There are many software vendors in the health and fitness industry that provide the basic tools for checkin, PT management and point-of-sale. Oftentimes it is difficult to identify the differentiators between health club and membership management software companies. One area where the differences are very apparent however, is in the billing and invoice processing functionality that club management software vendors provide.
There are essentially two schools of thought in the membership billing software world. The first is to provide billing as a service. Your club management company is also your EFT and credit card processing company. You pay their rates and once or twice a month, you send your member invoices to them and they process billing on your behalf. The second option is to provide you the ability to do your billing in-house through integrated billings features available in the software. You pick the processor with whom you will work and negotiate the best possible rates.
There are pros and cons to both of these offerings. With an in-house model, a member of your staff will need to spend a few hours each month processing the member statements and submitting the files. With the outsourced model, you pay a higher processing rate and leave all aspects of billing and member data in the hands of your vendor. Here are some advantages to an in-house processing model:
1. Take advantage of existing relationships.
Oftentimes your local bank, with whom you have an existing relationship in the form of deposit accounts or business loans, will provide you merchant services as a loss leader just to keep your business. This, coupled with the fact that you have a relationship with them, will give you a high level of service in addition to the comfort of knowing that if something goes wrong, you don’t need to deal with someone hundreds, if not thousands, of miles away on the phone.
2. Bypass the middle man.
Many people are not aware of the fact that there are only a handful of major processors in U.S. They include the likes of Chase, Paymentech, First Data and IC Verify. Notice that there are no health club software providers listed? That’s because health club software providers are reselling the services of the big companies and charging you a premium for what you can pay a lot less for.
3. Use the power to negotiate.
The health club market is a very nice vertical for processing companies. There is recurring revenue every month and processors will do whatever they can to earn your business. Use this fact to negotiate with as many processing companies as you can for the best rates. Even a few pennies a transaction can add up over the year.
4. Don’t wait for your hard-earned money.
Oftentimes billing services will run your EFT, ACH and credit card billing and then hold your money for some period of time before releasing it to you. After running your billing, you should demand that the collected monies be released to you immediately. Ask yourself why a business other than your business should make money on your membership dues?
Historically, processing checking account and credit card billing was a business unto itself. Today, advances in technology and commercially available software applications have made billing and collections a breeze. The major processors even provide services that make the case for in-house billing even stronger. One major industry player even provides a card account service which updates credit card expiration and account information the month prior to the change taking place. Imagine no more decline fees!
There are many choices in the club management software industry. When deciding on the best product for your business, look at the details carefully:
• Are you committing to a long-term contract?
• How easy will it be to change if you are unhappy with the vendor?
• What rates will you pay?
• Do you have access to your data when you want it?
• Are there any hidden items like statement or NSF fees?
After doing your due diligence, identify your staff resources and see if an in-house solution is viable, and if it is, start saving money today!
Al Noshirvani is the President of K.I. Software, a Division of MotionSoft Inc. He can be contacted at 800.829.4321, or by email at anoshirvani@kiesolutions.com, or visit www.kiesolutions.com.
