McCormick Institute for Early Childhood

BY Jane Humphries | October 3, 2023

This document may be printed, photocopied, and disseminated freely with attribution. All content is the property of the McCormick Center for Early Childhood Leadership.

The past few years have taken a significant toll on the field of early childhood care and education. Many programs have had to close, while others have re-opened or are new to the field and are struggling to survive. When talking with leaders whose programs are thriving, three strategies have emerged as keys to stability. These strategies include carefully managing cash flow, utilizing multiple payment options for tuition, and adhering to tuition policies and procedures. Let’s learn a little more about each strategy.


MANAGING CASH FLOW


Tuition paid by families is the largest revenue stream for many early childhood programs. This tuition, the foundation of a program’s budget, is distributed across the fiscal year and serves as the educated guess for income when operating a program. A budget guides income and expenditures throughout the year. Additional reviews by accountants provide insights based on the history of program budgets by analyzing and presenting numbers that help to determine actual costs. While all of this financial data helps to manage the overall fiscal operations of an early childhood program, why is managing cash flow so important?


Adequate cash flow keeps a program operating day-to-day. In some instances, this can include using a line of credit, should that become necessary. A cash flow statement shows what funds are immediately available for use. The statement, which reflects current amounts within similar budget categories and line items, reflects the mental exercise of going through all income and expenses to determine the dollar amount on hand at any given time. This provides the ability to know when actual funds arrive and when expenditures can be scheduled for payment and allows a program leader to manage cash flow proactively instead of reactively. Cash flow relies on receiving tuition in a timely, efficient, and predictable way. Having efficient payment options for families to utilize assists with this process.


OPTIONS FOR TUITION PAYMENT


Getting cash in the door quickly and securely is the next strategy. Today’s banking industry provides many options to small and large early childhood program businesses. Some of the most commonly used include:


Each one of these payment options has monitoring and cost considerations:

  • Bank drafts may not be funded if there are no funds in a family’s account, and follow-up would be necessary to include collecting fees potentially charged by banks.
  • Many love the ease of swiping a credit card or the use of popular online payment services to benefit from participation in reward programs. However, it may be necessary to charge the user ‘swipe or use fee’ percentage to offset the convenience of credit card use.
  • Automatic bill pay services secure funds as long as the amount due does not exceed the account balance. Too many overdrafts or insufficient fund fees may result in dealing with a family’s account switching to another payment method. This may result in family members playing “catch-up” on their tuition for a few weeks.
  • Payment by check is still accepted, which has resulted in programs utilizing bank apps to upload images of the checks within these apps to avoid trips to the bank and allow quicker access to the funds within the program account. While this means tracking checks and pursuing those presented with insufficient funds, it allows for quicker fund availability. Check for hidden fees as some banks may charge a small fee after a certain number of electronic deposits.
  • While cash apps are very convenient and have minimal fees, in 2023, the IRS now requires that any business transaction must be reported on a Form 1099-K if more than $600 is received. Cash apps may provide this service for a fee.
  • Accepting cash. Smaller programs may appreciate having cash in hand, while larger programs might prefer to avoid accepting cash payments due to the risks associated with having cash on the premises. A program may want to minimize the risk of theft or harm to an employee. Tracking cash payments for IRS purposes is also cumbersome if a system of accountability is not set up.


There are many options for receiving payments to have access to funds promptly. Choosing the best option requires understanding a family’s needs and utilizing effective tracking systems. However, none of this will work if tuition is not paid regularly. This is when a program leader must develop, implement, and enforce tuition policies and procedures.


TUITION POLICIES AND PROCEDURES


Collecting payments is vital to maintaining the financial health of any early childhood program. However, it is probably one of the least favorite roles of a program leader. Careful consideration must be given when creating tuition policies and developing procedures to collect funds. It is essential to have daily management practices and processes that minimize collection issues. Proper accounts receivable management allows program leaders and their staff to do what they love, be with the children.


Programs must have effective policies in place, and they must enforce them consistently. Inconsistent enforcement can result in a strain on cash flow. Managing the accounts receivable will always require time from a program leader. The first step is ensuring that effective policies are articulated and provided in writing to all family members or caretakers responsible for the child. Most programs have payment policies that impose significant fees for late payments. Those who do not pay can also face the possibility of children being disenrolled when payments are not received promptly.


