Direct Debit will help your fitness business
How do you currently collect recurring payments from members?
During the past year we have all seen the massive shift to contactless payment, with “no cash” signs up everywhere. Now is the time to embrace cashless transactions and move members across to a recurring payment, be that a rolling contract or a fixed contract.
Direct Debit is a reliable, flexible and secure method of payment collection, it’s simply the best way to collect recurring payments without working up a sweat. I use an app called GoCardless to collect my recurring payments as it benefits both the businesses I work with and my business.
By using Direct Debit you will be helping your members to budget and increasing retention, as they won’t need to consider if it’s worth paying to exercise today, you are removing a barrier to their willpower. This should have a positive impact on their dedication to attending, they have paid so they might as well get up and enjoy a gym session.
A pay-as-you-go system creates cash flow problems for your business, you won’t know when or how much is coming in each month. This will make forecasting difficult and cause you more stress, unlike recurring payments which do provide some reassurance. You will be able to forecast with reasonable faith that you have X number of members, signed up paying £X per month, which means your revenue is a certain level. It doesn’t completely eliminate risk but certainly provides more certainly than the pay-as-you-go method.
For recurring payments you may have considered Standing Orders, this was traditionally the preferred method for small businesses as Direct Debits were not accessible to small businesses. This has changed over the recent years with a few providers now being available to smaller businesses.
Standing Orders are inflexible, unpredictable and time-consuming.They can work well for fixed payments such as rent, but for gyms their usefulness is limited.
The Direct Debit door is open to gyms and fitness centres thanks to options such as GoCardless and FastPay.
Direct Debit puts the business in control, allowing the business to collect payment from the members bank and put through those annual price increases.
Need to increase membership fees? Let your clients know and, unless they specifically request to cancel, the revised payment will ping into your account.
When a Direct Debit bounces or is cancelled, you’ll be notified by your provider, meaning no need to examine bank statements daily to check that payments have been made.
Benefits for Gyms and Fitness Centres
1. Customer Loyalty
Competition for members among gyms and fitness centres is fierce. Once a member has signed up, you want to ensure they stay as it can be expensive to secure new members.
Once members sign up, they will appreciate the efficient method of payment, they don’t need to think about paying a bill every month or check for cash when they arrive at the door. You will build trust with the member as they trust you take the right amount, at the right time and Direct Debit provides this by removing any human error in the process.
There will still be some instances where payments are not successful but with GoCardless there is an option to use Success+ which will retry the payment at an optimal time. This increases the chances of having a successful collection.
2. Low-Admin Accounting
As a gym-owner, your passion is helping people with their health and fitness, you don’t really want to spend all your time worrying about the financials. With Direct Debit, any admin headaches from collecting payments will disappear.
The Direct Debit provider will oversee the process and provide clear, up-to-date information about who has paid what and when. Payment tech allows you to easily integrate your accounting software, including platforms such as Xero. Providers such as GoCardless also integrate with some of the Gym Software providers such as ClubRight. This makes the process even more seamless.
Real time payment information allows you to work with your accountant to understand your business cash position and forecast, meaning you will know in advance if there are any cash dips that you need to prepare for.
This will reduce stress and reduce the time it takes you to know your cash position. It means that you can make decisions such as can you afford that extra member of staff, can you take dividends and other future plans.
And if there are any issues, such as a bounced or cancelled Direct Debit, you’ll be automatically alerted via regular reports sent straight to your inbox. With a comprehensive breakdown of all payments, you’ll be able to resolve any payment problems quickly and always know what’s happening with your account.
So instead of sitting in front of a computer for hours inputting data into spreadsheets and chasing up late payments, you can be on the gym floor helpfully encouraging your members.
3. No negative cashflow issues
With Direct Debit, your cash flow will be built on certainty, 97.5% of payments are successfully collected first time and intelligent payment retry improves this further. This will provide you with more confidence in your fitness businesses future and enable you to plan.
Any issues will be flagged up quickly, so income disruption is minimised and you can intervene and implement your retention policy quicker.
If you’re just starting out in the industry, this peace of mind is critical. Experiencing an cash flow challenge is one of the key reasons why an estimated four in ten businesses fail after five years.
4. Known cost
Once you’ve signed-up, you simply collect a Direct Debit mandate from each of your members online. There is a charge for using these services but weigh this up against the time it usually takes you to chase payments, reconcile the transactions and the brain power worrying about payments. I am sure you will agree that it is worth the small price.
For gym owners, FitPros and Fitness centre owners there is no competition when choosing the best way to accept recurring payments, Direct Debit holds the winning spot.
Need help understanding your finances further, book in for a free 15 minute discovery call. Book now
1. Book a call with me: https://southbourneaccountancy.co.uk/contact-us/
2. Download my free guide on “7 mistakes to avoid – to stop your fitness business running out of cash” https://southbourneaccountancy.co.uk/fitness-ebook/
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4. Book an R&D eligibity call: https://calendly.com/rdteam/15min?month=2020-11
5. Grab a copy of our “32 ways to extract value from your business” – tax savings. Here https://southbourneaccountancy.hubspotpagebuilder.com/32-ways-checklist-to-extract-value-from-your-business-save-tax-now