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School fee collections can be a complex and time-consuming task, but it is essential for the sustainability and smooth operation of a school. Understanding the intricacies of fee collection not only improves success rates but also ensures compliance with legal regulations.
This blog covers the essential information for managing school fee collections effectively, the legal framework surrounding it, and the key steps to include in your collection process.
School fee collections require a thorough understanding of relevant rules, regulations, and supporting documentation to ensure compliance and effective management.
When collecting school fees, it’s crucial to understand the legal framework that governs the process. In South Africa, the collection of school fees is regulated by several laws and policies:
South African Schools Act 84 of 1996 & Regulations: This act sets out the obligations of parents to pay school fees unless they are granted an exemption. It also governs the procedures for collecting outstanding fees.
National Credit Act 34 of 2005 (NCA): While the NCA does not directly apply to school fees, it becomes relevant when a school charges interest or uses a discount transaction as part of the school fee payment structure.
School Application, Enrolment Form, and Financial Policy: These documents form the contractual agreement between parents and the school. They outline the payment obligations, terms of fee collection, and consequences of non-payment. This primarily applies to private schools, as public schools are bound by the Schools Act and cannot negotiate terms and conditions outside of its prescribed regulations.
When Are Parents Compelled to Pay School Fees, and When Are They Exempted? (Public Schools)
Understanding when parents are required to pay school fees and when they can be exempted is key to developing a fair and legally sound collection strategy.
Definition of a Parent (Who Must Pay School Fees) (South African Schools Act 84 of 1996): According to the South African Schools Act, a "parent" is defined as the biological or adoptive parent or legal guardian of a learner; (b) The person legally entitled to custody of a learner; or. (c) The person who undertakes to fulfil the obligations of a person referred to in paragraphs (a) and (b) towards the learner's education at school.
Who Qualifies for Exemption?: Exemptions are available for parents who can prove financial hardship and cannot afford to pay school fees. These exemptions are regulated by the Schools Act and calculated using a sliding scale based on the combined gross income of the parents. Schools must have a clear understanding of how these calculations work, especially as they can become complex in cases of divorced parents.
Types of Exemption? There are typically three types of school fee exemptions in South African public schools, regulated by the Schools Act:
Jumping Fox Software Exemption Dashboard Full Exemption:
Full exemptions are granted when parents or guardians qualify based on the sliding scale, which considers their income, the number of learners and dependents, and the annual school fees. Notably, household expenses are not factored into the calculation of the exemption percentage.
Partial Exemption:
The same principle applies as with full exemptions, but in this case, the parent qualifies for only a percentage exemption of the annual school fees, as determined by the formula and sliding scale.
Conditional Exemption:
Applies in specific situations, such as when there are unique financial circumstances. This exemption might be temporary or reviewed periodically based on changes in the parent's financial status.
Automatic Exemption:
Under certain circumstances, parents may qualify for automatic exemption from paying school fees. This applies to orphans in orphanages, children in child-headed households, students with foster parents, and those placed in youth care centres or under the care of family members.
Remember, no learner may be refused admission to a public school on grounds that his/her parent/guardian is unable to pay the school fees determined by the SGB.
Essential Actions for a School Fee Collection Strategy: Ensuring Compliance and Fostering a Payment Culture
A customised collection strategy should employ a consistent mix of communication methods and escalate collection steps to encourage payments without overwhelming parents. The goal is to foster collaboration with parents, as working together is always more effective than working against them.
Here are key collection actions to consider for maintaining compliance and cultivating a healthy payment culture at your school:
SMS Notifications: Quick, direct, and highly effective in prompting parents to take immediate action on outstanding fees.
Email Notifications: Useful for providing detailed payment information and reminders, while maintaining a formal tone.
WhatsApp Notifications: A more personal communication method that can reach parents in a less formal, yet effective, manner.
Payment Plan Negotiations: For parents facing financial hardship, offering a payment plan can help them meet their obligations without legal action.
Final Letter of Demand: A formal communication that outlines the consequences of continued non-payment. Private schools must adhere to the terms and conditions outlined in their enrollment and application forms, while public schools should consider their financial policies.
Sending Legal Notices: For public schools, this involves Section 41 notices, while private schools must follow Section 129. These legal notices serve to formally communicate the intention to take further action if payments remain outstanding. The notices are sent with a registered email.
Breach Letter: Issued if the parent has failed to meet the terms of an agreed payment plan. Again, private schools must adhere to the terms and conditions outlined in their enrollment and application forms.
Listing with the Credit Bureau: This step acts as a strong deterrent for non-payment by affecting the parent’s credit score. It's important to remember to send the 20-day notice prior to the actual listing with the credit bureau.
Contract Cancellation: A serious step that may be necessary if a parent continuously fails to pay. This applies exclusively to private schools. Schools must remember that when a contract is cancelled and the parent settles the account, a new contract must be signed by the parent. This is particularly important when a learner will be returning to school for the new year.
