Handle collections in-house

When a member’s cheque bounces or credit card payment is denied, Terry Adams, own r of Iron Haven d Gym, in Summerside, P.E.I., gets on the phone o chase down the o problem. “It’s an is- slue fo sur , but it’s maybe a little easier here since everyone oth r in our town,” he says, no ctling Summerside’s

But if the payment isn’t made prompt- ly, the member gets a polite reminder letter. If the debt isn’t settled short- y thereafter, a stronger letter is sent. knows e c

ollection agency.

Finally, a third letter informs the mem- population of 18,000. “Most people

“The system is a dream for the fit- overdrawn their accounts.

ber that the matter is being sent to are bas tically honest, and t chey fix it up quickly.” He finds that most o ffo trh cese problems are usually just oversights on the members’ ot part – credit cards have expired, bank accounts have been closed or members have

he reason.

wo Nonetheless, Adams and his managers spend several hours a month on

quent accounts. Though he admits he woul pda prefer to be doing service, agrees something more productive – like selling memberships or inter- acting 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 resolve things ourselves.”

ness staff,” says Glenday. “It keeps us rking positively with members ver- sus being the bad guy. Our business is to make people happy and healthy.”

Geoff Del Grande of Fitcomm

t “eImpting to contact them three or four tim tes, Adams doesn’t likely do it yourself,” usually pursue it any further. “They’re not training in the club anymore,” he says, justifying

ey just isn’t going to happen, so I unfortunately take it as a loss.” If he runs into these former members around town, he doesn’t usually bring it up.

Services, the company that provides the service for the club, agrees that it n be challenging to play two roles. t’s a hard switchover for fitness peo- ple – moving from the adrenalin rush of dealing with a member with a delin- quent account to then being a warm and fuzzy fitness professional.”

Over the years, Adams has modified his approach to mem- bership sales to help manage the problem: he pushes corporate

Outsourcing the job makes financial s nse too, says Del Grande, who has

Merchant treasury

 Payment processing solutions that require no capital outlay

 Proven procedures that increase cash flow

 Electronic processing efficiency that reduces operating costs

 Integration with back-office software to ease workload on administrators

caBut some members never respond to his “ phone calls. After at- wo staff you ca

is act ons. “And getting the mon-

he explains. “But as your number of payments.

phone and at the front desk dealing with delin- yment process

been in the business for 10 years. “We on’t charge the club for collecti g the verdue fee,” he explains. “Instead, we charge the member a $25 late fee.” The ub has the option to waive the fee if he person is a longstanding member, ustomer service reasons or for any

Marc Bourgeois, of Merchant

memberships (payroll deductions are very reliable), provides a generous discount for single payments for one-year member- ships and offers specials several times a year (where members pay up front for a multi-month membership).

But not everyoante is as comfortable wearing the bill collec- tor hat. When Eliza eth Gl nday opened a club with a business partner in Orangeville, Ont., five years ago, she had plenty on her plate managing the day-to-day operations and teaching up to 15 classes a week. D tealing with overdue accounts was at the bottom of her to-do list. ing a profit – seven percent is a pretty big chunk of money.”

It’s difficult to run a successful oper- ion if you’re not collecting your bad debts, notes Bourgeois. “In the fitness club business five to seven percent of all accounts receivable go NSF. Clubs hat don’t collect it aren’t likely mak-

Treasury Services, a Calgary compa- ny that provid s a similar managed

that hiring a third party to ma age your receivable makes good financial sense especially if you have a growing membership or more than one club. If you’re a mall key club with o ly

“I wanted to maintain go d relationships with everyone,” she says. “Going after money that clients owe you isn’t fun.” As a re- sult, 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.”

Sidebar: 5 Tips for avoiding delinquent

Outsource NSF follow-up and collections

bership agreement. Require a void cheque (people often make errors tran- cribing numbers to a form). Ask for

accounts 1.

Carefully design your mem-

members increases, so does the num- ber of returns. For example, if a club with 1,000 members has five p rcent or 50 items bounce per month, when it grows to 3,000 members now it’s 150

When Glenday accepted her current position as manager of Access Fitness, also in Orangeville, she was r lieved to discover that the club outsources all of its new-member data input and multiple telephone numbers to make it easy to contact members if there’s a payment issue; emergency contact telephone num ers help track down members who move away and forget to

payment pr blems per mont righ.t then and there. But if the payment isn’t made promptly,

Now when a member is in arrears, the front d sk computer flashes up a message, and Glenday simply informs the mem- ber that the club’s third party billing agent is unable to draw funds from the account. Usually the situation is sorted out ”

toll free: 1-866-588-6368 email: sales@merchanttreasury.com online: www.merchanttreasury.com

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