Health and Fitness clubs operate in an ambiance full of energy, motivation, sound of heavy metal and grunting. In such a vibrant place expecting your staff to always keep their head cool and dealing with clients with utmost respect and professionalism, while demanding to clear past due membership bills can be a challenging task. Moreover engaging a Gym employee to do debt collections, something in which he/she has no formal training (or experience) may not be such a great idea anyway. Most employees doing membership fees collection are either a back office accounting clerk or a front desk receptionist making calls during non-rush hours.
Let your staff do what they are the best at, handling their core health club responsibilities. Once your member has not responded well to your reminder calls and notices for over 60 days, its best to forward that account to a professional debt collection agency. There is a common misconception, that once an account is transferred to a debt collection agency the collector would misbehave with your customer to extract money – Not allowed. Collection agencies have to follow strict compliance laws like the “Fair Debt Collection Practices Act (FDCPA)”, due to which they must deal with all debtors professionally and diplomatically, else the debtor will sue them back. Debt collectors are experts in collecting debt, that’s what they do all day long. Collection agencies have numerous tactics and tools to successfully recover from past due accounts.
But even before the account gets transferred to debt collectors, most health clubs prefer using “Collection Letters“. This is a lot more “softer yet firm” approach to collect on past due accounts. This also takes care of customers who have probably shifted their residence to a new location, but you still have their old address on file. Collection agencies perform various scrubs on each account placed which includes “Change of Address” and “Bankruptcy Check”. Letters by Collection Agencies are carefully crafted for maximum impact, yet a low cost approach to collect money without ruining relationship with your members. The members pay directly to the club. The cost of “Collection Letters” is only about $15 per account, and up to 5 letters are sent out. This saves your staff time, paperwork and all the additional overheads involved.
Check this: Cost of hiring a collection agency
Before you select a collection agency, make sure they have the following:
1. An online portal where accounts can be placed any time or service can be stopped once a member has cleared his bills.
2. Their systems are PCI complaint, means the information about your members is handled securely in their IT systems.
3. They should be able to send demands in both English and Spanish.
4. Should be able to report an account to credit reporting agencies like Transunion, Experian and Equifax if you want.
5. Ability to accept payments online or over the phone.
6. Collection letter accounts are usually purchased in a bundle. Like 100 accounts for $15 per account. Check with your agency if your unused accounts have an expiration date ( usually an year or two).
7. Insist that you want to use the diplomatic “collection letters” service, before a debt collector gets involved. They are best for accounts which are less than 120 days past due. Check if they offer any guarantee on their collection letters service.
Note: If the staff of a Health Club waits too long to transfer account to a collection agency, recovery on that account gets tougher.
Contact us if you are looking for a collection agency.