|Common Contract Mistakes|
Brought to you by ProviderWatch
Important points to keep in mind
The Missing Piece.|
Think about the last time you personally signed a contract at the gym, the
bank, signing up for cable service, buying cellular phone service or contracting
to have your septic system pumped.
Did the contract only ask for your signature or did you have to fill in your
name, address, and phone number?
More than likely, you also had to provider your birth date, drivers license,
and social security number. (Most companies stop short of asking for your
first-born child) Those companies ask for that information, because they
know how to use their contract to protect their businesses. You need to do
Over 98% of providers fail to include a section for the parent's name, address,
phone number, and identification directly on the contract.
This important step is commonly overlooked because the provider usually asks
for this information on a separate "enrollment" form. Your contract should
be a "stand alone" document. In other words, if you were faced with a legal
dispute, the contract should contain all the necessary information and documentation
need to argue the case.
If you are one of the 98% who have forgotten to include this information
on your contract, all you need to do is update it with a section for the
parent to fill in this important information.
*Personal note: Be sure you verify any information provided to you. Look
at driver's licenses and social security cards. If the parent is not willing
to let you verify
the information they have given you, that should alert you that there may
be a problem.*
Past Due? What Will You Do?
Now, lets go back again to the last contract you signed. In the fine print,
there was a section that told you exactly what would happen if you didn't
pay for the services you were purchasing. (You did read the fine print, didn't
you?) No matter what company or service you were dealing with, I'm sure they
told you step-by-step what they would do (short of kidnapping the family
pet) if for some reason you didn't pay or were late in your payments.
Most daycare providers do not having a clear policy about what will happen
if the parent becomes delinquent in their childcare fees.
If you are one of them, you need to state exactly what steps you will take.
Even if you think your contract covers everything, go back and read it again.
Is there anything you have left out?
Some questions to consider are:
. How much time will you wait before taking action to collect
on past due accounts?
. One day, one week?
. Will you charge any daily late fees?
. How long will these daily late fees continue?
. Will you charge interest on any unpaid amounts?
Be sure that you are very specific about the steps you will take. Many providers
do have a policy listed on their contract that briefly talks about past due
bills, but they limit themselves by stating that the parent will be liable
for "court costs" incurred while trying to collect the debt.
This is a mistake!
You should always state that the parent will be liable for any and all collection
costs. This way, if you decide to use a collection agency or do the collecting
yourself, you are still able to recover any costs that you incur. For example;
postage or printing costs, attorney fees for consultation, long distance
phone calls, income lost due to closure of the daycare, etc.
Since ProviderWatch offers free reporting on all delinquent accounts, many
providers even include a policy that informs the parent that their account
information will be reported to ProviderWatch.
Remember, any time you have an unpaid daycare bill; you can immediately contact
ProviderWatch with this delinquent account information. This is a free service
and can be done via the website (www.providerwatch.com)
or by a toll free phone call (1.866.267.3691).
This is an example of the policy to inform parents of this action on past
If your childcare account remains unpaid for any reason, be advised that
your account will be reported to ProviderWatch immediately. ProviderWatch
is a credit-reporting agency that specializes in childcare accounts. Your
delinquent account being reported to ProviderWatch will likely make it more
difficult for you to find childcare providers willing to accept your children
until any such accounts have been paid. You may contact ProviderWatch if
any childcare provider informs you that their decision not to accept your
child into care is based in whole or in part on information received from
this agency. ProviderWatch will disclose any delinquent account information
on record so that you may resolve these accounts.
ProviderWatch * www.providerwatch.com * 1.866.267.3691
"Prior", "Previous", and "In Advance"??
The third most common mistake is using words like "prior authorization",
"previous arrangement", and "in advance" in your policies.
For example: "The parent must pick up their child by 5:00 p.m. unless prior
arrangements have been made."
Stop and think about that for a minute.
Imagine yourself standing in front of a judge trying to explain to him that
a phone call from the parent 20 minutes before 5:00 was not your idea
of a "prior arrangement".
