Annual vs. Term Based Billing

Private schools are (in essence) a business. Although schools and education providers face unique challenges, they still exhibit most - if not all - the key characteristics of any other service business. An effective billing strategy can be a key ingredient in succeeding in this type of business. Implementing a robust platform to manage billing is half the battle, but you may also want to consider how your billing frequency affects your income, parent/ guardian satisfaction, and school reputation.

Through advances in technology and the resultant shift in billing structures in other industries, annual billing is becoming an increasingly viable option. We’ve compiled some information that may help you weigh up the pros and cons of annual billing compared to a term based structure.

Advantages and Disadvantages of Annual Billing,

Advantages and Disadvantages of Term Billing

How About Monthly Billing?

Monthly billing is the standard for most companies, and with subscription-based services becoming prevalent, many households have more monthly payments than ever. So, it’s no surprise this model is also becoming more common for schools. Rather than a single lump sum payment or four slightly smaller chunks, school fees are broken down into smaller, more manageable payments that fit nicely into their monthly budget.

This option has the potential to reap a consistent revenue stream, and accurate cash flow projections.  However, it may be worth considering the additional administration work this method could create, including processing and administering the payments each month, rather than on a term or yearly basis.

Providing Multiple Options.

There are pros and cons for each billing frequency, and what works for your school may not work for another. Of course, there’s nothing stopping you leaving the choice to your parents, however there are some things you may want to consider.

The more pricing options you offer, the more resources you will need to manage the process and perform follow ups. In addition, using a combination of billing methods could potentially cancel out some of the benefits that each frequency (when used as a stand-alone option) would bring to the table.

Top Tips for Billing Practices.

David Buley, Chief Financial Officer of the Independent Education Sector NSW, compiled a list of 'best practices' for recurring billing in schools. Here’s some of Mr Burley’s key points:

• Regardless of your billing method, parents should be able to access and review payments that they have made and print past or current invoices.
• Some banks provide payment gateways that can be made accessible through your school’s portal to provide easy payment options for parents.
• Support multiple payment types and pass on merchant fees if parents choose to pay by credit cards.
• Provide billing date options to parents, which may lead to higher parent satisfaction. This is easier if you use an automated platform for regular billing.

View Mr Buley’s full article here.

At the end of the day, you know your school best. Finding a billing system that works for you means weighing up the pros and cons to see what method is best for your school and the school community.