Your health club is a business; its survival depends upon the bottom line. For most clubs out there, that means the dues line. Growing the monthly revenue is an ongoing process and the most successful facilities put 70 percent or more of their members onto monthly electronic billing. The ideal number to reach is where the monthly revenue meets, or preferably exceeds, the fixed monthly expenses such as the rent, insurance, loan payments, lights, heating, air conditioning, water, property taxes, etc.
Managing collection of your dues payments is both the club’s responsibility and that of the billing company you hire. On the club side, having an experienced and confident front desk staff to ensure members, who are delinquent and using the club, get stopped and then pay their bills is important. If members are permitted to pay sporadically, or worse yet, not at all, that message gets around. It needs to be clear that paying is required; it’s not an option. In its simplest form, your checking software should signal your staff when a member who is delinquent checks in – a signal such as having the screen turn red or a noise of some kind occurring.
On the billing company side, for members who are on electronic billing, when that reject, decline, or return comes in, an efficient and effective follow-up system should kick in. Club software should be updated automatically to alert desk staff that a balance is due. A statement or invoice should go out to the member with an appropriate service charge added in, and then follow-up phone calls should begin immediately. Statistics show that anyone who is delinquent will pay within 60 days if they intend to pay at all. However, that number drops significantly if no follow-up is done.
Avoid, by all means, the use of coupon payment books. These are highly ineffective and very costly. Some billing companies charge upwards of nine to 13% of what’s collected. They are expensive to administer and in addition, the payment ratio drops tremendously. Coupon books are rarely used anymore even in other businesses. They used to be quite common for car loans but now even that is mostly done electronically.
Occasionally in some clubs there’s a need to allow a few select members to “pay over the counter” each month. These are the people with no credit cards or checking accounts. In these situations, when electronic billing is ruled out, your club management software should allow the creation and running of a recurring invoice or a charge to a member’s inhouse account each month. This ties-in with the ability to create and generate a billing statement. This is a more effective manner of billing a member versus a coupon book. It should be noted that most clubs that do allow this method of payment also charge a higher dues rate of $5 to $10 per month. This method has a higher rate of receiving payment and is far cheaper to administer than a coupon book. It also allows the ability to accelerate the balance on a delinquent contract immediately or write-off the bad debt without a penalty fee to the billing company, if one is assessed.
Another area of key responsibility for managing your billing is the effectiveness of your office staff. They need to have an excellent working knowledge of the management software and an understanding of how the billing concept works. Outsourcing your data entry and billing management entirely should only be considered if the owner is not comfortable or confident in the club staff to manage the process efficiently. It’s a good idea to do some cross-training of employees and have a back-up person available to step in when an emergency situation arises. Keeping the control in-house overall typically allows for the highest degree of member satisfaction with quick response to resolving member issues.
The billing management process can be briefly summarized as follows:
• Inputting data – new members, changes, freezes, cancellations
• Following-up on returns and delinquent accounts
• Answering and resolving member billing inquiries
• Generating a billing file and forwarding it for processing – Being the “gatekeeper” between the club and the billing company.
Looking forward, electronic billing is here to stay and a safe bet for the future. Immediate follow-up to resolve payment issues is key to recovering uncollected funds. Outsourcing the collection process is much easier, less expensive and more effective than handling it in-house. The economy is pushing the need for higher net receivables and effective processing. Make your primary job that of focusing on marketing, selling, and providing excellent service. If it is time to evaluate procedures and providers, talk with other club owners and visit other sites that are using the product or service you are evaluating. Lastly, get detailed billing reports that easily breakout all applicable fees and charges, and that analyze your billing data. The better the reports, the easier it is to manage and impact your bottom line.
Carole Oat is the National Sales Manager for Twin Oaks Software. She can be contacted at 860.829.6000, or by email at coat@tosd.com, or visit www.tosd.com.
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Carole Oat is a national sales manager at Twin Oaks Software and a former club owner and operator for 15 years. She can be reached at coat@tosd.com or 860.829.6000 x 281.
