Whether you’re a startup or an established business, your billing process is an integral part of how you operate. How you collect your money not only affects your cash flow, but also your expenses and profitability.
There are a wide variety of ways to handle your billing. Here are some summaries of the more common options:
Cash at the desk
This is the easiest way to get your business off the ground. Simply get cash or cheques when members show up or sign up for Debit/Credit Card processing and you’re good to go. Just take payments at the front desk and get on with building your business. However, people forget to bring their wallet, transactions are forgotten, people are forced to mill around and wait to pay and some days things just won’t add up. It can easily get out of control and requires a hands on approach to keep up to date with everything. This can not only be time consuming, but can also lead to problems when doing financial reports if you have not kept on top of things.
This option is simple to set-up and operate, but is a full time job to monitor and maintain for large facilities.
Instead of having money come in over the front desk, you can have clients simply set-up an automatic payment into your account which means no transaction fees and no third party. Just provide your Bank Account number and that’s it. If everything goes to plan, you will still need to update your membership software and while most software programs will offer an import feature to automate part of the work, you still have to manually get involved in the process every billing cycle.
As this option puts the responsibility of cash flow in the hands of your members, it means you will likely need to follow-up with them to ensure it’s set-up in the first place and check that members are paying correctly. In addition, members also have control over if and when they are changed or cancelled. Having no transaction fees is beneficial, but requires you relinquish control over the process and some administrative work will be required.
Partially Integrated Direct Debits
The main advantage of running your Direct Debits through your bank is a lower transaction fee meaning you pay less of your membership revenue to a third party. However, as each batch must be manually exported and then reconciled, it requires having a specific staff member to handle this. It also means reducing the flexibility and options for members when it comes to billing dates as running a batch every day is far more time consuming than running one every Thursday or on the 1st and 15th of each month.
This option has lower transaction rates but has more admin costs.
Fully Integrated Direct Debits
The advantage of having Fully Integrated Direct Debits is reduced admin costs and automated billing and reconciliation. In this case the system is linked directly, causing batches to be automatically generated, submitted and reconciled. This means you can easily offer more flexible billing options for your members while reducing the amount of admin work required by staff.
The third party sometimes takes on follow-up responsibilities such as informing members of failed billing and, in some cases, taking payments and updating information. This option may carry higher transaction costs, however advantage of fully integrated DDs is that it can further reduce admin costs and lost revenue.
The key to choosing the right billing system for your business is figuring out your priorities and then choosing the billing provider that reflects your needs the best. This can be complicated by the fact that what may seem the most appealing at first, may not be the most beneficial for the size or structure of your business long term.
The team at GymMaster can help you find the best way to bill your members and which provider is best suited to your needs. Schedule a demo today with one of our experts to learn how GymMaster can take the hassle out of your billing.