When money is not doing anything for your business, is missing, or failing to be properly managed, it is considered Languishing Funds. For fitness facilities and health clubs, this means expected, recurring payments that are not being collected, or payments that are late and accumulating fees.
When your money is not deposited into your account in a timely manner, those funds are not working for you by earning interest, or paying your debts and bills. To prevent Languishing Funds, your business must be proactive with the following:
- Updating credit card expiration dates before they expire or before the next due date of a recurring payment.
- Bringing a late payment back into paid status as quickly as possible.
- Pursuing overdue accounts to prevent them from going more than 90 days past due.
Update Credit Card Expiration Dates
Actively check the expiration date on a member’s account when they enter the facility. This enables your staff to notify the member immediately and update the expiration date. In addition, it is good to verify the billing address associated with the card to ensure you have current information.
Bring A Late Payment Current
If your staff has the information on hand when a member comes to the facility, they can notify them of their late payment status and take a payment immediately. Identifying the issue early enables you to work with your member to resolve any recurring payment issues before they are so late they feel overwhelmed.
Pursue Overdue Accounts
When an account has not been brought back to current within the first 30 to 90 days, it gets harder to collect. Having notifications such as emails or letters helps to remind the member of their contract responsibility, but calling them usually gets a faster result to recover unpaid funds.
Prevent Languish With Proactive Customer Service
Sometimes, Languishing Funds are a customer service opportunity.
Preventing credit card expiration dates from getting out of date prevents the late fee experience, rejected credit cards, and disgruntled members. Contacting late paying members allows you to invite them to return and help them to stay current. A conversational tone is a terrific way to entice them to return — inform them about new events, equipment or trainers at the location.
Give overdue accounts incentive to come back and bring their account current. Offer to remove a late charge if they pay by a certain date or pay that day. Removing fees, extending their contract, or giving something for free is a great incentive to encourage members to bring their payments current.
Proactive effort and great customer service can go a long way to prevent Languishing Funds and keep your income working for you.
Susan McLain works for Affiliated Acceptance Corporation and has written for many industries, including sales and use tax, digital signage and financial services. She can be reached at email@example.com.