Most childminders first read their late payment clause properly after a family has paid late, which is the worst time to find out it says nothing useful. A good clause makes the rules clear enough that most families never break them, and gives you something firm to point to when one does.
Which law applies
You'll see the Late Payment of Commercial Debts Act quoted online, with its statutory interest and fixed compensation. It doesn't apply to you, because it covers debts between businesses and the families you care for are consumers. Your late payment terms come under your contract and the Consumer Rights Act 2015, which says every term in a consumer contract must be fair, written in plain language and brought to the parent's attention.
In practice a late fee has to be in proportion to the cost and hassle late payment causes you. A flat £10 or £15 after a set number of days is easy to defend. A daily penalty that soon grows bigger than the fee itself isn't, and a court could refuse to enforce it.
What a working clause covers
It gives the due date clearly, for example the first day of each month for fees paid in advance. It allows a short grace period, so a payment that's a day late because of a bank holiday doesn't trigger a charge. It sets one reasonable late fee, and it says what happens if fees stay unpaid, from written reminders through to ending the agreement after notice.
I think a clause also works better when it gives its reason. Families respond far better to "fees are paid in advance because your child's place is held for them" than to a bare rule, and the reason helps show the term is fair.
Funded hours
If you offer funded hours, a late fee can only apply to private hours and optional extras. Funded hours are free to parents, and nothing you charge can be a condition of a child taking up their funded place.
Start with a message
The clause is your backstop. When a payment is late, a friendly message on the day it's due sorts out most problems, because most late payments come down to forgetfulness or a change in someone's pay date. Keep the formal steps for families who don't reply.
Your options
The choices are when a late fee starts and how much it is. You can have no late fee and rely on reminders and notice, a flat fee after a grace period (such as £10 after seven days), or a flat fee from the day after the due date.
Then decide how much notice you give before ending a place for unpaid fees. Fourteen days is common and some childminders use seven. Any of these can work in a strong contract, as long as the fee is modest and only applies to private hours.
What I do
I'm paid monthly in advance, on the same date every month, and families know that date because it's in the contract. A late fee applies from the day after it's due. If fees still don't arrive, I give short written notice, because I can't keep providing care for free. Most families respect that once it's been in writing from the start.
How it looks in your contract
From a GoChildmind contract
Late payment. £10 if payment is more than 1 day late.
Unpaid fees. If private-hour fees remain unpaid, I will remind you in writing. If they are still unpaid after that, I may end this agreement as set out in section 19, after 7 days' written notice.
Put your own details in, freeRead the full sample contract
You set the fee, the number of days and the notice period, and funded hours are kept out of it automatically.