The successful regular collection of membership subscriptions can seem like a daunting task. Whether you’re running a gym, a professional association, or a community club, the cycle of sending reminders, chasing overdue payments and reconciling bank transfers can be a frustrating drain on time and resources. It’s important to make it easy for members to pay. An efficient Direct Debit Scheme can ensure a high rate of collections with less time spent on tasks like processing and reconciliation. Perfect for regular collections!
Why Chasing Payments can be a common problem in Membership
Memberships typically involve recurring payments — monthly, quarterly, or annually. Relying on your members to make these payments manually e.g. via Standing order, bank transfer or via debit / credit card can cause issues such as:
- Missed deadlines – members can forget to pay.
- Increased admin time – e.g. for the team to send reminders.
- Challenges reconciling payments – members can use incorrect or confusing references for their payments that don’t match those in the CRM.
- Gaps in revenue and cash flow – members may not pay the correct amount or may not pay on time. If they cancel standing orders or fail to make card payments, the organisation often won’t find out until much later.
- Frustration among staff / committee members – often it’s the same members who ‘forget’ to pay repeatedly.
- Awkward conversations that strain relationships with members – contacting members about payments can make you seem pushy. Interactions can seem very transactional, rather than being about the value of membership.
These issues can disrupt the organisations operations. They also undermine the organisations ability to grow and serve their members effectively.
How Direct Debits can help
Direct Debit is a payment method run by Bacs, part of Pay.UK. It allows you to automatically collect membership fees from your members’ bank accounts. This can be on an agreed schedule of dates – that you set. Members provide their authority for the Direct Debit to be set-up via completing a Direct Debit Instruction. The collecting organisation then arranges for the payments to be collected. The organisation can ensure that the correct amount is taken, on the correct date with the correct reference.
Benefits with Direct Debit
- Automatic, Reliable Payments. With Direct Debits, payments are ‘pulled’ automatically. That means fewer missed payments, no more late fees, less chasing and no more uncertainty around who has paid and who hasn’t.
- More Time for What Matters. Direct Debits can significantly reduce admin time allowing you to focus on providing great services for your customers, not chasing payments. Bank transfers or Standing Orders often involve the processing of lots of separate transactions. Direct Debits however, are a bulk payment method. It typically involves the creation of one file containing multiple transactions. In addition, Direct Debits mean less time spent manually tracking payments or following up with members. Unlike other payment methods, if a member cancels their Direct Debit, notification is received via a Bacs report. The Bacs reports also provide information about the reason for the cancellation. This makes it easier to reach out and re-engage the lost member in a conversation about re-joining. Once set up, Direct Debits can run automatically, freeing your team to focus on more valuable tasks.
- Member Convenience = Better Retention. Members appreciate hassle-free payment options. When fees are collected automatically, it’s one less thing for them to think about. This can lead to better member satisfaction and higher renewal rates.
- Predictable Cash Flow. With Direct Debits, you know exactly when money will arrive in the organisations account. Having a consistent and predictable income makes it easier to plan payroll, initiate marketing campaigns, focus on service improvements. The organisation can manage its expenses more confidently.
- Scalable as You Grow. Whether you have 50 members or 50,000, Direct Debits are built to scale. As your organisation grows, the same system continues to handle payments seamlessly. There is no extra burden on the team.
Getting Started with Direct Debits
If you don’t currently collect via Direct Debit, it can be straight-forward to introduce.
- Talk to your bank about sponsorship to provide you with a Service User Number (SUN)
- Choose a provider to help you manage your Direct Debits
- Schedule payments – set your billing frequency, start collecting and spend less time chasing payments.
Improving Current Direct Debit Approaches
If you are already collecting via Direct Debit, there could be ways ways to improve your approach:
- Consider your collection dates – ensure you offer collection on the dates most closely associated with successful collections. Consider reducing – or increasing – the number of collection dates offered
- Review your frequencies of collection – many organisations offer monthly collections via Direct Debit but sometimes don’t offer quarterly or annual payments – which some members could prefer
- Audit your failure rates – consider if your failure rates are in line with industry averages. Review if the reasons for failure are areas that are within the organisations ability to influence. Reducing the failure rates even by a few percent could free-up admin time and improve cashflow.
Movimo can help!
If your team spends more time chasing member payments than engaging with members, it’s time for a change. Direct Debits help membership organisations reduce admin, improve retention, and create a more reliable financial future. Movimo can help implement a new process or improve your current approach. So, whether its training, consultancy or bureau services you are interested in, Contact us today!