Optimizing Health Club Billing and Collections

If you’re looking for software advice from an industry veteran, Paul Reed, owner of the Mt. Hood Athletic Club in Sandy, OR, is worth speaking with, especially regarding billing and collections. You might consider Paul a real pioneer.

In December 1988, he took over the operations of a health club, and collections were a critical issue, with contracts getting about 25 cents on the dollar. Using a basic DOS computer, Paul installed medical billing software he’d learned about from a member and input all his members’ data. That led to the ability to create trackable, month-to-month memberships based on uniform billing.

“We had some minor pitfalls, and it was a bit of a struggle at first,” says Paul. “But we got it going, and we saw an immediate increase in revenue without a huge growth in membership. Essentially, we gained control over billing and collections. We now knew we could send out late statements when we needed to, and when we wanted to—at the beginning of the month and then in the middle of the month.”

A few years later, he attended an industry trade show and was introduced to Aphelion billing software—later acquired by Jonas Fitness—and the EFT process, which became a permanent part of his billing platform. Paul was ahead of his time.

We spoke with him about some of the tips and tactics he’s employed using his software package to keep billing under control.

Recent Lessons Learned

Through the years, Paul has experienced several health and fitness industry ups and downs, but likely none more impactful than COVID.

During the pandemic, Mt. Hood lost a third of its membership, which equated to about an $800,000 loss in cash flow for 2020. In looking at where he could scale back, Paul did something that many might find counterintuitive: he dissolved the bookkeeper position.

“We realized that we didn’t need the position for a lot of what we do in terms of billing,” he notes. “We have a membership services staff here at all times, and we often hire our membership services employees from the desk staff, so they already have a good understanding of our billing software.

"They already do membership changes, help people with their accounts, and understand the process of our billing and our collections cycles—and require less additional training when they get into their new roles. It doesn’t take that much time to train somebody on the software, and all our billing and collections are handled through it. There was just no need for a more highly paid bookkeeper position.”

Paul was at a FISA (Fitness Industry Suppliers Association) roundtable discussion last February when the topic came up.

“We were talking about changes that clubs made. I would say 40% of clubs did away with membership services and just had their front desk people do it,” he says. “I'm thinking, ‘big mistake.’ We started off that way when we first got going because we couldn't afford to add a whole department. But once we got away from it and had those dedicated membership people, we saw big improvements in membership sales. Now we've taken it a step further.”

These changes led to a new way to approach staffing.

“Here's a great formula: take your good-to-advanced desk people and put them in membership services. They're getting basically the same rate, and now they get a little commission on top of it. They're familiar with the software and all the nuances and so forth. It’s a natural fit.”

It’s more than just good advice—Paul has the receipts to back it up. With member services staff handling these processes, Mt. Hood is collecting 99% of billable revenue each month.

“The reports don’t lie,” asserts Paul. “Our numbers come right from those reports; we're not manipulating them in any way. Since we’ve started tracking, our best month was February 2023, when we collected 99.89% of all billables. Our worst month was May, where we did 98.66%.”

Another vital post-pandemic change Paul made was the addition of a turnstile, which connects directly to his member billing software. As a result, he says, his overall numbers are more accurate.

“If we have an issue with any member information—expired credit card, incorrect mailing address, phone number, or email, a missing birthday—the turnstile stops them right there,” he explains. “Once the front desk person gets the right information, the member is buzzed in. It also helps with compliance and makes things less stressful for our front-desk people.”

The Right Scheduling is Critical

Fulfill effective billing and collections by aligning your scheduling with key external dates.

“We do the billing on the first of the month, financial institutions on the fifth of the month, and then again on the twentieth. Those dates coincide with primary paydays, and we want to be first in line if we can. Returns will start coming in on the fifth, the first for any frozen cards, and then soft declines follow. As soon as we get those, we send out emails that day. Any bounce-back emails are noted in the back office on the general tab by an alert. So, people can't get in without an updated email.

“Beyond billing, we have a schedule for everything we do on a monthly basis,” he continues.

For example, every month, Mt. Hood conducts software audits to ensure billing is correct for all primary members, checking that there are no double charges and that overall numbers are accurate. Once or twice a month, a member services person comes in for about a half day to review other issues, such as finding soft declines and understanding why they took place—and then emailing and/or texting that member for faster collection.

Typically, that takes place on the tenth of each month, or 10 days after sending the billing, which allows for frozen soft declines, returns, changes, and updates, which reduces the time for those payments to come back in.

What Jonas Fitness Brings to the Table

Many of the best practices Paul and Mt. Hood benefit from are built into the Jonas Fitness Member Billing Services (MBS) solution. Among the benefits of MBS is its ability to improve collections. The platform is composed of three core areas:

• Managed billing allows Jonas experts to implement best practices for cleaning up files and drafting members, which increases draft success.

• Delinquency follow-up. The MBS team implements best practices for resubmitting past-due payments, increasing the successful collection of past-due payments.

• Billing communication with members via SMS messaging, email, and phone calls quickly escalates higher success in drafting past-due payments vs. blindly drafting an account a second or third time. This communication gives the members time to straighten their affairs and make funds available to eliminate potential bad debt.

“Overall, MBS implements best practices when running billing and resubmitting files, which produces the best results in delinquency collections,” notes Eleanore Gracia, director of payments and MBS at Jonas Fitness. “By using a combination of automated processes and our dedicated MBS team, clients can focus more on engagement with their members vs. managing billing files and past-due follow-ups.

“Depending on size, for about the money you would spend on a part-time employee, you can have an entire MBS team working for you with a dedicated billing analyst, helping you increase your bottom line.”

To learn more about Jonas Fitness and the Member Billing Services platform, visit their website.