Handover to Legal Team: When all other options are exhausted, the matter can be handed over to the legal team for further action.
What Other Actions Can You Take to Help Decide on the Best Next Step?
Before deciding on the best course of action—whether to list, hand over, or write off as bad debt—consider conducting a financial check to gain insight into the parent's financial situation.
Experian Credit Search: Provides detailed credit information to assess the parent’s financial history and provides a credit score.
VCCB Adverse Finding Report: Identifies any negative financial activity associated with the parent.
Financial Profiling: Helps to understand the parent’s overall financial status, making it easier to offer appropriate solutions like payment plans.
Customised Collection Reports: Track payment histories and identify patterns to fine-tune your collection strategy.
Jumping Fox Software Customised Collection Reports Ask the Experts: When in doubt, consult your legal team or a debtor management specialist to ensure compliance and effectiveness.
What Can Keep You from Collecting Outstanding School Fees Successfully?
Several factors can impede the success of your collection efforts, making it essential to gather this information from the parent or other resources, such as credit checks. This information is crucial for determining the most effective next steps in your collection strategy.
Administration Order Granted: When a parent successfully applies for the administration of their estate with an outstanding debt of less than R50,000.00, the school can still pursue legal action for future debts, as the parent should not incur new debt. It is advisable to provide your legal team with the administration application so they can discuss the matter with the attorney handling the application.
Sequestration & Liquidation: If a parent is insolvent or liquidates their business, their capacity to pay outstanding fees is significantly diminished. In cases of sequestration, the debt may be included in the application, making it uncollectible.
Untraceable: Parents who move without providing updated contact information can be difficult to track down.
Unemployed: Parents who lose their jobs may be unable to make payments until their financial situation improves. Normally these parents will qualify for exemption from payment of school fees.
Debt Review: Some parents may apply for debt relief, limiting your ability to collect fees.
What Tools Can Help You Achieve Your Outstanding School Fee Collection Goals?
To enhance efficiency and accuracy, schools should use the right tools and integrate technology and industry experts into their debt management team.
Debtor Management Software: Use workflow automation to track, monitor, and schedule accounts for collection actions, ensuring that the tool used ensures legal compliance. Automation also helps eliminate repetitive tasks, such as compiling reports and managing daily tasks.
Jumping Fox Software Automated Collection Actions Credit Bureau: Helps to assess the financial status of parents and identify high-risk accounts.
Legal Team: Offers support when legal action is necessary, ensuring compliance with all legal procedures. It's essential to engage experts in the field, as school fee collections differ significantly from collecting levies or outstanding accounts for a business.
Why Manual Collection Processes Fail in Collecting Outstanding School Fees
Manual fee collection processes are often ineffective and can only take you so far. It is nearly impossible for even two members of a debtor management team to collect outstanding fees, manage finances and exemptions, and keep up with legal requirements simultaneously without the use of technology.
Not Efficient: Manual tracking and communication are time-consuming and prone to errors.
Limited Skill and Knowledge: Without specialised collection training, staff may struggle to enforce policies or handle non-compliance.
Stressful Job with Shared Responsibilities: Fee collection can overwhelm staff members who are already managing other responsibilities, leading to burnout and inconsistent collection efforts.
What Elements Does a Good School Fee Collection Notification Have?
A well-crafted collection notification can be a powerful tool in school fee collections. Key elements include:
Personalised Greeting: Address the parent by name to make the message feel more direct and relevant.
Details of Outstanding Amount: Include a breakdown of fees owed and any penalties for late payment.
Deadline for Payment: Provide a clear due date to prompt action.
Consequences of Non-Payment: Outline what will happen if the payment is not received (e.g., credit bureau listing or legal action).
Call to Action: Encourage parents to make payment or contact the school to discuss a payment plan.
Contact Information: Make it easy for parents to get in touch if they have questions or concerns.
Conclusion
Understanding the critical aspects of school fee collection is essential for ensuring a school’s financial health while fostering positive relationships with parents. By focusing your time and efforts on strategies that create the greatest impact, you can enhance your collection process. Incorporating legal experts and technology designed for compliance and the elimination of repetitive tasks can significantly improve fee collection rates and positively affect the well-being of the debtor management team
If your school is facing challenges in collecting outstanding school fees and you feel overwhelmed by the numerous tasks required to get the job done, consider incorporating the right team and tools into your process. Jumping Fox Software offers the ideal solution for schools, automating repetitive tasks while ensuring legal compliance.
Our exceptional team is committed to supporting debtor management teams throughout the entire process, ensuring you won’t feel overwhelmed or stuck in your work. We help you approach your tasks with professionalism and structure, providing a detailed plan of action that revitalises your efforts.
Contact us or request a demo: Daleen: daleen@jumpingfoxsoftware.com / 021 - 001 4758
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