What if you could increase your revenue without having to sell one more membership? That’s exactly what happened to Ben, a club owner, when he found an extra $100,000 – right in his file cabinet! Like Ben, if you have members who are not current with their monthly dues, you might be sitting on hundreds or thousands of dollars in revenue, and not even know it. Here’s how to turn those membership files into extra income for your club:
Find out who is delinquent.
On average, 20 to 25 percent of everyone you enroll will at some point miss a payment on their membership agreement. Of those members who go one or more days delinquent, as many as 70 percent never receive consistent follow-up in the right manner to collect those funds. That’s missing revenue that could go directly to your bottom line.
What are your uncollected receivables for the month? That’s the first step. What are you sitting on each month that is uncollected? If you don’t know, find out.
Don’t stop there though, keep digging. Out of everybody billed this month, how much of what didn’t come in was collected in the next 30 days? Another thing to look into is how many people you didn’t try to collect from that are still delinquent from the last two or three months. Did you quit trying to draft their bank account? Did you quit sending past-due letters, or did you send any letters at all?
Have a good system to collect.
The important thing to realize is that whatever monies don’t get received by a push of a button or from sending out bills…that revenue can be, and is, collected if you have a system in place to do so. It’s the timing and consistency by which all the billing functions are performed that enable those funds to be collected. It takes experienced people to stay on top of all the details, so in many cases, outsourcing all or part of these functions may be the best system for you. An outside billing company will have the policies, procedures, personnel and technology already in place to make sure that everything is done consistently, and in a manner that is conducive to collecting those monies.
If you can answer “No” to any of the following questions, your club will likely benefit from outsourcing:
• Policies: Are you aware of what monies weren’t collected? Do you send late notices out when payments are 10 days late? Do you send letters informing members about special payment terms for them next month?
• Procedures: If the member hasn’t come into the club recently, do you know if their information is current? Are you keeping up with updates on credit card numbers, expiration dates, members changing banking accounts, etc.? Is it easy for you to review a member’s account history, view a copy of their contract, post a payment or update their account information? Is it easy for the member to do the same? Are your billing and collection activities in compliance with your state’s collection practices and fair credit reporting standards?
• Personnel: Does your billing always go out on time? Is your staff keeping you informed? If a staff member is out for any reason, is your billing still on time? Is someone following up on your delinquent members?
• Technology: Is your software easy to use? Are you always connected with what is going on with your customers? Are you able to customize correspondence? Can you see the conversations and mail correspondence going on between you and your customers?
With so much focus on technology these days, it’s tempting to think that billing and collection activities run on auto-pilot. It’s important to remember that software alone can’t chase your members down, or resolve customer issues or problems. A quality, full-service billing and software company will have a customer service staff well-trained in customer resolution for your industry. Contacting a pastdue customer is a golden opportunity to remind the member of what brought them to the club originally, and to help get them back on track and into the club to accomplish their goals.
Be proactive – it adds up fast.
Without a good system in place, eventually the lost revenue from uncollected membership dues starts adding up. It’s costing you a certain percentage every day, so don’t wait until it’s costing you 20 percent or more of your business. Most of the billing companies serving the industry can provide you with a free analysis of your accounts receivables. Their insight may help you to determine how efficiently and effectively your current system is working for you.
Is there an extra $100,000 sitting in your file cabinet? Maybe not, but there’s no question that knowing who your current and delinquent members are and having the right billing, collection, and software company on your team will certainly put more revenues (and members) back into your club.
Sid Nelson is a former club owner, and since 1999, the COO of Affiliated Acceptance Corporation. He can be contacted at 800.233.8483, or by email at AskSid@affiliated.org.
