Asking your members for money is never easy. When a member doesn’t pay on time, it’s tempting to let the delinquency slide to avoid confrontation. But you run a business. You deserve to be paid for the valuable services you provide. Still, how can you ask for late payments without sounding cold or impersonal? These seven tips will help you navigate how to collect and prevent late member payments:
1. Automate member payments
Automating credit card and ACH payments through your member management system is an easy way to prevent late payments. Talk to your members about switching to one of these methods if you notice them struggling to pay on time. Be sure to highlight the added convenience of auto-payments and address any concerns about data security.
2. Set expectations with new students
Review key points of your membership contracts with new students and families. Make sure students or parents sign off on payment amounts, due dates, and the membership duration. Be honest and open about your expectations for on-time payments. Just like your members expect consistent, high-quality martial arts instruction from you, you will expect prompt, full payments from them.
3. Charge fees for late payments
If late payments are a chronic problem for your organization, you might decide to add late fees to your membership contract. Some businesses charge late fees of $5 to $25 per overdue payment. For some individuals, the extra incentive will motivate them to stay on top of payments.
Before deciding to use late fees at your school, consider how this will impact your relationships. Ask yourself how new members will react to hearing about late fees before they’re even a part of your community. In the end, you’ll have to determine the best balance to protect your business without harming your relationships.
4. Send email reminders
You probably already use your membership management software to automatically remind your customers about upcoming payments and due dates. Hopefully, these reminders help prevent late payments before they occur.
Once invoices become past-due, you can use another type of email reminder to collect late payments. Create a short series of email scripts to ask for late payments. Be polite but direct. Make sure to clarify any consequences of late payments, including interest fees or deactivation of the membership.
6. Be kind, not argumentative
Your members are only human. They make mistakes. They forget to update expired credit card information or to check their bank account before payments are due. There are hundreds of reasons members miss payments. Avoiding financial disputes is crucial to maintaining a strong, long-lasting relationship. Before jumping to conclusions, see if a friendly reminder is all that is needed.
In some cases, the individual may be dealing with a difficult or complex situation that has impacted their finances. Use good judgement to come to an agreement that’s fair and mutually beneficial to you and your member. It may make sense to be flexible or forgiving in order to preserve your relationship and retain your member.
7. Call in an expert
Collecting late payments is complex and challenging. To truly be successful, you’ll need to dedicate resources to make sure someone is responsible for follow up and collections. If you handle this follow up in-house, make sure to incorporate this task into one of your job roles so it does not become an afterthought for one of your busy employees. You can also outsource payment collection to a professional team to bypass the awkward conversations and eliminate the complicated follow up process.
If you follow the steps above, you’ll see your overdue invoices decrease while your relationships with your members improve. In the long run, the combination of these two factors is what will keep your membership organization financially stable and successful.
Want help handling late member payments? Learn how Cubiic helps you improve revenue and member relationships.