Third-Party Billing Services

Q: We are a large multi-purpose facility, but we still do in-house billing and collections. Is it worth paying the extra percentage to outsource and use a third-party billing service? – Submitted by Kelly Tobey, Membership Manager of The Sporting Club, La Jolla, Calif.

A: In one word: Yes.

Smaller studios and low-traffic gyms can still get away with handling billing and collections in-house, but a large multi-purpose or even a medium-sized gym needs to outsource their tasks to a third party.

Although, at first glance it might appear that outsourcing will be an expense to justify, you will soon find that the benefits far outweigh the cost. Once you harness the power of a club management system (CMS) that integrates your check-in procedure, your database, your billing and a variety of other sales and retention systems, you will actually make more money from using a third-party CMS provider.

For example: I’m certain that whomever you have handling delinquent account and collection calls could be using their talents elsewhere. Taking time to call a delinquent member, leave a message, make a note to call them back again, call them again and then repeat for the 10 percent of your membership base whose payment didn’t go through every month, is a waste of precious time. Think of all the money you’re losing when a day becomes a week, and a week becomes a month; and, you still haven’t made any progress on collecting from many of your members.

Aside from delinquent accounts, don’t forget that you’ll need to follow up regarding expired credit cards, account holds, closed accounts, change of banking information or members who simply forget to pay or renew. You are a health club, not a collection agency. Do what you do best and outsource the rest.

When you are making those calls internally, you become the “bad guy.” When you use a third-party system, they become the bad guy and allow you to focus on making the member experience at your club as positive as possible.

With all of the new credit card regulations and PCI compliance concerns, trying to stay abreast of what you should and should not be doing can get confusing. There are ever-changing rules from credit card companies and encryption issues; there are even rules on how paper-based membership agreements can be filed. By outsourcing, you don’t have to worry yourself with any of these issues.

Also, imagine how nice it would be to have your integrated system tell you when Jim Member tries to check in, but his credit card has expired. Or, to be reminded that Susie Member’s paid-in-full membership expires in one month. What if you operate an unstaffed 24-hour facility? Wouldn’t it be nice to know that your system isn’t allowing entry of expired or delinquent members outside of staffed hours?

The right system will automate your entire health club, including: check in, point-of-sale, data entry, billing, reporting, collections, retention, scheduling, personal training and other profit centers, marketing, sales and more. You want to automate as much of your health club business as possible so that you can free up your time to do the things that will grow your business.

As far as cost is concerned, if you choose the right CMS company, this isn’t an issue. Almost immediately you’ll see an increase in your monthly draft thanks to their collection efforts. You’ll see an increase in productivity from your staff because they won’t be spending hours chasing down delinquent members or trying to update member records. Finally, you’ll be able to focus on managing and growing your health club, instead of spending your time on the tasks that can easily be outsourced.

Don’t look at outsourcing your billing as a cost to your business. Look at it as an investment that allows you to increase overall revenues, increase productivity, increase staff loyalty, decrease headaches and interruptions, and allow you to do what you do best — helping your members lose weight and become healthy. -CS