A Simple Guide to Direct Debit for Gyms and Fitness Centres

The fitness industry in the UK has gone from being something considered a niche interest in the 1960s to something that is now very much in the mainstream. More than 10 million of us are members of health and fitness clubs and we have more than 7 thousand to choose from. Around 190,000 of us rely on them for our livelihood.

The 2019 State of the UK Fitness Industry Report states that market penetration is 15.6% and that the sector is worth £5 billion. Individual clubs will commonly see a turnover of £100,000–£250,000.

The impact of bad debts on SMEs

SME bad debt levels held at around 25% during 2014–2015, but had risen to over 30% by late 2018/early 2019. That’s three in ten SMEs shouldering a financial burden that can have an impact not only on profit, but also on cash flow, and cash flow is the lifeblood of a business. Lack of cash can mean an otherwise successful business goes under, as they are unable to pay their own bills when they fall due.

One way to minimise the potential impact of bad debt is to offer payment schemes that both spread the cost for the customer and ensure a regular, reliable flow of cash into the business.

Gym and fitness centre subscriptions that are paid in instalments – and these don’t just have to be monthly, they can be set up fortnightly or even weekly – are more affordable and convenient for members.

Historically, such arrangements were set up using standing orders, as for SMEs they were the only available option. The main downside of this, however, is that it’s the customer who is in charge, not you – they can cancel a standing order without your knowledge and, if the price changes, they may decide to let their membership lapse rather than set up a new one. If you want to use a system of regular payments to help you to accurately forecast your cash flow, that’s not ideal.

Monthly payments by Direct Debit are a better option, as they put the business in the driving seat. They are also accessible to SMEs via the facilities of a collection service.

Benefits of Direct Debit

One of the main benefits of Direct Debits is their flexibility. Once you have an agreement in place, if the price changes, you simply let the customer know in advance and change the Direct Debit amount. That, in turn, aids customer retention.

Because of this, you are better able to forecast your cash flow and so to budget accurately. You know on what day of the week or month a payment will reach your bank account.

You don’t have the hassle of late payments to contend with; there’s no need to monitor payments and chase things up if they don’t appear.

If a Direct Debit is cancelled or a payment doesn’t go through, your service will let you know. And, as people generally budget for their Direct Debits, interruptions to expected payments will be minimal. Businesses can also provide incentives to their customers to set up Direct Debit payments, such as potential cost savings, easier cost management and the ability to manage ad-hoc payments for extra classes.

Direct Debit payments made easy for you

Cash from membership fees is the rock many gyms and fitness centres is built on. If you are interested in establishing a Direct Debit payment system for your gym or fitness centre, we are able to handle the process for you. We have years of experience, and our systems are safe, secure and reliable, giving you peace of mind.

For more information about our dedicated Direct Debit service, feel free to browse our website or get in touch with the London & Zurich Direct Debit for Business team today.

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