Debt Collection Strategies For Health Clubs & Gyms

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Debt Collection Strategies
For Health Clubs & Gyms

debt collection strategies health clubs Health clubs are very popular in our culture these days. With much public awareness on physical fitness and maintaining good health, many people become members of gyms and health clubs to stay fit. Others join for strength training, and/or to lose weight.

Along with the huge popularity of health clubs and physical fitness, also comes accounts receivable problems, because of delinquent payments from some club members. Neglected delinquent accounts and poor internal debt collection strategies usually spell cash flow problems for the managers of these health clubs.

There is a tendency to let past due accounts pile up in the hopes that delinquent members will pay voluntarily. And while managers may focus much of their attention on the gym facility and equipment, the money-managing aspects of the business, especially having sound and consistent debt collection strategies in place tend to suffer.

Members typically sign an annual or longer contract, usually with a price break off of a monthly “pay as you go” type scenario. As is often the case, after the initial excitement and novelty of beginning a new regime wears off, and the real work of maintaining a consistent fitness schedule, some become disillusioned.

Even though bound to a contract, some will neglect their obligation and stop payment altogether. Some may think that in spite of a legal contract, they shouldn’t have to pay if they’re no longer using the gym’s facilities.

Internal Debt Collection Strategies

It’s very important to implement and consistently follow an in house strategy for recovering on past due accounts. In addition to past due membership dues, other fees, such as locker rentals, food services, or additional charges can account for delinquent accounts.

One key component to successful debt recovery is getting as much personal information on the initial membership application. Ask for social security and drivers’ license numbers, in addition to banking and employment information. This information will be especially helpful should these accounts have to be outsourced to a collection agency.

Early And Consistent Contact Is Critical

After payment is past due 30 days, a manager or someone else assigned these tasks should call the delinquent member to see if there’s a problem. Making a friendly reminder call to encourage the member to stick with their fitness plan, as well as inquiring when the past due balance will be brought current can rescue a situation before it gets much worse later.

Sending Past Due Statements

Along with making reminder and followup phone calls at 30 days to delinquent club members, your office should mail a past due statement or reminder. Be sure to be mindful of local and federal guidelines governing both telephone and written communications with delinquent debtors.

Although, technically, you're not a collection agency, you still don't want any of your communications with past due members to be perceived as harassing and/or threatening. It could backfire on you. Learn how to write effective debt collection letters here.

Depending on your business' internal policies, you may suspend club privileges at 45 days. This might be the incentive some members need to reinstate access to the gym's facilities.

Ideally, non-paying accounts should be outsourced to collection agencies at around 45 days, if you've either received no payment or arrangements. You really shouldn't go past 60 days with late accounts unresolved.

Know When To Outsource Difficult Accounts

A second phone call and/or letter should be sent to the delinquent club member at 45 days. Time is of the essence, and you can’t afford to let much more time pass without communication. If the problem isn’t rectified, either with having brought the past due monies current, or payment arrangements made, part of effective debt collection strategies is knowing when to outsource to a collection agency.

Statistics prove that past due accounts depreciate drastically with the passage of time. At 45 days without contact from the club member, you should know if the situation warrants alternative measures. The sooner these problem accounts are turned over to a collection agency, the better likelihood for a successful recovery.

Collection agencies have the resources, experience and proven strategies to recover past due accounts efficiently. Cost options include some agencies that charge a percentage of any money recovered. Others offer the option of a fixed cost, flat fee, that can be very cost effective for many health clubs. Plus, the psychological impact of a neutral third party can make the difference with the majority of delinquencies.

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