Increase Profit by Owning Your Billing

Removing transactional services from your club will allow you to increase profit and reap long term financial and client service benefits.

Billing services have been around for a long time in the fitness industry, but that doesn’t mean they should exist in the future.

What’s the main purpose for using a billing service firm?

As a startup chain, you simply do not have the capital or experience to conduct your own billing, and it is far simpler to outsource to one of the many companies that provide these services. As a multisite business’s revenue increases, additional sites follow, and the circle continues.

But what happens when you have grown to a scale where the costs outweigh the benefits?

The main source of a billing service’s income is skimming off the top of your transactions. Over the years they have opened up additional revenue streams such as taking a percentage of your joining, administration and rejection fees.  Altogether, billing services typically end up pocketing 0.5% to 1% of their client’s subscription revenue. That means if your chain runs $20 million annually in billing, you’re giving $100K to $200K of that to your billing service. It is time to bring billing in-house.

In 2020, the health and leisure industry is at the forefront of technology, and the industry relies on simple, scalable and automated solutions that don’t clip your transactions now more than ever.

Are you as close to your customer as you think?

Using one of these firms can also cause disruption to your members. Members may read their bank statement and see a deduction with a different company name and wonder what this transaction is. They may get a call from this company to collect some membership arrears and be uncomfortable speaking to another company about their personal membership arrears. These types of conversations can cause embarrassment and can erode your relationship with your members.

Does it really make sense to give ownership of your billing to a third party company when your business can own the billing, the collections and the relationships with your customers? 

A membership management system should put you into a position of control over your billing and payment processing. You can, and should, find a software partner who does not profit from your transactions. A strong partner can maintain data and financial security while empowering you to manage billing according to your business and customers unique needs. Remove transactional services and you will increase profit, and reap long term financial and client service benefits.