The lack of payments from students is an issue faced by every language school. Unfortunately, for many schools, especially those just starting out, not being prepared for such difficulties can pose a significant threat. We observe that schools in their early stages, overwhelmed with other important matters such as acquiring clients, advertising, marketing, and teaching methodology, often overlook the risk of student debtors as a serious business risk.
Meanwhile, half of all new businesses fail within three years of opening. One of the factors influencing these statistics was proper payment management and effective response to payment delays. Here’s how to handle it.
What will you find in this article?
- How to prevent problems with non-paying students?
- How to recover money from a student?
- Factoring – solving payment issues from students
- Summary – what to do if a customer won’t pay?
How to prevent problems with non-paying students?
Many difficult situations with non-paying students can be avoided if you properly protect yourself, both formally and financially.
A well-structured agreement with the student
It is crucial that the agreement includes a clause stating that withdrawing from the course does not exempt the student from the obligation to pay for the classes that took place up to the point of contract termination. Of course, you are bound by the rules dictated by the government and must avoid prohibited clauses. You can also include a notice period, e.g., one month, which gives the student time to reconsider their decision and you time to secure the payments due. Find out what a student agreement should look like.
Collecting payments in advance for classes
Ideally, the student should pay in advance for the entire month or course. If you offer installment payments, plan them so that you receive the full payment as quickly as possible, for example:
- half of the price paid in September, half in November
- 5 installments paid month after month
Avoid stretching payments over the entire year, as this could increase the risk of payment issues.
Payment reminders
Regularly sending SMS or email reminders about upcoming payment deadlines can significantly reduce the risk of delays. According to many schools, SMS reminders are the most effective form of reminder.
Discounting the last installment
The last installment is often problematic to collect, especially when the weather starts to warm up. Therefore, it is best to make this payment as low as possible – if the client drops out before the end of the course, they automatically do not receive a discount from you. Perhaps this will also motivate them to complete the classes.
Flexible payment methods
Allowing payments in cash, by transfer, by card, or online through electronic payment intermediaries like PayU should be standard. This gives students more payment options, which reduces the risk of delays. If you use LangLion, the language school management platform, you can take advantage of integrated Online payments. This way, your students can pay for installments directly from their E-gradebook account with just one click.
Consistency and predictability
Keep track of payment dates and react immediately when delays occur. The student should immediately be aware that if they do not pay, the school will take steps to recover the debt and will not let it go. Set firm deadlines for payment reminders, for example, 3 days before, on the due date, and 5/7/10/15 days after the due date. The student should know that the school will take steps to recover the due amount.
Give a final chance
It is always worth striving for an amicable solution. Therefore, before proceeding with the steps mentioned in the next point, send one more SMS, write an email reminder, or make a phone call. If the student wants to arrange a payment plan, be flexible. It may be just a temporary difficulty, and once resolved, this person might continue with your school for further courses.
How to recover money from a student?
If, despite all efforts, the student still does not pay, it’s time to take more decisive actions.
Suspend individual courses or refuse participation in group classes
Although this can be difficult, especially when it involves children, it is worth considering suspending the course until the arrears are settled. Remember, you are not responsible for this situation—the child’s parents did not pay for the classes. Act firmly but ethically. I do not suggest removing the child from class in front of the entire group.
It is better for the instructor to ask the child privately after the class and inform them to go to the office, or the instructor can relay the information that due to unpaid fees, the child will not be able to participate in the next classes and should ask the parent to contact the school. It is possible that parents are not aware that they have the right to withdraw from the contract and not pay for the course until the end of the year. It is worth clearly communicating this.
Remember, for classes conducted without payment, you are paying out of your own pocket while simultaneously increasing the other party’s debt.
Pre-litigation demand letter
This is often an effective way to remind them of the serious consequences of non-payment. It helps signal that gentle actions have ended, and the next step will be court proceedings. Use ready-made templates available on the Internet or hire a professional company for this task.
Official letter from a law firm
If the debtor is a company and the arrears involve larger amounts, it is worth seeking help from a law firm. A letter from a lawyer can carry serious consequences and prompt immediate payment of the owed amount.
Filing a lawsuit
In extreme cases, when a student-debtor does not respond to any other measures, the remaining option is to file a lawsuit to obtain a payment order. You may want to consider online courts, which often offer lower costs and a simpler process. Court fees in such proceedings are typically a small percentage of the claim amount, with a minimum fee that varies by jurisdiction.
In most cases, the court will issue a payment order based on document analysis, without requiring the presence of the parties or a formal hearing. A hearing will only occur if the court has doubts or if the debtor contests the payment order. Once the payment order is issued, you can proceed to enforce the debt through legal channels such as engaging a bailiff.
Factoring – solving payment issues from students
Factoring is a service where a financial institution takes over the responsibility of collecting receivables. The student signs an agreement with the bank, which from then on collects course fees and, if necessary, handles debt enforcement. The school settles directly with the bank, which eliminates the problem of non-paying students, although it involves additional costs.
Summary – what to do if a customer won’t pay?
Preventing issues with non-paying students and quickly reacting to arrears are crucial for maintaining the financial liquidity of a language school. Well-constructed contracts, systematic payment reminders, and readiness to take more decisive steps can significantly reduce the risk of financial losses.
For larger schools, where the scale of the problem is greater, it is worth considering solutions such as factoring, which, although costly, can completely eliminate the issue with delinquent students.
How do you handle situations when a student refuses to pay?