By themselves, these words don't mean anything...especially when you are
standing in a courtroom trying to prove a case.
If you want to use terms like this, be sure to include specific information
such as how much time will qualify to be considered "prior arrangement".
Be sure you clearly state that you must approve of any changes in such procedures
or policies. (The parent should not be allowed to make a judgment call on
what will work for you.)
Also, when you are considering these policies, remember to require "notices"
and "alternative arrangements" to be in writing as often as possible. This
doesn't mean that you have to require a big fancy form every time; just a
note from the parent will work. It is best to have both signatures on these
types of documents, yours and the parent involved. Save these notices in
the child's file!
No matter what, be sure your contract includes information allowing you to
update your contract!
Towards the bottom of your contract make sure you have a section that clearly
says you have the right to update and/or change the terms of your contract
as needed. You will of course need to stipulate that the parent will receive
a written notice of any changes, 14-30 days in advance of the changes taking
effect. This gives the parent plenty of time to review your proposed changes
and decide if they want to be bound by them. We recommend giving a 30-day
notice rather than 14 days.
People usually don't like change, so give them time to adjust!
If you don't include this policy, you may end up being stuck with your existing
contract, even if you decide there are changes you want to make!
Now that you know what some common contract mistakes are, re-read yours!
Have you made some of these same mistakes?
Don't panic! Just use the information in this exclusive report and fix those
areas. It shouldn't take long to make the necessary changes. Remember that
you will need to let your childcare parents know that you are updating your
If you see some of these common errors in your own contract, the chances
are that there are probably more! On average, the contract review specialists
at ProviderWatch find 10-12 mistakes, errors, or omissions on a childcare
contract. It is terrible to get stuck in a situation just because of a simple
mistake that could have been easily fixed!
Providers lose in small claims court every day, simply because they didn't
know what to write or how to write their policies. Almost every situation
could have been different if only the provider would have had an effective
How Can You Make Sure Your Contract Will Protect You?
ProviderWatch has a simple answer that won't cost a fortune! Every provider
who becomes a member of ProviderWatch receives a comprehensive, personalized
contract review for FREE! Don't wait to lose a collection or policy dispute
before making sure your contract is effective! Get it done now and save yourself
the headache and expense of losing on a technicality.
In addition to your initial personalized review, you can get your contract
reviewed for free EVERY year that you are a member!
No more stress!
We want to make sure you are successful and don't lose money by making a
simple mistake on your childcare contract! Like I said before, our professionals
find 10-12 mistakes on each contract that they review.
You can stop worrying!
In addition to your free contract review, membership with ProviderWatch also
allows you to screen your daycare applicants using our exclusive childcare
credit reporting service. You can find out if any parent applying to your
daycare has unpaid bills with other providers! ProviderWatch is the only
company that offers these services nationwide!
Whether applicants have:
- bounced checks
- left without notice
- refused to pay their co-payment
No matter what the reason, you will know right away if the parent applying
to your daycare still owes money to other providers and make the best decision
for your business.
This service alone saves providers hundreds of dollars every year. In addition,
you have the added benefit of a free annual contract review! Call ProviderWatch
to learn more! 1.866.267.3691
******************About the Author ********************
Cindy Wren, founder and CEO of ProviderWatch, is a wife and mother of two.
ProviderWatch, founded in 2000, was developed to bring the power of the information
age to childcare professionals across the United States, help eliminate provider
turnover and increase long-term provider success.
Cindy, a member of the N.A.E.Y.C, has presented risk management training
courses at childcare conferences throughout the Northwest. She continues
to search for innovative ways to reach out to the daycare community and help
provide resources and information for managing profitable childcare businesses.
In spite of challenges both personally and professionally, she still firmly
believes that any thing is possible when planning, action and determination
meet. Email Cindy
You may freely reprint this article on your website provided the following caption remains intact. Article courtesy of ProviderWatch. For more information about the only nationwide credit reporting agency for childcare professionals, visit providerwatch.com or call toll free 1.866.267.3691.