Collections Made Easy for Delinquent Membership Dues
It’s never easy to talk about money. As a club owner, you can anticipate anywhere from 5% to 25% of your term and month-to-month agreements going past due. The longer they stay past due, the harder it will be to collect.
Best-in-class clubs get their delinquency rates to below 5% and you can as well by following these steps:
1) Start with the Right Contract
Reducing delinquency rates starts with how you structure your initial agreements. Starting your member-club relationship off on the right foot will eliminate many delinquency headaches down the road. Train your staff to get as much information as possible at the time of sale – multiple phone numbers, email, date of birth, place of employment, and addresses. This information is what is used in the delinquency follow-up process; therefore, more personal information on the agreement leads to more money collected.
At the 90-day delinquency mark, the account is deemed bad debt. These accounts still owe their money, but they are not cooperating. Keep this in mind when you write your agreements. Include language that allows collection and attorney fees as well as the ability to recover all costs of collection.
2) Partner for a Professional Collection Process
Consider having a technology partner, like ABC IGNITE, who can run a professional delinquency remediation process as soon as any payment issues arise. Most issues are routine, often involving a credit card expiring, but the longer the account goes unpaid, the harder it is to collect.
Here’s how Gary Castellano, COO of Club Fitness in Greensboro, North Carolina, described his experience working with ABC IGNITE:
“The minute something declines, we hand it over to ABC IGNITE. When a member gets a message from the team, they always seem to get back to us immediately. IGNITE’s outreach process is very professional, and we have noticed a big difference. We have almost nothing outstanding.”
3) Build a Layer of Protection to Your Members
A full-service technology partner can bring a professional remediation process and a layer of protection to your club. These are still YOUR members – YOU own the membership agreements, and you decide how you want them handled. You should have freedom, without fees, to cancel or adjust accounts that should have been canceled or updated.
Your technology partner can provide a layer of protection and remove delinquency follow-up from your team’s interaction with members. The goal is to get as much of the due that is owed to you while prioritizing your relationships with your members.
For Nick Kerzman, Owner at Three Rivers Fitness in Minneapolis, “It was important for us to be strong on collections for the business of things. Having the ABC IGNITE team follow up made a huge difference. It allowed us to focus our time on member engagement and gave us a nice layer of protection with our members. We were not the ones ‘hounding’ them.”
Improved Collections Leads to an Increase in Working Cashflow for Your Club
The outcome of having the appropriate language in your agreement, a professional process, and a layer of protection for your business will allow you to maximize cash flow. That combination has helped many ABC IGNITE partners become best-in-class and drop their delinquency rates below 5%.
Trey McClain, Chief Revenue Officer at Bob’s Gym, did not think there was any room for improvement in their collections rate. He shared, “I didn’t know how we can get any better; we were already running at 94%. But after working with ABC IGNITE, our club is now consistently running at 95% or 96%.”
Not only will you see an increase in cashflow, but working with a full-service technology partner helps to ease the burden from your staff reaching out to remedy delinquent membership dues. They can focus their efforts on sales and marketing or other projects around the club that will enhance your members’ experience.