If you could minimize returns on billing, would you? Without a doubt, “yes” is the probable answer to that question. Therefore, to help you solve your billing and collections issues, we spoke with clubs to discover their best practices — what they do when it becomes time to collect.
According to Eve Krieger, the financial director for Newtown Athletic Club (NAC) in Newtown, Pa., billing and collections issues at NAC are at a bare minimum. Out of the club’s 466 checking accounts, NAC receives an average of 2 percent on returns (bounced checks). Out of its 4,500 credit card accounts, returns average between 4-6 percent. “We really have a low volume of billing issues,” said Krieger.
Krieger attributed much of NAC’s billing and collections success to the club’s management software, operated through CSI Software, which NAC began using in 2001. “CSI helps us manage everything concerning billing and collections,” said Krieger.
According to Krieger, CSI’s software is particularly helpful when a member becomes past due on payments. “Once a member misses a payment, CSI flags the member’s account, and a check-in message will appear the next time that member checks into the club,” said Krieger. “When the front desk person sees that, they can notify the member, and ask them if they’d like to speak with a sales rep to get the issue resolved.”
In addition, CSI prints off a “missed payment letter,” which Krieger mails to members, informing them that they have missed a payment. “This is helpful, because a lot of times when members are past due, they won’t come into the club,” said Krieger.
Bonnie Gilles, the vice president of finance for Total Woman Gym and Spa in Westlake Village, Calif., uses ABC Financial’s club management software to minimize some of its pesky billing issues.
“As a full-service company, ABC does the billing, makes phone calls and sends letters for any uncollected balances,” explained Gilles. “We have noticed a 2-3 percent increase in collections in the short time we have been with them.”
However, Julie Chavez, the membership director of Super Shapes in Midland, Texas, believes club management software providers can only do so much. Chavez uses EZFacility, which separates her membership accounts into current, past due and collections categories. Chavez has found that handling past due accounts herself is sometimes the best course of action.
“We really try hard to work with our clients to get them up to date,” explained Chavez. “If I can contact a past-due member and ask to work together, they respond much better. I ask ‘what can I help you with?’ and as a result, they’re much more inclined to work with me than with a collections agency. A lot of people put their trust in technology, but I always double check everything. Reports can be inaccurate.”
Krieger agreed that handling past-due balances personally is sometimes more efficient. “About 90 percent of the time that a member is past due, it’s because they lost their credit card or it was stolen, and they just forgot to let us know,” said Krieger. “Those types of accounts should never go to collections, and should be resolved with the member one-on-one.”
According to Krieger, sending an account to collections should be a last resort. “In a year, we’ll maybe send 10 accounts to collections,” said Krieger. “When you send an account to collections, you only get a portion of the payment anyway.”
However, Chavez pointed out that sometimes, collections agencies are a necessary evil. “Some members will just quit paying on purpose, as a way to get out of their membership,” said Chavez. “I always try and work with my members, but only to a certain point. Don’t let them walk all over you.”
According to Gilles, billing and collections success starts at the beginning of the club/member relationship. “I feel strongly that success begins at the time of the membership sale,” said Gilles. “When the member is educated on the billing process, there are fewer issues. We provide our members with a business card providing them with the link to create an online account to manage their account, as well as the member services phone and e-mail information. We also have our cancellation procedure documented on our agreement. Surprises lead to frustration, so information up front leads to a better member experience.”
Advice from Carolina Atai, the Marketing Manager for EZFacility: “When it comes to billing, one of the biggest issues clubs encounter is finding the time to follow up on past-due payments. The easiest way to address this issue is to outsource it. For example, EZFacility works as an extension of the club and avoids the costs associated with hiring additional employees to chase down delinquent accounts. Administrative overhead is reduced and club owners can focus on their core business, bringing in new members and keeping current members satisfied.”
Advice from Sean Kirby, the VP of Client Relations for ASF International: “Getting a good return on payment rejects is a tricky process for most club owners. There is a skill to resubmitting payments at the proper intervals with multiple communication methods to the member in between those attempts. Additionally, there needs to be a sense of urgency created for the member to respond without creating panic. No process is perfect or permanent and needs to be reviewed based on collection percentage success.”
Advice from Carole Oat, the National Sales Manager for Twin Oaks: “One of the biggest issues for clubs is the frequency in which members change credit cards and the ever-present merchant fees. More and more sites are experiencing higher fees due to the increased use of ‘rewards’ cards. Ultimately, that expense comes back to the merchants providing the services. Many clubs, especially the low-cost models, are emphasizing and encouraging members to utilize checking accounts for their monthly fees or they are adding on a slightly higher fee if the member chooses to use a credit card for monthly dues. Members are less likely to change checking accounts as often, as it’s a little bit more work to go to the bank and take care of it.”
By Rachel Zabonick