For policies to be effective, program leaders must follow account receivable procedures regularly. Program leaders should allocate time each week to review the accounts receivable. Any outstanding balances should be dealt with by a formal written or electronic notification and personal contact by phone and during the morning or afternoon pick-up hours. While email collection notices or notes to families serve as documentation, these are easy to avoid and ignore. Speaking personally with each family member is more likely to yield results. Special arrangements can be considered for long-term families who communicate regularly, but they should be in writing and followed through.


CONCLUSION


Managing cash flow, offering multiple options for tuition payment, and staying on top of tuition policies and collection procedures are administrative leadership strategies to support program stability. Program leaders should not apologize for having consistent policies and procedures in place. By maintaining control of cash flow, program leaders have a better opportunity to provide a safe, stable early childhood program where children can grow and learn.


Want to learn more about Building a Sound Business Strategy? Check out our Aim4Excellence™ online professional development opportunity, and also consider joining us in February 2024 by attending, in person, Leadership Connections™ to learn how experts in our field are navigating these and other challenges. Mark your calendar for February 7-9, 2024, and watch for registration to open soon!

Jane Humphries, Ed.D., serves as the Aim4Excellence™ Program Specialist and curriculum developer for the McCormick Center for Early Childhood Leadership at National Louis University. She has written curriculum and facilitated online learning in graduate and undergraduate level courses since 2004. The Aim4Excellence program is the online National Director Credential recognized by the National Association for the Education of Young Children (NAEYC) accreditation and is incorporated in multiple state quality rating and improvement systems.

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Building Community Partnerships for Lasting Impact

By Cara Murdoch and Sherry Rocha • December 12, 2025
By Cara Murdoch and Sherry Rocha Community collaborations can strengthen your early childhood program, expand services for families, and increase your visibility and credibility as a trusted resource in the community. But effective partnerships don’t begin with a phone call—they start with a plan. Start with internal planning Before reaching out to community members or organizations, gather insights from your internal team. Hold a brief planning meeting to discuss goals, identify needs, and build a shared vision for collaboration. Consider including: Members of your board of directors or advisory board Program staff members Interested family members and parents of enrolled children. REVISIT your mission and goals A clear, shared understanding of your program’s purpose will guide effective partnerships. Before reaching out to community members or organizations, gather insights from your internal team. Hold a brief planning meeting to discuss goals, identify needs, and build a shared vision for collaboration. Consider including: What is your mission? What strengths and expertise do we bring to the community? What challenges do our enrolled families face? What support or resources would be most helpful? What can we offer potential partners in return? Clarity about these questions will ensure that your outreach to community members and organizations is focused and meaningful. Learn about local resources Begin exploring the services and organizations that exist in your community. These may become valuable referral partners or direct collaborators. Examples include: Early intervention services Family support agencies Mental health providers Multilingual tax-preparation volunteers Knowing these resources helps you connect families with the help they need. share your space and services Your early childhood center may be a valuable asset for other groups. Consider offering your space to other programs or groups to strengthen your role as a community hub. Possibilities include: Scouting America or Girl Scout meetings Parenting workshops or support groups Health screenings or nutrition programs Community committee meetings participate in community events Raising visibility in your community opens doors to partnership. Become involved in: Neighborhood clean-up days Local fairs or festivals Library literacy events Cultural celebrations School district events These types of interactions naturally build trust and relationships. build and expand your network Partnerships often begin with small conversations or shared goals. Stay curious and connected—the more people you meet, the more opportunities arise. Potential collaborators include: Museums Public libraries Human services departments Colleges and universities Local schools Cooperative Extension services Hospitals and clinics Banks and financial advisors Mental health agencies Early intervention programs Remember: partnerships are mutually beneficial Successful collaborations are built on: Clear communication Shared goals Appreciation for each other’s strengths A commitment to supporting families and the community Whether the support you receive is financial, advisory, or educational, strong partnerships help everyone thrive. A final thought Community partnerships don’t happen overnight. With the proper planning, your early childhood program can become a powerful and connected resource in your neighborhood. Start small, stay open to ideas, and let relationships grow.
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