Parents Who Don't Pay: Is ProviderWatch a Solution?

Have you ever had a parent leave your program owing you money?

Do you wonder if the next parent you enroll in your program has a history of not paying their previous caregiver?

Unfortunately, these are common concerns of family child care providers across the country.

In my travels across the country, a majority of providers I have talked with have lost money owed to them by parents. It's not unusual for the amounts to be in the thousands of dollars.

What can be done?

One solution is ProviderWatch, a nationwide credit reporting agency created exclusively for daycare providers.

ProviderWatch collects reports from family child care providers on parents who are delinquent with their child care payments. Child care providers can also contact ProviderWatch to see if prospective clients owe money to previous caregivers.Started in 2000, ProviderWatch offers two services:

Free Account - With this free service you can report the names of parents who have left owing you money.

Risk Management Membership - In addition to the free benefits cited above, you can submit the names of parents to ProviderWatch and learn whether the parent owes a previous provider or has a history of payment problems. This can help you screen parents before you enroll them. Other member benefits include:

* ProviderWatch will review your contract annually and offer suggestions for ensuring parent payment.

* Access to 39 daycare forms to use in your business.

Further Information

ProviderWatch is not a collection agency. It's a service that allows you to report delinquent parents and find out if a prospective parent has been delinquent.

If a parent leaves owing you money, it's still up to you to collect it, by taking the parent to court or using a collection agency.

Although some child care providers have questioned whether this service is legal, ProviderWatch asserts that it does comply with all federal (Fair Credit Reporting Act) and state laws.

It is not appropriate to report a "problem parent" who doesn't owe you money.

You don't have to tell applicants that you are going to look them up on ProviderWatch. Their website provides details on what you must do if you do refuse to enroll a parent because of the negative information you receive from this company.

My Comments

Although I do recognize that unpaid bills are a significant problem with many family child care providers, I don't think a service such as ProviderWatch is the best solution.

Providers can avoid most problems with parent payments by requiring parents to pay at least a week in advance, and pay the last two weeks in advance.

Secondly, ProviderWatch only works if many, many providers in your area are reporting delinquent parents to them. If you contact ProviderWatch to find out about a prospective parent, it won't be able to help you, unless the parent's previous caregiver has reported her.

A prospective parent may owe their previous caregiver, but if they are not listed by ProviderWatch, the service won't do you any good.Some providers use ProviderWatch to their advantage, without paying a fee, by putting in their contract that any unpaid balances will be reported to ProviderWatch, or a collection agency. This threat, by itself, may work to get some parents to pay up. Such an addition to your contract makes sense to me.

Note: I sent an email with questions to ProviderWatch, but did not receive a response.

Followup: After this article appeared, a representative from ProviderWatch did send me an email answering several of my questions.

Tom Copeland - www.tomcopelandblog.com

Image credit: providerwatch.com

For more information about collecting parent payments, see my book Family Child Care Contracts & Policies.