Just thinking about collections is enough to get gym owners and members more than a little worked up. While for decades, collections were a necessary evil in the fitness industry, gyms and studios are increasingly shifting their focus away from tracking down bad debts. Now, today’s next-generation gym owners are shifting to a more efficient, effective and proactive revenue cycle management (RCM) approach.
Unlike traditional billing collections, RCM connects the dots from enrollment to Automatic Clearing House (ACH) drafts to accounting, support and even re-engaging lapsed members. By looking at your company’s overarching revenue lifecycle in this more holistic way, it’s easier to spot and fill gaps that could lead to both short and long-term lags in cash flow. With the right systems and technology solutions in place, RCM typically increases billing by 5 to 7%, or more.
What’s more, RCM also supports asset recovery — collecting late payments and curbing payment declines.
Your next step: get on board with end-to-end revenue cycle management. Here’s how:
Step 1: Assess your enrollment process.
Are you collecting ample, accurate information from every member at enrollment, and requesting updates at least annually? Be sure you’re collecting multiple phone numbers — mobile, home and work, for example — and emails from each member at enrollment. This will ensure you can get in touch with any payment issues before they escalate into less-than-ideal customer service issues.
Step 2: Make sure you’re collecting the right ACH information.
It’s not enough to collect a bank account number and name. At enrollment or when draft information is updated, your team needs to collect the member’s full name and full mailing address with their zip code, bank name, routing number and account number. Ideally, collect a backup method of payment to keep on file should their primary method ever be declined.
Step 3: Partner with a targeted cash flow recovery agency.
Even with your best efforts to collect member information, missed payments happen, and that can impact your revenue cycle and your ongoing cash flow. By working with a targeted cash flow recovery partner, you’ll be able to close those loops.
While traditional collections agencies aren’t geared toward the fitness industry, the right service will both understand RCM and work to not just recoup past-due payments, but also reduce future payment declines. Additionally, fitness-focused cash flow recovery agencies can work to get lapsed members back on draft, where they’ll keep contributing to your ongoing cash flow.
With a proper RCM approach in place, your business will see significant gains, including increased revenue, fewer payment issues, a more consistent cash flow, and fewer members in long-term collections situations. It’s a win-win for gyms and members, and it’s the future of financial management for the fitness industry.
Alex Wolf is VP of customer success for Swift Financial Services, which provides targeted collections services exclusively for gyms, wellness studios and fitness facilities. Contact Alex at 347-943-6668 or info@Swiftfinancial.fit.