For many gym-goers, armed with fresh kit and a motivating playlist, all it takes is a quick flash of their membership card and they’re ready to work out.
At thousands of gyms up and down the country, members are welcomed at reception with a smile and a chat, rather than a request for cash before they can even get to the changing rooms.
And that’s thanks to Direct Debit.
In 2016, nearly 51 million Direct Debits for gym subscriptions were processed by Bacs, the company which oversees the scheme. With over 300,000 extra fitness fanatics signing up with gyms in the 12 months to March 2017 and 272 new private and public gyms opening, this impressive figure is sure to rise.
Direct Debit is the third most popular payment method in the UK, after cash and debit cards, with 4 billion transactions made in 2016.
For gyms, it’s top of the table: reliable, flexible and secure, it’s simply the best way to collect recurring payments without working up a sweat.
If you’re an existing gym owner who doesn’t use Direct Debit, or are planning to open a gym and need guidance on how to accept recurring payments, we’ll show you why it’s the only option that carries weight.
We’ll explain why it’s so popular compared to other payment types, what benefits it will bring to you and your clients and how it can revolutionise your business.
Ready to get up and running?
Gym Membership Models
Taking the leap to become a regular gym-goer takes will power and dedication. The membership options you offer clients to pay for the pleasure of keeping fit can impact on their success and your bottom line.
A pay-as-you-go model where members join up but only pay each time they use the gym doesn’t do your cashflow forecasting any favours. You may never see them again or they may develop an unpredictable pattern of visiting, with no means of knowing how those visits will affect your turnover.
Digging out their wallet might also put them off digging out their gym kit – the psychological effect of having to find cash or hand over a card each time they work out may strike them as being poor value for money. The result? They don’t bother and their will power withers.
To provide the greatest value and convenience for clients and the greatest profitability for you, offering memberships based on regular monthly payments makes perfect sense. With X number of clients signed up to a 12-month contract paying £X per month, your financial forecasting will be a breeze.
And the best way to accept recurring payments is via Direct Debit.
When deciding how to accept payments from your members, your research may have you sprinting down a path towards Standing Orders.
Stop! You’re heading the wrong way fast.
Standing Orders were traditionally the preferred method for small businesses to accept regular payments as Direct Debit schemes were only accessible to large corporations with high turnover.
Fraught with frustrating features, Standing Orders are however inflexible, unpredictable and time-consuming.They can work well for fixed payments such as rent, but for gyms their usefulness is limited.
They put the customer in control, not you. They can cancel or change a Standing Order without informing you: you’ll only discover what they’ve done when the payment doesn’t show up or is less than you expected. This could take a month or longer, depending on the payment frequency.
Your cashflow is then unknowingly compromised and, rather than a payment on the correct date, you get a nasty surprise and a hole in your bank balance.
While Standing Orders rapidly become outdated, the Direct Debit door is open to sole traders and SMEs thanks to bureaux such as FastPay. They can operate a scheme on your behalf to make the move to accept recurring payments straightforward and flexible.
Direct Debit puts you in control. It authorises you to collect money from your clients’ account and allows you to adapt that payment to suit your business needs.
Harnessing its power is easy. With a Direct Debit, when the payment amount, frequency or payment date changes, you can collect the new amount on the date of your choosing. As the customer has already agreed to pay by Direct Debit, they simply need to be informed in advance and no further authorisation is needed.
Need to increase membership fees? Let your clients know and, unless they specifically request to cancel, the revised payment will ping into your account.
When a Direct Debit bounces or is cancelled, you’ll be notified quickly by your bureau – within 24 hours by FastPay – meaning no need to examine bank statements daily to check that payments have been made. This helpful reporting allows you to tackle any issues professionally and efficiently.
With a Standing Order, you’d still be sitting there in blissful ignorance that there is a problem.
Benefits for Peak Business Fitness
Switching to or setting up a Direct Debit collection scheme will affect every facet of your gym business. Not only will it make sure you’re on a level payment playing field with your competitors, it will boost customer satisfaction levels and launch your business into the digital age.
1. Crucial Customer Loyalty
Competition for clients among gym operators is fierce. With the rise in low-cost gyms increasing, you need to pull out all the stops that once a member has signed up with you, they stay the distance.
Direct Debit can help here. You’ll be offering the most efficient and flexible payment method available: if your clients know that their fees are being taken care of they’ll see you as a hassle-free partner doing everything possible to make their lives easier.
Because they trust you to take the right amount from their account at the right time, when it comes to renewing their contract, they’re more likely to stay loyal and sign up for another 12 months.
And with payments taken care of by FastPay, you’ll be free to focus on your individual clients’ fitness rather than their finances.
2. Low-Admin Accounting
As a gym-owner, your passion is personal training not profit and loss forecasts. With Direct Debit, any admin headaches from collecting payments will disappear.
FastPay will oversee the process and provide clear, up-to-date information about who has paid what and when. With many complicated processes now automated, the danger of human error will decrease and tiresome admin work will be a thing of the past.
Payment tech allows you to easily integrate your accounting software, including platforms such as Xero and Sage, with your bureau’s. This hassle-free automation means automatic reconciliation and effortless streamlining at your fingertips.
Rich in functionality, embracing this technology opens up a whole world of digital possibilities. All transactions flow seamlessly within the system, increasing payment efficiency, saving admin and giving you a real-time cash overview.
And if there are any issues, such as a bounced or cancelled Direct Debit, you’ll be swiftly and automatically alerted via regular reports sent straight to your inbox. With a comprehensive breakdown of all payments, you’ll be able to resolve any payment problems quickly and always know what’s happening with your account.
3. No Cashflow Compromises
With Direct Debit, your cashflow will be built on certainty. The stop-start patterns of payment often experienced by companies using Standing Orders and other methods won’t trouble you.
Instead, by using the best way to accept recurring payments, you’ll have the reassurance that your cashflow will do exactly that: flow.
Your clients are signed up to pay you a regular amount at regular intervals. And as any issues will be flagged to you quickly, income disruption will be minimal.
If you’re just starting out in the industry, this peace of mind is critical. Experiencing an insurmountable cashflow challenge is one of the key reasons why an estimated four in ten businesses fail after five years.
4. Straightforward Set-Up and Predictable Pricing
By choosing to appoint a bureau to manage your Direct Debit collection services, you’ll enjoy a simple set-up process and low fees.
FastPay’s experts will advise on the best scheme for your business needs and provide all the professional support you require. This includes free access to friendly phone and email support, branded Direct Debit mandates (both paper and online) and a transparent fee structure.
Once you’ve signed-up, you simply collect a Direct Debit mandate from each of your clients either online, on the phone or using a paper mandate. And within 24 hours, you’ll be up and running.
You’ll then receive regular, straightforward invoices – with prices as low as 3p per transaction – with fees charged separately as a total, rather than by individual collection, to make reconciliation a breeze.