Non-paying course participants are a problem faced by each school. Please find below a few ideas of how to cope with it.
1. Be wise before the event
Many difficult situations with non-paying students can be avoided if you secure yourself properly from them.
A well-designed contract with students – it is worthwhile inserting a provision into the contract whereby resignation from a course does not release students from the obligation to pay the tuition fee (e.g. for the classes that took place before the student resigned). If you prefer more flexible solutions for the course participants, you can insert a termination notice period (e.g. of one month).
Remainders – as a standard it is worthwhile sending an SMS or email with a remainder about the approaching payment date. The info we receive from many schools suggest that sending a SMS is most effective.
Discounts only on the last instalment – recovery of the last instalment is usually most troublesome, so it’s best to make it as low as possible. At the same time, if the customers resign just before the course ends, they will not get a discount.
Information about payment – make sure course participants have full access to transfer data (name of the school, account number and amount) and know what the transfer name should be.
Flexible payment forms – the facility to pay both by bank transfer and with cash should be a standard feature. If many people inquire about card payment option, introduction of such solution is worthwhile considering too.
Consistency and predictability – those features should apply to your contacts with course participants. Payment dates must be adhered to and you have to respond immediately if any student is in delay. Your customers must be aware that if they fail to pay, the school will take steps aimed to recover the due amounts.
Give them last chance – it is always worthwhile aiming at amicable resolution. Therefore before you take any formal steps, send an SMS, write an email with a remainder, or make a phone call. If a student wants to spread the payment over time – be flexible. Perhaps those are just temporary difficulties, and once they are resolved the person will remain in your school for next courses?
2. When a course participant does not pay
If despite our efforts a course participant fails to pay due amounts to us, we need to take much more resolved steps to recover them.
Pre-court call for payment – it has not legal relevance but is frequently effective. It helps you send a signal that the stage of soft persuasion is over and as the next step you will take the matter to court. In the Internet you will find many ready samples of such document. Remember that you are also eligible for statutory interest!
An official letter from a law firm – if it is a business entity not a natural person who is in delay with payment, you can ask a law firm for assistance in recovery of the due amount. It is worthwhile reaching for such solution when the overdue amount is quite large.
Bringing an action at law – if the attempts to reach an agreement with the debtor failed, the next step is bringing an action at law for issuing the order to pay. In most cases a court will issue such order on the basis of the analysis of documents without presence of the parties and without legal hearing. The latter will only take place if the court has any doubts or when the debtors raises some charges against the order to pay.
3. Factoring, or forget problems with payment
The aforementioned methods are effective but they take a lot of time. Factoring is an interesting alternative to them. The concept is that a student signing up with the school enters a contract with a financial institution (e.g. a bank) providing such services. From then on the course participant transfers tuition fees to that institution and the latter undertakes to enforce any potential receivables. The school makes settlements directly with the bank. Use of factoring does entail costs but it may be profitable for big schools where the scale of customers’ debts is bigger too.
How do you cope with unreliable course participants?