Q: I was generous and helpful with a family who told me they were going through hard times. I even bartered with them to offset some tuition and costume expenses. After all of this, they suddenly left my studio with an unpaid balance, and their daughter is now dancing at another studio. Is there a way to legally ask the family to pay their debts?
A: One of the things that makes running a dance studio unique is that personal relationships often form between teachers, students and families. The downside is that this can sometimes get in the way of our best business judgment. The longer a balance is left unpaid, the harder it is to collect, especially when a student has been allowed to fully participate in classes and perform at a recital. If a special payment plan was not signed and agreed upon, it could be counterproductive for you to attempt to recoup the loss. The family could even deny having received the services.
This situation, though unpleasant, may prompt you to establish and clearly state your policies for accounts 60 to 90 days past due. We recommend this: “Any account 15 days overdue or more will be assessed a late fee of 10 percent of the total monthly tuition; a student with an overdue balance of more than 60 days will not be allowed into class or to perform until payment in full is received.”
With a written policy and a signed payment plan for exceptions, you will have better success with a formal collection process (through an agency, lawyer or small claims court), if it becomes necessary. It may be hard to say no when your students and families face difficulties, but if you make an exception to your payment policies, be prepared to not receive the amount owed to you.
Kathy Blake is the owner of Kathy Blake Dance Studios in Amherst, New Hampshire. She and Suzanne Blake Gerety are the co-founders of DanceStudioOwner.com.