conduct Authority (FCA).

Private education specialists

At Redwood Collections, we're the go to agency in the private education sector. We represent more than 700 schools and trusts, supporting them with efficient, effective debt collection and debt management, as well authoritative advice and guidance if it becomes necessary to take legal action.

The sooner you refer a case to us, the less likely it is that legal action or insolvency proceedings will be needed. Our robust and structured internal processes enable us to separate those who can't pay from those who won't pay, so that we can put effective interventions in place at the earliest opportunity.

It's all about helping your school to maintain optimum financial stability and Grow Stronger.

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