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in pursuit of billing

Nothing has revolutionized the health club industry as much as automatic monthly recurring billing. It was a win-win situation for both clubs and members. The clubs no longer had to rely on their members to come into the club monthly, quarterly or yearly to renew their memberships. And members received a monthly fee incentive, costing them less up front and motivating them to workout more.

Automatic recurring billing made selling memberships and hunting down renewals easier for clubs: maybe a little too easy. Seeing that membership dues at most clubs make up 70 to 90 percent of their total revenues, I am surprised at the cavalier attitude some operators take in regards to their monthly billing. They send the file to their billing company, check their bank account a few days later and accept the fact that 8 to 12 percent of their credit cards were returned. At which point they are back to chasing the money.

Because of this, some operators take the path of least resistance and ask their billing company to handle the recurring billing process. The downside? It will cost you anywhere from 2 to 5 percent of your billing revenues each month. That does not include your credit card merchant fees, which represent another 2.5 percent. That is a lot of money for a job that you can do internally at the club.

Personally, I like to see clubs keep the whole process in-house and be proactive in handling their automatic recurring billing each month — especially if your goal is to get as many of your membership payments to go through and limiting the amount of returned credit cards and checks. By doing it in-house, clubs not only save thousands of dollars in service fees from their billing company, but they also get to control the process from start to finish.

Here is what I consider the perfect timeline for a club that bills on the 1st of every month (an arbitrary date picked for example purposes).

On the 25th of the previous month:  Send out a text message or email reminder to your members letting them know their account will be billed on the 1st. Remind them to get you their updated information if anything has changed with their account. Doing this will help them avoid a possible return fee. If the text or email template is saved in your software, this job takes 15 minutes or less.

On the 1st: Your billing company should be sending all of the Visa and Mastercard accounts to get updated by their issuing banks. This is called account updater, and your billing company should do it for you automatically. I have seen clubs drop their monthly return rate by as much as 35 percent.

On the 2nd: You should have a list of the members whose credit cards and ACH’s returned. Again, text or email those members and let them know their accounts will be resubmitted in seven days and they can call the club to update their account before it gets re-run on the 8th.

Between the 2nd and the 8th:  When a member whose payment got returned comes to the club, your software should alert the desk that the member’s account returned. At that point the front desk can either take the payment or update the account so the charge can go through on the 8th.

After the 8th: Now you will have a greatly diminished list of final returns, who are legitimate candidates for collections.

Again, remember the goal of a proactive automatic monthly recurring billing process: The club gets more of its members to pay before they are sent to collections, less members get angry about being sent to collections and best of all, the club saves thousands of dollars in needless billing company fees.


Eric Claman owned two clubs in Torrington, Connecticut: Pinewoods Health and Racquet Club for 23 years and Energy Fitness for four years, before selling both and accepting a consulting job at Twin Oaks Software Development in 2011. He can be reached at 866.278.6750, eclaman@tosd.com or visit healthclubsoftware.com.

Eric Claman

Eric Claman owned two clubs in Torrington, Connecticut, before selling both and accepting a consulting job at Twin Oaks Software Development in 2011. He can be reached at 866.278.6750 or at eclaman@tosd.com, or visit healthclubsoftware.com.

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