It's all your business: collecting payments—past, present and future - Professional Resources

American Music Teacher, August-Sept, 2003 by Beth Gigante Klingenstein

Editor's note: Although her byline is not new to AMT, Beth Gigante Klingenstein is the new columnist for "It's All Your Business." Her knowledge and expertise of the independent music teaching business are a welcome addition to AMT.

Like the English language or our understanding of the solar system, the independent music studio is in a state of constant flux. Today's studio looks and operates much differently than the studio of fifty years ago. One area that has changed significantly is our system for collecting payments. While it is important to set our rates at an acceptable level, it is also important to use a system of payment in keeping with today's professional studio. Below is a summary of past practices as well as some of today's creative solutions to the challenges of getting paid the correct amount, on time, by everyone. By reviewing a number of approaches, we can determine what will work best in our present and future studios.

In years gone by, students came to the studio with the payment for that day's lesson. No bills were sent; no long-term debts were incurred. This required very little bookkeeping, assuming that students brought each week's payment with them. When the student missed a lesson, however, the teacher did not get paid. The teacher could not count on a steady income, and earnings could be greatly impacted by sick or unreliable students.

Eventually, teachers started charging by the month. At first, many teachers adjusted each month's income to reflect the exact number of lessons in that month (three lessons due to a holiday or five lessons due to a fifth Wednesday). They also would adjust payments by deducting the charge for any missed lessons. Book expenses and fees incurred during the month would be added to the bill. The disadvantage to this system was that it required a great deal of bookkeeping, and the teacher still could not rely on a steady income. The amount owed each month fluctuated with holidays, missed lessons and book expenses. Parents needed to be sent written notice of the amount owed, which could vary significantly from month to month.

One huge step forward was the development of a system of set monthly payments. Teachers decided how many lessons would be taught during the school year and then divided that number into equal monthly payments. If the teacher offered each student forty lessons during the school year at $30 a lesson, the annual income from each student was $1,200. That income could be divided into nine equal monthly payments of $133 or ten monthly payments of $120 per student. At this point, more and more teachers started to call the payments "tuition." As with any school tuition, the amount owed was not altered due to missed classes. Each teacher developed a make-up policy that established when lessons would or would not be made up, but missed lessons did not impact monthly tuition payments.

Teachers also started to charge a book and fee deposit. The amount charged was recorded as a deposit on an invoice. Book expenses and fees for competitions, festivals, late payments and so forth were then deducted from that deposit during the year. Teachers no longer had to figure extensive book bills at the end of each month or track unpaid book money. A copy of the invoice was forwarded to the parents when the funds were depleted. Parents appreciated not having monthly tuition payments altered, and the invoice provided clear documentation of the expenses incurred throughout the year. When the child stopped lessons, any unused money from the deposit was returned to the parents.

Teachers were now able to earn a steady monthly income, unaffected by missed lessons, holidays, trips to conferences or book bills. Excessive end of-the-month bookkeeping was no longer needed because parents always knew the exact payment expected each month. The only disadvantage to the system of set monthly tuition was it usually was based on lessons received during the school year. Summers often were treated differently. Although some teachers had a summer income that was comparable to their income during the school year, many did not. If summer lessons were not taught or were greatly reduced, the teacher's summer income suffered accordingly. In line with the desire for a steady system of payment, teachers began to devise some creative solutions to the "summer slump."

Today, the easiest way to produce a summer income is to go back to the annual income produced per student (say $1,200 as figured above) and divide that income by twelve months instead of nine or ten months. The $1,200 income produced by forty lessons during the year can produce a monthly income of $100 per student during all twelve months of the year. The monthly income is slightly lower than when it is received over only ten months, but now the teacher receives steady payments all year. If the teacher had thirty students, this would produce an income of $3,000 every month of the year. Even if the teacher decides to go to Italy in August, he or she still will receive the same monthly income as in October or April. Such a system can be dearly explained in a policy sheet that the parents sign.