Automating your studio tuition collections is probably the single most important thing you can do for your business this year. You'll see it increase your overall collections percentage, your student retention, not to mention the time you save not handling it all yourself. This article examines exactly how this happens, and why tuition automation is so important.

Increased Collections

The companies that automate your tuition collections for you are better at collecting than you are. (Don't feel too bad, you teach better than they do!) Just by automating your tuition payments with a billing company you guarantee an increase in income each month. With the billing company that I work for we see on average a 10% increase in collections for each studio just in the first month. Just recently a studio with some significant problems signed up and we've seen an increase of almost 20% in just three months.

This increase in overall tuition collections makes any cost of using such a service almost negligible. It pays for itself. Plus, you have the added benefit of not having to do any of the work. Why would you not do that?

Students Love it

Many studio owners are hesitant to automate their tuition billing because they are afraid of how their parents will react. They are afraid they'll lose students. Students and parents love it. They don't have to remember to bring a check in to the studio each month. They have some flexibility in the method of payment they use. They love it. Present it to them as a positive step forward for your studio, don't give them the option to pay at the studio, and you won't have ANY problems.

Here's the dirty little secret. Those parents who resist are those who will be your problem payers anyway. They know that they can't weasel their way out of paying tuition any more. They are the ones you want to get on this system first.

Increased Student Retention

Your overall student retention will also increase. Think about the psychology for a moment. Let's suppose a student has missed a couple of classes. They are getting out of the habit of coming to class and you run the risk of losing this student. Now their next tuition payment is due. They know that when they come in to the studio they'll have to pay tuition, probably a late fee, and maybe feel embarrassed in front of the other students and parents. This increases the risk of losing the student.

When you automate your tuition the parent knows that payment is going to come out on time anyway. They want to get their money's worth. That student is going to be back in class! It works, it's almost like magic.

Studio - Student Relations

It is so hard to be a student's teacher, their role model, their motivator, their friend, and also their bill collector. "Great job in class today Jane, remind your mom she owes me $50." Nobody likes that. It's uncomfortable for you, for the student, and the parent. As a matter of fact it's usually uncomfortable enough for at least one of the people involved that they'll avoid it altogether. That means you give up and don't collect the tuition, or the student stops coming, or, even worse, loses respect for you.

By automating your tuition you avoid this. The company doing the billing can be seen as the "bad guy." You can focus on what you are good at, and these awkward financial interactions become a thing of the past.

Employee and Tax Liabilities

Some studios have enough front desk staff employees to handle their tuition collections for them. This isn't wrong, but even in this situation automating your tuition billing holds more advantages.

When you hire an employee you take on certain liabilities. You have to advertise the position, interview the person, train the new hire, and continue to manage them. You might have to fire them some day, or they might quit at any time. If they get sick or want time off you have to step in to cover for them, or get someone else to. When you hire another company to collect your tuition for you they have to worry about that, not you. Your front desk staff is there to help you attract and retain more students, which is what they should be doing with their time, not taking payments.

Also, when you pay an employee you have to pay payroll taxes on top of their hourly wage. When you hire a company to collect your tuition you don't pay taxes on the hours their employees work for you, and any costs incurred from their services are a business expense and can be written off anyway.

Training and Consulting

A good billing company will offer training and business consulting. You have to understand that it is to their advantage to help you get as many students as possible. The more students you have the more success their own business sees. Often these companies offer other free tools, software, and training to help your business to grow and be more profitable.

Contact with Successful Studios

When you join a billing service you are joining a network of like-minded business owners. The studios that use these programs are interested in being more successful. That's why they do it. By joining you tap into that community. Many billing services have ways of allowing their clients to maintain contact with each other, sharing experience, and learning from one another.

Bookkeeping Simplification

When you collect tuition at the studio you have to enter each student's payment individually into your bookkeeping. By hiring a billing company you can decrease this to one entry per month. This depends a little on how the billing company is set up, but a good one will be able to collect the tuition for you and then deposit it in your account in one, or two (or however many you need) deposits.

Your tuition income can literally be decreased to one entry. Then, if you need to go back later and find specifics about payments for individual students you can always do that. It's your billing company's job to track that for you.

More Time

Automating your tuition saves you time in more ways than you might first imagine. How many hours a month do you and your staff spend collecting tuition, doing data entry, or following up on late payments? How much time does it take to prepare bank deposits, drive to the bank, and wait in line? What could you do with those hours instead?

This is by far the most valuable reason to automate your tuition billing. If you lose money you can always earn or borrow more. If you lose time you NEVER get it back. That's time you could be developing your programs, marketing your classes, or just spending time with family and friends.

You probably got into the studio business because you love teaching. If you're like me you are passionate about your particular art and want to help others feel that passion. You probably didn't get into the business because you love being a bill collector. Make the best business decision you have in a long time. . . automate your tuition billing!

Mago Lauritzen is the owner of a successful studio and the marketing director for CompeteServices.com, a dance studio tuition billing company. Compete Services provides dance studios with tuition billing services, free management software, and business consulting. Their services help owners run more organized and profitable studios. www.competeservices.com