Billing Strategy Checklist


As some states have started to announce timelines for gyms to reopen, these developments are exciting yet bring their own set of new challenges.

In speaking with many brands over the last month, we know there is a lot to consider as you prepare to open your clubs and restart billing for your members. Putting members first while considering cash flow implications to your business isn’t easy, but it is the right move for your business long-term. Much like IHRSA’s safety checklist, we have created a billing checklist to help you devise the optimal strategy for your business.


Overall strategy consideration:

  • Does your strategy prioritize member’s needs to feel fairly treated for what they paid and what they had access to?
  • Is your strategy easy-to-understand so your staff is comfortable explaining?
  • Does your strategy balance your need to start collecting revenue as quickly as possible with members’ concerns about coming back to the club?
  • Is your strategy simple and automated enough that your staff can focus on welcoming members back instead of processing manual back-office changes that could result in errors?
Some terminology to determine different billing options:

  • Billing restart date is assumed to be the member’s normal billing cycle regardless of when the club reopens –creating the Member Debit proration
  • Member Credit proration: The number of days that the member has paid dues but the club was closed
  • Member Debit proration: The number of days that the club has re-opened but the member has not paid dues
  • Proration: the credit and debit value measured in whole days, or dollars, calculated as monthly dues divided by the number of days in the billing period
  • Members are expecting the Member Credit proration and ABC is recommending this in all cases
  • There is debate on charging members the Member Debit proration and this is part of a club’s decision on how to balance revenue and member experience
  • For closing and opening days, count partial day as a closed day

Questions to Consider:
1How do I calculate the total number of days impacted by my club closure?
Start with the date your club closed, when you stopped billing and your anticipated opening date and member billing date.
  • If you typically bill on the 10th of the month (March 10 and April 10) and you closed on March 23, there is a member CREDIT period of 18 days (March 23 to April 9)
  • Let's say you didn't stop billing until April 15, so that's 30 days CREDIT (April 9 to May 9) where member paid for but could not access the club.
  • If you plan to open on May 16, then there is a member DEBIT period of 26 days (May 16 to June 9).
2How do I weigh or calculate the impact for my members and my cash flow?
  • First one needs to understand how many types of the membership agreements you offer. Common examples include “term” vs “no-term”, or “paid in full”.
  • Do you bill on the same day every month for every member? Or, is your billing date unique to each member agreement?
  • For each membership agreement type, determine the net prorated value based on your net proration days above.
  • In the example above, the net prorated days of CREDIT is 22 days = (18) + (30) + 26.
3Should I prorate or not prorate?
  • Based on the impact analysis you have just completed, decide if you deem the impact material enough at the club and individual member level to warrant a per-member change.
  • If you deem the impact to be immaterial, then no proration is a viable option. Assessment of member reaction to no proration is a critical part of your overall evaluation.
4If I want to prorate, how should that be implemented?
Based on your typical membership agreement term, there are two options to consider. The two options impact your members and your cash flow considerations differently.
  • Extend the membership term. In the example outlined in item 1, you would extend the term by a net credit of 22 days. If the original term date was December 31, 2020, you would be affording the member to continue to use the club through January 22, 2021 for no additional membership fees.
  • Apply outstanding net credit to club dues in the next billing cycle after the club re-opens. In the example outlined above, if your membership dues are $20, then the member would be entitled to a net credit of $14.67 (daily rate of $20/30 days). Such credit would be applied to the member's June billing, therefore the net payment would be $5.33.
5What else should I consider regarding billing?
Based on your membership agreement types, it is important to consider how you want to handle personal training and other recurring services, like annual fees.

You should also take into account how you want to handle the timing of annual or enhancement fees. Many brands plan to push annual fees that would have otherwise been due while the club was closed, as well as annual fees coming due within first 30 days of opening to a later date (i.e., 45 or 60 days after club re-opens).

For ABC clients, there are reports you can generate to see the various membership types and their status. We will be publishing several refresher training videos in the coming weeks.
6I have decided on the plan, what should I communicate to members?
Ease of engagement and members’ ability to understand their impact will be at the core of your communication and should influence your decision. Will your front desk staff be ready to answer membership-related questions?
7I’ve never stopped billing. Does this apply to me?
For those club that were able to continue billing their members during the club closure, these billing and related credit alternatives may still apply should you choose to provide them with a credit for the time your club was closed.


Billing Strategy Decision Tree

All options are equally viable

Billing Strategy Decision Tree

All options are equally viable