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Home In Print

Managing Account Receivables and Member Retention

Raj Chhabria by Raj Chhabria
March 14, 2019
in In Print, Operations & Facilities, Pro Talk
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There are multiple club management and billing programs, and these software platforms enable maximization of revenue, and help fitness and sports facilities manage their membership database. In a normal course of billing, there will always be certain members who default. It could be due to declined credit cards, chargebacks, ACH or physical check NSF.

Depending on various factors, the lost revenue could be about 5 to 20 percent of a community center’s total monthly billing. This has a direct impact on the profitability of community centers, and the revenue collected could be used for facility improvements.

Typically, there are no formal processes to engage with members and collect debt. Lack of resources and training prevent community centers from efficiently implementing a collections process. Additionally, there is a perception that members would be upset if they are contacted and it will impact the reputation of the facility. Community centers perceive that by not following up, it is encouraging new customers to sign up because they know they wouldn’t be called on for non-payment. While on paper this seems like a logical plan, reality tells a different story.

Imagine a member was late by two months and owed $60. They avoid visiting the community center because it’s their perception they may be stopped when trying to enter. What would they do? More often than not, they will just stop visiting and join another facility. Now, your member is paying the competition instead of paying what he owed you and discontinues his membership. This could have all been avoided if there was a structured accounts receivable plan in place. So, what are the options?

One route would be to build an in-house capability for following up on account receivables issues with members. However, the volume of A/R may be too little to warrant an investment in the technology platform.

Not only is this not a core objective of a community center, but time constraints pose a problem. The staff at the community center have many responsibilities that take up the majority of their time. Due to these rigors, delinquent accounts may be put on hold to be contacted, or never called at all. Statistically, the longer an account stays delinquent, the harder it is to collect funds.

Additionally, operators of professional A/R management companies are thoroughly trained to be knowledgeable of and apt to the ever-changing federal and state laws. There are many do’s and dont’s, that if not understood, could result in lawsuits.

A logical solution is to partner with an outsourced A/R management company. With proper data tracking and infrastructure coupled with integration with your billing software partner, engaging with members and collecting debt has never been easier and more cost-effective. Not only will this alleviate the stress that goes into retrieving backed funds, it also helps you retain and grow your membership. This ultimately impacts the cash flow and profitability of the community center.

 

Raj Chhabria is CEO of First Credit Services. He can be reached at rchhabria@fcsbpo.com or visit firstcreditonline.com.

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Tags: account receivablesFirst Credit ServicesMarch/April 2019member retentionmembersPro Talk
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