How to Accept Payments for New Tutoring Companies

A question that commonly comes up with new tutoring companies is how should I be paid by customers. Should I accept only cash? Should I be paid in advance or at the end of the week or month? Should students pay for each session separately or should they pay for several sessions in advance.

There are several variations for accepting payments, but there are a few rules new companies should adhere to more than established tutoring businesses.

1. Get paid in advance
   Regardless of the form of payment – cash, credit card, checks or PayPal – insist on being paid in advance of tutoring sessions. The reason you want to be paid in advance is so that you will receive payment before you incur any expenses. If you wait for the end of week or month to be paid you will likely first have to pay your tutors their wages and you will likely incur other expenses before you receive any cash from customers. If you always receive payment before you have to pay your tutors or other expenses you won't run out of cash (assuming your revenues are greater than expenses).
2. Keep it simple – If you're just starting out you don't need to offer payment methods like PayPal or credit cards. All customers should have easy access to cash or checks, so you aren't offering much more convenience by accepting credit cards, but you would be increasing your expenses in the form of credit card processing fees.
3. Be firm about your payment policy – if you are lenient about payment terms, customers will become relaxed about paying you and you may run into problems if they delay their payments and you need to pay expenses. Tell your clients that you hold all clients to the same payment standards and can't make special exceptions.
4. Be willing to accept payment for single sessions instead of a package of sessions. Some tutoring companies will sell a package of sessions to a client that they will pay for up-front. However, if you are a relatively new tutoring business or a customer is new to your business they may not feel comfortable paying a large amount of money in advance. You can extend these people the option to pay before each session and as you build your reputation for reliability you can require payment for multiple sessions in advance.