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Home In Print

The Basics of Revenue Management For Your Club

Carole Oat by Carole Oat
March 1, 2013
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Revenue Management
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As I speak with owners and managers of clubs, quite often the discussion leads to the subject of revenue tracking and receivables. It’s amazing how infrequently a club is aware of its outstanding balances, deferred revenue, held deposits or even gross and net billing per month.

More often than not, this is due to poor knowledge of accounting basics. Owners or operators need to get a grip on the basics, to ensure that they understand the numbers. Here are some basic revenue concepts and management formats for proper money tracking:

Software

Make sure your computer software program is designed with a method to enter receipts and track member purchases, thus generating amounts owed. If the software is used as designed, clubs can derive important financial information. Most software is not designed to be an accounting program, but to actually record source information into a separate software program that produces financial statements.

Accrual Basis Accounting

“Accrual Basis Accounting” means that revenue is recognized when the service is rendered, whether paid or not. The goal is to match revenues to the expenses required to render the service. For example, with the sale of 10 personal training sessions, one-tenth of the revenue will be recognized as each session is redeemed or used. This would match the payroll expense paid to the staff member for training. Unused sessions are considered a liability (owed) until redeemed. This would be seen as outstanding revenue (a customer prepayment or deposit on future services). The same principle applies when selling gift certificates.

Global Terminology

“Debit” is a charge against a member, or an amount owed. This increases a member’s balance. “Credit” is a payment to the club. This decreases a member’s balance. When a member buys and pays for something at the same time, it creates both a debit and a credit to their account.

“Balance” is the amount still owed. A positive value indicates that the member owes. A negative value indicates that the club owes. Often called a “Credit Balance.”

“Posting” is a way of permanently recording a transaction. Be leery of any program that posts automatically — this does not allow for corrections to be made, at least not easily. Also, be leery of any program that allows you to delete transactions from a member’s record. This is unsafe, invalidates the authenticity, and allows for easy employee manipulation of money transactions.

Point of Sale (POS)

The majority of club transactions come from this function. The POS system should operate like a cash register, allowing the recording of sales either to a member record or to a generic tracking member in the system. Get in the habit of ringing memberships, packages, program registrations or gift items to specific member screens for excellent record keeping. Process any ancillary transactions such as refunds, paid-outs or house charges directly from this point as well.

Back-Office Functionality

Verify that EFT returns are entered and member balances are adjusted accordingly. Review a billing journal, look for breakdowns by member type, accounting code, and that someone is matching up the numbers to the sales results (i.e. if you sold 100 new members in January, and 30 cancelled, did the dues line grow by a net gain of 70?).

Review an accounts receivable list, and identify outstanding balances. An efficient club management software will generate this information for you. A sales analysis report will summarize all income. This is a support document for all aspects of revenue generation. See real details, such as inventory change, average sales, payment on accounts and deferred revenue or outstanding liability.

Software Reports, Merchant Fees and Bank Statements

Tie out the daily in-house income and monthly billing revenues to your bank statement. Your club software should provide exact reports to match your deposits, and withdrawals should match what you were originally quoted for, for fees. No exceptions.

 

Carole Oat is the National Sales Manager with Twin Oaks Software. She can be contacted at 860.829.6000, or by e-mail at coat@tosd.com, or visit www.tosd.com.

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Carole Oat

Carole Oat

Carole Oat is a national sales manager at Twin Oaks Software and a former club owner and operator for 15 years. She can be reached at coat@tosd.com or 860.829.6000 x 281.

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