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Studio Owners How do you deal with late payments?
I will be purchasing a studio with existing clients. We have annual contracts set up with auto pay. We always have a few members who’s cards don’t go through each month and a few members that just stopped paying all together. We have a fee to end the contract, however if they aren’t paying the monthly fee how can we possibly collect their cancellation fee? Do you as studio owners have a collecting agency? Is that worth the cost and bad will? Any other suggestions?
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4 Replies
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I would be curious to see what other say to this as well. We call and email but after a while we feel it’s not worth the effort to chase these people. we just flag their accounts, shut down their membership and move on.
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Do you have a lawyer that handles your purchase agreement? Ask him or her to create a clause in your purchase about setting some moneys aside in-trust separate account from the value of purchasing price. All the faulty accounts that money bounced or unpaid should be drawn from that amount. In this case you are protected from unpaid non-collectable bills. The easiest and cheapest way to ask these members to pay but anything might happen. Present clients of that studio are your good will that you are buying. So you have the right to secure yourself during purchase
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Ok not that Im a bad person but Im a contract member. Let me say that from the customer point of view, that depending on how you have the account setup is what matters. My studio that Im paying out of my contract with does it by setting the auto payments with the bank account information. Not a Card. Cards can be cancelled. If my cards does not work, I get 3 notices from the studio to come in and pay something. If not, they can force my account which causes an overdraft for me. However, they are aware of my hardship so they just offer to take whatever I can at that time until the draft goes through and they just adjust how much I owe. I know that does not help much in your situation but most times they just get rid of the account and the customer is not allowed to come to any classes. Not even with the guest card until they are paid out. I would say offer them a smaller payout just so you can discontinue their account without feeling that they took advantage. I only stopped going because I was paying more than I was learning. The gas to drive to that side of town and only get maybe 30mins of spin was killing me in my hardship that Im having right now. Just my thoughts and opinion…
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Oh just to add, I hope that you dont mind, Does your contract payout have a standard price? If so, then may I also add that they it could be a decreasing amount payout that would help in recouping customers that want to not have a contract. Kinda like what T-mobile does. The price to payout the contract decreases every month on a phone. Most people just stick with the contract long enough to get the payout amount down to a good amount like $40 so they can get a new service.
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