While maintaining a gym facility may be challenging, dealing with unpaid membership fees is one of the difficulties of running a successful gym business.
While this revenue is crucial to staying in business, you wouldn’t want to harass or strong-arm them during the debt collection process. Therefore, the big question is, how can you easily collect debts from members of your gym without affecting the smooth running of your business, the member experience and their ongoing perceptions of your club?
This article was written to guide you on everything needed to begin the gym collection process, helping you recover unpaid balances effortlessly.
Let’s get straight into it!
How Unpaid Balances Can Affect Your Gym Business
For a seamless debt collection process, you must first understand how unpaid gym dues can affect your business.
The obvious and most major way it affects your gym business is the loss of money. What many don’t realise is that members who do not pay their membership fees actually cost more money than the fee that they owe. Following up on debts, has flow on effects across club resources, time, and effort to recover the money which could be used elsewhere.
This sapping of resources can lead to gym dept collection sucking away from the experience of other members, as well as the ongoing improvement and growth of your business. Things like club maintenance, having your admin staff greet members upon entry, reach out for upsales opportunities or follow up on leads may go amiss if your team’s plate is full with phone calls re:debt collection.
Another thing to note is that sadly, if the gym debt collection process isn’t handled appropriately, you might also end up losing such members completely and hurt your club’s reputation in the process.
Top 5 Tricks for Effective Gym Debt Collection
As seen above, bad and accrued debt can have significant adverse impacts on your gym business and in extreme cases has led many a business to struggle or go out of operation in the past. While it’s a highly important task, remaining diplomatic about debt is key to actually getting paid and having the matter resolved in a way that’s best for both parties.
Follow the top 5 tricks for effective gym debt collection discussed below to help you collect all your unpaid membership dues without the risk of creating negative perceptions about your business, especially amongst new, sleeping or rejoining members who are most likely to cancel.
1. Consider Using the Upfront Payments Policycy
Upfront payments will help you reduce the possible amount owe-able by your gym members. Technically, even if such a member fails to pay the settle the bills of the final installment, you might not be in loss as the initial payment must have catered to the majority of the costs. This is also a way to ensure regular cash flow. You can even help your gym members create a schedule for installment payments. For instance, 70% upfront at the start of the billing period and 30% before the end of the billing period under review.
2. Offer Incentives for Members Who Pay Early
Take inspiration from the big conglomerates who own internet and power companies, these guys have millions of customers regularly paying bills – they must be doing something right. One thing they commonly do is offer incentives for paying early or on time.
This may be as little as a slight discount – although somewhat insignificant to you, it would serve as a significant motivation for people to pay up their debts as quickly as possible. This trick is more favorable for situations such as settling outstanding invoices, issuing late fees, etc.
Do you have members at your gym who have been very reluctant to pay their due fees? Introducing incentives for early payers is a brilliant way to indirectly coerce them into paying!
3. Set Payment Terms Per Client and Abide by Them
Ensuring the most minimal unpaid dues includes having preset payment terms for all members. However, apart from creating them, you must ensure you also abide by them painstakingly. Apart from helping your members understand the conditions associated with being a member of the gym, it also creates some sort of protection for your business.
Your payment terms contain all associated costs, including the costs associated with collecting outstanding invoices from clients. Also, ensure you include these payment terms on your invoices to prevent customers from paying on their terms.
4. Ensure Proper Communication
Even if a gym member can’t pay immediately, you must still ensure proper communication is kept in place. Talking with gym members with outstanding payments and listening to whatever they have or want to say might be instrumental to identifying payment plans that can help them offset their debts sooner and remain ongoing members at the club.
However, while communicating, ensure you avoid manipulation and confrontation. Instead, try to identify their respective excuses for not paying yet. Often it is best long term to give the benefit of the doubt if you want the member to remain. Remember, the rule of thumb is its 8x more expensive to acquire a new member than it is to retain a current one.
5. Let Defaulting Members Know the Consequences of Unpaid Balances
This is somewhat related to setting the payment terms of your gym membership. When signing up to your gym, ensure they understand the consequences of delayed payments. Such awareness creates some kind of consciousness that enables them to live up to the agreement’s conditions.
Most importantly, never let them forget. Create a follow-up plan that constantly reminds them of the impending consequences so they can take necessary actions as quickly as possible. This is also a part of effective communication.
Final Thoughts
Gym debt collection might seem difficult and an unpleasant task, especially when there are many members with unpaid dues. The tricks explored in this article are a few sure ways to help make your gym debt collection a lighter lift for you and your staff.
But, Why Don’t You Save Yourself the Time & Stress?…
Undoubtedly, the tips discussed in this article can be hugely time-consuming and can even become a full-time position if your gym has a large enough membership. Thankfully, you do not need to worry any further. There are now smart membership management systems that help you automate your debt collection process. Find out more about the best automatic gym debt collection system here.
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