Do you have anything in your contract about not picking up or dropping off during nap time? If you do, when he comes in the morning, meet him at the door with his things and tell him that you will no longer take their child as he clearly has some illness that they have refused to address, he paid you late, even after you reminded dad about it AND he picked up during nap time, when it is clearly stated in your contract that you don't allow it.

If it isn't in your contract, then just go with the first two reasons. I'm sorry but you are being WAY too nice to them. Let them go now or the next two weeks will be h.e.l.l. on you.

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