Day care providers - Small Claims Court & Collection Agency?

I'm planning on opening a day care. In my contract I have written that non-payment will be turned over to a collection agency. How do you get in touch w/ a collection agency? What is the difference between taking someone to small claims court & calling a collection agency? How do you get in touch w/ a small claims court? I want to have all this figured out before my business starts.

This is for a Licensed home day care. I have seen it on other day care contracts. It's the only way to collect money from parents who try to "rip you off" & get respect for your business.

All the daycares (family, and other ones) that I've sent my kids to have required payment at the start of the week or month. It is payable by Monday or the 1st of the month. So, all payments are due in advance. So, the worst case, is, you might end up providing a day or 2 of care without getting paid...

I guess this might not work when the hours the parent needs daycare are variable. I would say, you should figure out a formula by which they pay an amount in advance, and then you make up the amount they owe you, or if they paid more, it gets carried forward to next week/month.

Small claims court - not worth it. The amount a parent might owe you coudl be a maximum of, lets say, $800-$1000. To file a claim, you have to go in person to the small claims court, fill out forms, including the person's full name and address, and valid phone numbers, then pick an appointment for the small claims court meeting, then you get the papers to serve to them. It is your job to serve these to those people, or mail them by certified mail, or there are also people standing outside the small claims court who do it for $50 or so...

Sometimes it is hard to prove you served the papers, and you have to show up in court the day of the appointment... The parent can make excuses like 'not well', 'family emergency', 'car accidnet' etc adn not show up. Court date gets postponed......so, it is mostly a hassle, if the amount is less than $1000, and in your case it is so hard to take off! Other parents might not be happy even if you have a helper/substitute to take care of their kids. And, they will be even more unhappy, if they know why you are taking off.

I don't have much idea of collection agency, but some basic research I did on the internet, I found it to be even more painful process than the small claims court.

So, I would say, you make the agreement such that payment is due at start of month/week. And, if you do want to specify some legal action for non-payment, keep it generic, like "Parent/guardian acknowledges that provider can take suitable legal action if payment not made on time".

No idea... but what kind of daycare??
Private home care or licensed by the state??
Have you done the business plan aspect of it??
I've had kids in day care and have never seen such a thing on the application.. sounds like a bit of overkill to me.. I would contact a lawyer and have them do up your contracts..

Small Claims Court is usually free, or close to it. However, if you win you may still have trouble collecting. Collection Agencies take a pretty good cut of the money and their tactics can be pretty rough . If you want one, look in the Yellow Pages and interview a couple to see how they operate. Your best bet is to collect the first and last week in advance and if they get further behind then a week use the last week's money, then ask them to leave.