Tens of thousands of gyms, health clubs, leisure centres and even personal trainers already use direct debit to collect their memberships every month.
And yet, there are thousands more who are discovering why Direct Debit might just be the simplest solution they’ve been looking for when it comes to reliably collecting their monthly memberships without having to keep an eye on it constantly.
There are so many elements to Direct Debit that we’ll start basic and work our way up, but feel free to scroll down and skip to a particular subject or question to get the information that you need.
You Can Also Download Our Direct Debit Guide
If you don’t have time to read the blog, then you can always download our complete direct debit guide right now, and discover the power of direct debit collection for your club memberships in your own time.
What Makes Direct Debit Unique?
Let’s start at the basics, what actually is Direct Debit and how is it different to other forms of payment collection.
Direct Debit is a realiable way to transfer funds electronically between UK banks. It is an instruction from your bank which authorises someone to collect payments fro your account on a specific due date.
To set up a Direct Debit, the account holder must sign a Direct Debit Mandate form with the company they wish to pay. The form will confirm how much money will be taken from the individuals account and when. If the organisation taking the payments at any time wishes to change the amount or date of a collection, they are required to tell the account holder first. This means individuals don’t have to worry about missing payments and business owners don’t have to worry about chasing them.
In short, Direct Debit is a payment system which uses the bank as a middle man. Everything has to be signed off and agreed to, meaning that no one is ever taken by surprise. Both parties will find out if there’s been a change such as a change of payment or a cancelled payment – and can then respond right away.
Just How Popular Is Direct Debit?
In the UK, over 80% of people have at least one Direct Debit, with the average consumer having a whopping six! But just because it is well used, it doesn’t mean people understand what Direct Debit is or when is the best time to use it.
It’s likely you have a direct debit, most likely for household bills or insurance – but many gym owners aren’t sure how to utilise it in their own business.
Most people will be familiar with using the payment method as a comsumer, maybe you use it to pay your energy bills or car insurance. but do you, as a business owner, know when to utilise it?
Direct Debit collection ensures that the correct amount will leave your account on the correct day, greatly simplifying managing your personal cashflow and budget. Not only does this give an individual reassurance, but as a business owner it makes sense to replicate that ease and financial peace of mind in your professional life.
Using Direct Debit can transform how you run your business, bringing benefits to customers, your staff and your bottom line.
Direct Debit vs. Other Methods
If you’re not currently using Direct Debit, then in all likelihood you’re using one of the following methods below.
In our experience, the biggest obstacle to club owners not wanting to switch payment methods is that they’re comfortable with what they have. We’re not denying that is the case, but when you take a step outside of your daily routine, you might be surprised by just how much extra time and effort you’re spending just to collect your monthly memberships.
Overall, Direct Debit can save a huge percentage of time. So let’s take a look at a few other payment methods and see
Direct Debt vs Cash
Cash can be extremely convenient for your customers, allowing them to pay in person at their own convenience, without having to use any technology in the process.
However, the issues that cash causes are cause much more trouble than their worth.
Firstly, handling large amounts of cash within a business poses a big security risk from burglary, but it also makes it far more likely for money to go missing or be misplaced, affecting your club’s revenue stream.
Secondly, when it comes to your collections, the amount of time that cash adds into the mix is staggering. Your team have to manually keep an eye on who has and hasn’t paid, and unless your members are very regular when it comes to their payments, you’re likely going to have to spend a lot of time tracking your money down.
Overall, cash adds a lot of admin time to your club payment collection and completely derails any regular cashflow as your payments come in whenever your members remember to pay you, or whenever you manage to catch them.
Direct Debt vs Cheques
When it comes to cheques, you get all of the same problems as cash, but with the antiquated complications that cheques throw into the mix.
All of the cons of cash, with the added issue of also needing to cash in your cheques at the bank, as well as the added surprise of them potentially bouncing.
There’s a reason why most businesses don’t accept cheques anymore, so it’d save your club and team members a world of hassle by dropping them ASAP if you still use them.
