Deposits and retainer fees are charged at the start of childminding contracts to reserve places. They help ensure that a parent is committed to using the place that they have reserved and that you are not left out of pocket by keeping a vacancy open only find the parent has changed their mind about using your childminding service.

Deposits

A deposit is a one off down-payment on future fees and is usually paid when the contract is signed. It’s useful when there is a delay between signing the contract and the first normal payment being due, this might be because there is a gap before the child starts attending or you ask for payment in arrears. Paying a sum of money upfront helps to demonstrate a parent is committed to taking up the place and not a time waster.

There is no set amount for a deposit but it is usually related to the amount a parent would usually pay. For example, it could be the first week’s payment or 50% of the first month’s payment. Some childminders like to ask for the amount that would cover the notice period of the contract.

A deposit is an advance on future fees so once the child starts attending the deposit is usually deducted from the first payment that is due. However, you can also keep the deposit and use it against the last payment due when a child leaves or return it as a lump sum at the end of a contract. If you ask for payment in areas then holding the deposit to the end of the contract helps prevent a parent leaving without paying the last months fees. Whichever you choose, you’ll need to set out the terms you decide in the contract.

If parents change their mind about taking up a place after they have paid the deposit, you would normally keep the deposit (again you should explain this in the contract terms). However, if you are unable to take the child you must return the deposit.

Retainer Fee

A retainer fee is a reduced fee which is paid when there is a delay between booking a childminding place and a child starting. If you have a current vacancy and a parent wants you to reserve the place for their child but doesn’t want to start straight away, it may mean turning down other parents that could have started straight away. Sometimes parents may want places reserved for several months and that could mean a significant loss of income for you. A retainer fee acts as compensation for the reduction of earnings you will experience by not filling the vacancy immediately. It is usually a proportion (often 50%) of the normal fee that will apply when the child starts to attend and is paid on the same basis (e.g. monthly/weekly) as the future service will be provided.

Whilst you are being paid the retainer, you should not fill the slot the child would usually attend. If the parents need occasional childcare during the retained period you should have the space to provide it (the full childminding fees would apply for the hours they attend). If you take on a short term placement for another child during a retained period you should not continue to charge a retainer fee as the place would not be available; instead a deposit would be more appropriate.

You should have a contract to cover the retained period which sets out the fees, notice period (in case a parent decides they no longer want the space) and any conditions. A retainer fee is not a credit against future fees. If the retained place is not taken up by the parent, the retainer fees are not refundable. This should be explained in the contract.

You can also use retainer fees if a there is a break in a child’s attendance, for example the parents do not require childcare in school holidays. Charging a reduced fee helps to prevent big dips in income that you would not experience with a child that attended all year around. As with a retainer used to reserve a place, you can only charge a school holiday retainer fee if you are available to provide care but the parent does not use your services. If you are on holiday or you take on a temporary child that fills the place then a retainer fee is not applicable.

Note: It is good practice not to take retainer fees or deposits for babies until after they are born.