By Patrick CraigSpecial FBA Contributor
One of the areas that is critical to stay on top of in your club is failed payments, otherwise known as overdue payments. Late payment disrupts cash flow. Cash flow is the lifeblood of any business. Without cash flow, your business will crumble. It may seem unimportant for a small invoice to go unpaid. But, imagine a situation where this number keeps growing. How would that affect your daily operations going forward? To be blunt, it would be a disaster.
A majority of fitness businesses use an automated payment gateway that collects payments from financial information stored either within the software you are using or by processing a flat file that the club generates at the end of each collection period.
You would think that with such an automated payment system, you would not have a lot of problems—not so. In my experience working with a software/payment gateway company that has many fitness clubs as clients, I see declined payments that need to be rebilled every day of the week. And if you are running a large chain of clubs, those unresolved failed payments can accrue into the hundreds of items each month.
This kind of problem can cause a club, or a chain of clubs, to lose tens of thousands of dollars in membership fees each month and can have a serious effect on your business.
Now here’s the catch. Many clients are simply bad payers, but in other instances, unforeseen circumstances may cause a late payment—an overlooked credit card, a cash crunch, unforeseen cash-flow problems, you know, real life.
I’ve been made aware of credit service companies that are initiating programs they call Engagement Partnerships. It’s a system whereby the credit company uses their own employees to handle the phone calls, emails and text messages the facility has developed to handle delinquent payments.
So how do you handle this situation with class, culling out the ones that are obviously dead-beats from the ones who are happy to work with you to straighten out any problems? Recently, I’ve been made aware of credit service companies that are initiating programs they call Engagement Partnerships. It’s a system whereby the credit company uses their own employees to handle the phone calls, emails and text messages the facility has developed to handle delinquent payments.
Putting such an internal process in place to contact each member with multiple phone calls, emails and texts can prove extremely labor intensive and difficult to manage for a club owner who wants his employees to be signing members up, training them and developing programs for fitness and wellness. So now credit companies are asking, “Why not let us handle all that for you? Just outsource the CRM part of this process to us and we’ll handle it completely.”
The club controls the messaging and the timing, provides a branded phone number and email address, and then, using what the club provides, the credit service engages the customers under the name of the club’s brand. Over a period, the service provides consistent phone and email engagements. The friendly staff acts as an extension of the club’s front desk, rather than a collection agency hammering the clients, most of who the club would like to permanently retain.
And for those members who move out of the 30-day overdue bracket and into 60 or 90 day no-pays, the credit service will handle the late stage collections with no setup fee, low commission rates, real-time reporting with complete visibility from collection to payment into the club’s accounts.
So if this is an area in your business that you have relegated to a dark corner, give serious thought about taking on a credit service that will work with you, under your brand, with fully accountable employees that represent your club personably and engagingly. Just another thing to think about as we move forward in 2022.
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Patrick Craig has worked in the Marketing Industry for the past twenty years. He is a published author and has written extensively about the fitness industry, particularly the gym software aspect of it. He has been with Money Movers, Inc. for the last six years where he serves as the Marketing and Operations Manager, web designer and coder, and maintains the custom websites Money Movers, Inc. develops for their Online Business Manager gym software clients.