How do I confirm a music studio’s students pay for lessons by automatic debit?

Start by asking how payments are collected. Some students pay by automatic debit, others by cheque, e-transfer or at the desk. Request a report that groups students by payment method, then compare that with the bank statements for the same period. The two should line up.

Look for failed or reversed payments. A pattern of returned payments suggests students who are not fully committed or accounts that are not well maintained. Ask how the studio follows up and how often it loses a student after a failed payment. Ask whether the debit schedule matches the pay dates of your teachers. If students pay late in the month but teachers are paid early, the studio may rely on cash that is not always there.

The authorizations themselves matter. Ask who signed them, where they are held and whether they can continue after a change of owner. The payment provider may need new paperwork, so your lawyer and the provider should confirm the steps. Finally, test timing. Ask when students can cancel and how quickly the studio learns of it. Stable debit income is useful, but only if cancellations are easy to see early.

Key takeaways

• Compare the debit list against bank deposits and the income statement.
• Ask how many payments failed or were reversed, and what happened next.
• Find out whether debit authorizations can transfer to a new owner.
• Check whether debit dates line up with when teachers must be paid.