Direct Debt vs Debit & Credit Card Payments
Many gyms will forgo all the issues that cash and cheque bring, and instead take card payments for their membership collection.
Compared to cash, credit and debit card payments have a lot of benefits and take a lot of work off your admin team. By taking card payments, you know that all of your revenue is instantly available in your business bank account, with no extra trips to the bank or keeping an eye on cash.
However, when it comes to your club membership collection, the fact that card payments are still a manual process puts a lot of added pressure on your team and also makes your cashflow unreliable. Since your team still have to keep track of when members need to pay, your team are still responsible for tracking down members and having repeat discussions with members about their membership.
And of course, with members paying at completely irregular dates, your cashflow is severely affected by always having to chase the next payment. In the long run, this can make budgeting and planning upgrades to the club extremely difficult if you’re always at the mercy of when the next instalments are coming in.
Direct Debit vs. Standing Order
Hopefully by this point we’ve established that the key strength of direct debit is that it not only takes admin work away from your staff, but it greatly increases the security of your business when it comes to both your cashflow and not having physical cash on-site.
However, many gyms also use Standing Order as an alternative to Direct Debit. But while they might seem very similar on paper, Standing Order collection is slightly different to Direct Debit in some very significant ways.
What Is Standing Order?
Standing Order is a recurring payment method where the customer puts in a request to their bank to pay your gym a set amount each month.
But that’s the most important aspect of Standing Order…. The customer is in control.
The customer can cancel or change it at any time they like without informing you.
Standing Orders may be free to set up, but you will still need to devote time into checking your accounts and making sure your payments are coming in, since the bank will not inform you if a standing order has been changed. The communication is all between the customer and their bank, with you simply being the receiver of any payments.
This will still lead to your accounts team having to chase non-payments, sending reminders and manual checking your club’s bank statements to guarantee your payments are coming through.
How Direct Debit Is Different To Standing Order
With a Direct Debit, you get the benefits of Standing Order’s regular and automatic payments, but with all the control on your end.
By getting your member to sign a Direct Debit mandate in the club at sign up, you can guarantee that everything will be set up. You don’t have to rely on your member going to their gym and setting up a Standing Order on your behalf.
A Direct Debit Guarantee allows you to adapt the payment to suit your business needs. The bank will then inform the member of any changes to the payment and their account.
This keeps you in the loop when it comes to your member and their bank account. You’ll always be updated with any missed payments or changes, so you don’t have to manually keep an eye on any payments.
Using Direct Debit For Gym Memberships
Introducing Direct Debit collection for your gym memberships might be the single best decision you make for your business. No matter what your club size, collecting for your business via direct debit has 3 key benefits.
• Improves member retention by reducing payment defaults and taking your member’s attention away from their payments.
• Allows you to increase fees and add extra service costs when you need to.
• Reduces membership and payment admin by always keeping you in the loop automatically.
Allowing your members to sign up via Direct Debit is quick, easy and hasssle-free. You can even offer instant online sign up for your members which gives you the tools to manage your gym easily and efficiently.
Direct Debit simply makes collecting recurring and one-off payments an automatic and seamless process, removing dozens of hours of admin and member chasing every month. You will be amazed by how much time you save with Direct Debit collection.
Ashbourne Membership Management Can Handle It All
Ashbourne Membership Management has been growing over 25 years to handle every single aspect of club management. From direct debits to website maintenance and handling your energy bar sales – Ashbourne handles it all.
When it comes to Direct Debits, we can drastically reduce your admin and free up your staff in 5 simple steps:
- We provide you our software to track all your members
- We provide you with direct debit guarantees and set them up
- We set up your direct debits
- We handle all contact between your members and their payments
- We handle all debt collection for any defaulted payments
If you want to take a look at what your club could be with Direct Debit collection, then we can give you a completely free demo and consultation, simply to run through the process, our systems and answer any questions you might have.
Simply book a free demo with us and let us show you the future of your gym.