The dust from Christmas has settled, families have a clearer view of their finances and unpaid balances from the autumn either start to move or harden into longer term risk.
At the same time, the wider context is getting tougher. Research from Weatherbys Private Bank shows the cost of privately schooling the next generation is set to nearly double when inflation and VAT are combined, with average day fees now over £22,000 a year for some schools.
To add insult to injury, late payments are rising across the UK as a whole. One recent analysis of Payment Practices reports found £109.2 billion of invoices were paid late between January and September 2025. The Small Business Commissioner estimates that late payments cost the UK economy around £11 billion a year and contribute to the closure of thousands of businesses.
Independent schools are not immune. Understanding how parents tend to behave in the second term helps bursars decide where to be patient and where to step in earlier.
How the second term affects school cash flow
Advisers working with independent schools note a healthy school should be cash flow positive at the beginning of each term, receiving income before major costs such as salaries and HMRC are paid. When fees are delayed into the second term, the school effectively carries the risk for longer, often using short term borrowing as a buffer.
At the same time, more families are asking for flexibility. One survey found that 94% of school heads, bursars and finance managers are now exploring options that allow parents to spread payments, up from 89% just a year earlier. Premium Credit’s research suggests around 17% of parents at private schools already pay monthly and over half of those who don’t would like the option.
These arrangements can support families, but they also increase the chance that a missed instalment in the autumn turns into a larger arrear by the second term.
Psychological behaviours that shape second term payments
1. Engagement returns before action
Families often re-engage in January because the New Year acts as a psychological reset. Research into fresh start moments shows people make more contact after temporal landmarks, but financial action usually lags behind. This is why schools see replies increase, even when payments do not immediately follow.
2. Instalment requests rise as families recalibrate
Many parents request payment plans in the second term because they are reassessing what they can realistically afford. This reflects present bias, where people overestimate their ability to manage future commitments and underestimate current strain. It’s a predictable pattern after Christmas spending.
3. Hesitation signals deeper decisions about September
When families hesitate or slow down payments in January and February, it often reflects the sunk cost dilemma. Paying fees feels like recommitting to a decision they may be reconsidering. Second term payment hesitation can therefore be an early indicator of families weighing up leaving or switching schools.
4. Small disputes appear as a pressure response
When families are under financial strain, they sometimes raise minor fee queries or change the reason for a dispute. This behaviour aligns with loss aversion. Challenging the invoice is psychologically easier than acknowledging financial difficulty, even if the challenge isn’t central to the balance owed.
5. Silence becomes a more meaningful warning
If a parent stops responding after Christmas, it often reflects avoidance coping. This is a well-recognised reaction when people feel overwhelmed or embarrassed about arrears. Silence in the second term is a stronger indicator of non-resolution than silence in the first term of the academic year.
6. Repeated slipping of payment dates has a psychological cause
When parents repeatedly promise to pay and miss the date, this often stems from optimism bias. They genuinely believe they will have more financial room next week or next month. The intention is real but the affordability isn’t. By the second term, this gap becomes much clearer.
7. Pride can limit honest conversations
Independent schooling is tied to identity for many families. When they fear they can’t keep up, embarrassment can delay communication. This reflects identity-protective behaviour, where people avoid discussions that challenge their self-image. It’s one of the reasons some families stay polite but vague.
8. Short replies and delayed decisions signal cognitive fatigue
After Christmas budgeting, high winter bills and early-year demands, many families experience decision fatigue. Financial decisions feel heavier, so communication becomes brief or delayed. This pattern is common in January and February and often clears only once a structured plan is in place.
Second term behaviours tell schools far more than who has or hasn’t paid. Some families will move with a reminder, some need a more realistic plan and others may not engage without help. Understanding these patterns allows finance teams to act with confidence and reduce the risk of arrears carrying into summer. The most effective decisions come from looking at behaviour as well as numbers.
If you’d like a structured way to review your outstanding accounts this term, our editable Outstanding Accounts Triage Spreadsheet can help you assess each case quickly and decide the most appropriate next step.
