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Collecting Debt By Barb Gormley

Recovering bad member debt is cru-

cial for every fitness club’s health When aspiring fitness club owners

are writing their business plans and eagerly planning ways to help future clients reach their goals, they rarely stop to consider the less exciting side of the business – how they’ll handle NSF cheques, unpaid bills and expired credit cards, for example. But success- fully collecting on bad debt can be the difference between running a prosper- ous operation and being forced to per- manently close its doors. Here are two options for taking control of your club’s debt recovery.

Handle collections in-house When a member’s cheque bounc-

es or credit card payment is denied, Terry Adams, owner of Iron Haven Gym, in Summerside, P.E.I., gets on the phone to chase down the problem. “It’s an issue for sure, but it’s maybe a little easier here since everyone knows each other in our town,” he says, not- ing Summerside’s population of 18,000. “Most people are basically honest, and they fix it up quickly.” He finds that most of these problems are usually just oversights on the members’ part – credit cards have expired, bank ac- counts have been closed or members overdraw their accounts.

Nonetheless, Adams and his man-

agers spend several hours a month on the phone and at the front desk deal- ing with delinquent accounts. Though he admits he would prefer to be doing something more productive – like sell- ing memberships or interacting with his members – he prefers to handle the matters in-house. “These people are usually going to renew, and we don’t want any hard feelings. We like to re- solve things ourselves.”

BY BARB GORMLEY

W

But some members never respond

to his phone calls. After attempting to contact them three or four times, Adams doesn’t usually pursue it any

DEBT

Recovering bad debt is crucial for every fi tness club’s health

further. “They’re not training in the club anymore,” he says, justifying his actions. “And getting the money just isn’t going to happen, so I unfortu- nately take it as a loss.” If he runs into these former members around town, he doesn’t usually bring it up.

Over the years, Adams has modified

hen aspiring fi tness club owners are writing their business plans and eagerly planning ways to help future clients reach their goals, they rarely stop to consider the less exciting side of the business – how

his approach to membership sales to help manage the problem: he pushes corporate memberships (payroll de- ductions are very reliable), provides a generous discount for single payments for one-year memberships and offers specials several times a year (where members pay up front for a multi- month membership).

they’ll handle NSF cheques, unpaid bills and expired credit cards, for example. But successfully collecting on bad debt can be the difference between running a prosperous operation and being forced to permanently close its doors. Here are two options for taking control of your club’s debt recovery.

But not everyone is comfortable

wearing the bill collector hat. When Elizabeth Glenday opened a club with a business partner in Orangeville, Ont., five years ago, she had plenty on her plate managing the day-to-day opera- tions and teaching up to 15 classes a

32 Fitness Business Canada July/August 2009

Fitness Business Canada May/June 2009

Now when a member is in arrears,

the front desk computer flashes up a message, and Glenday simply informs the member that the club’s third party billing agent is unable to draw funds from the account. Usually the situa- tion is sorted out right then and there.

Outsource NSF follow-up and

collections When Glenday accepted her current

position as manager of Access Fitness, also in Orangeville, she was relieved to discover that the club outsources all of its new-member data input and collections.

COLLECTING

week. Dealing with overdue accounts was at the bottom of her to-do list.

“I wanted to maintain good relation-

ships with everyone,” she says. “Going after money that clients owe you isn’t fun.” As a result, the club let many of its non-payers slip through the cracks. “My partner hated calling people for money too, so it was very easy not to do it.” In retrospect, she admits they probably lost “a huge amount of money.” Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56