How to Optimize Your Health Club’s Cash Flow

No matter what motivated you to join the fitness industry, at the end of the day, it’s a business and it has to be run like one. You can’t stay in business if you don’t make money, and that requires knowing how to keep track of your financial status while you pursue more revenue opportunities.

IHRSA’s Financial Management Tool can be an invaluable aid in managing your finances, especially if you don’t have a full-time accounting staff on-hand. The Strategy & Finance section of the IHRSA website also has other resources that will help stay financially organized if necessary, especially if you’re a new club owner or operating a startup.

But in this hypercompetitive marketplace, even seasoned club owners can find themselves with challenging financial quandaries in organizing their books. One reason is the prevalence of electronic transactions. You need powerful health club management software to help keep track of all the digits flying in and out of your accounts from multiple payment systems. More revenue streams are great, but they have to be tracked with precision, so you can determine if your initiatives are in the black.

A healthy cash flow is essential. According to the IHRSA Health Club Business Handbook, the industry enjoys an advantage in “free” cash flow, which is defined as “all operating expenses (including rent and/or debt service), interest expense, taxes, maintenance CAPEX, and working capital investment.” Most retail businesses are in the 2%-5% of cash flow, while the health club industry has a range of 5%-12%.

If you’re lagging in cash flow, you need to see where you may be falling short.

Optimizing Your Financial Revenue Stream

Here’s a few questions to ask yourself about your financial status if you don’t think you’re optimized for growth.

Is Your Payment System for Member Dues Seamless and Mobile?

Automatic payments for membership dues are the industry norm (about 90% of facilities operate this way), and consumers have never been more comfortable paying for good and services electronically. But consumers have also become less patient with any process that involves too many steps or asks for too much information. You need a seamless, easy-to-use payment system that gives members flexibility without hassle.

Do You Have an Effective Collections Policy in Place?

Money you’re owed is money you don’t have. There’s a number in a ledger, and a different one in your bank account. You need to stay on top of collections. This is true for both club operators and industry vendors.

Entrepreneur magazine says that “being passive about past-due receivables” is one of the biggest mistakes that small companies make. “If your clients don’t know for sure that they’ll hear from you the moment a payment is late, you’re sure to be the last of their vendors to get paid,” they say. “If you haven’t already, set clear policies with your customers for penalties and consequences when payments are late.”

You need a system that ensures automatic follow-ups on unpaid fees, preferably one that communicates using SMS with payment links. These can greatly increase compliance and grow your revenue.

Do You Have a Reliable Payment System for Non-Dues Revenue?

The proliferation of group training, personal training, retail products, and other revenue streams have taken off in recent years. Your sales staff needs to be able to convert the sale when it’s hot, so your payment system should be accessible for on-the-spot processing of mobile payments. You should be set up with a mobile payment system that trainers, class instructors, and salespeople can use on the floor and even outside of the club.

Do You Have Flexible Payment Options That Increase Compliance?

Your accounting and collections system should allow you to offer multiple payment options that can increase your ability to collect dues. For instance, smaller installment payments are seven times more successful than larger installment payment plans. And weekly payments are 1.9 times more successful than monthly payments.

Do You Have Sufficient Customer Service?

Your software can handle the financial processing and record keeping, but what about the customer service? You don’t have time to manage every customer interaction that results from billings and collections. You need a system that anticipates these issues and offers built-in automated solutions, so you can continue running your business without taking time out for constant problem-solving.

Are Your Financial Services Outsourced to Different Vendors?

Your CRM needs to perform a lot of tasks, but you don’t want to diffuse your financial accounting systems among non-integrated sources. If you’re running a club, you don’t have time to access different platforms to find out your entire financial picture. Try to set yourself up with a financial system that is comprehensive. You wouldn’t hire an accounting staff for every bookkeeping task. Choose a vendor who can provide integrated financial services.

To satisfy all of these concerns, you need a full-service billing and collections system that is integrated with your gym management software and that does all the work while you can concentrate on your core responsibilities as a club owner.

A Specialist in Health Club Financial Transactions

Optimizing your revenue streams and cash flow is the life blood of your business success, and while many vendors offer fine accounting services, you want to make sure the company you trust to manage your accounts understands the health club business.

TSG has been a world leader in revenue management solutions for health clubs for more than 20 years. They service over 5 million consumers on four continents, and process approximately $4 billion worth of transactions per year. With their proprietary software and experienced professionals, they’re able to provide billing solutions and customer service that makes sure you’re not leaving any cash on the table.

The prime driver behind the success of TSG is through integrated payments using Debitsuccess. TSG has a 97%success rate of collecting dues. Their integrated payment capabilities allow you to have one central repository for dues collections and other revenue streams. They take the load off of you and your staff when it comes to making sure all billings are collected.

TSG manages the entire backend of your accounting needs, which allows your staff to capitalize on revenue opportunities and deepening customer relationships. Using their mobile-friendly options, your trainers and salespeople can accept payments on the floor for products and services. And TSG will also help you avoid awkward encounters at the front desk when members are delinquent with members dues. The staff at TSG are diligent in making members aware of their payment status, so your employees don’t have to be part-time debt collectors.

With TSG, you’ll be able to answer “yes” to all the questions listed above. They’re a great solution for both startups and seasoned club operators who need a simple and comprehensive revenue management partner who understands the unique challenges of the health club industry.

To learn more about TSG software and integrated payments, visit their website or call 855-202-2932.