Absorbing the Shock of Uncollected Payments
February 23, 2018 | Categories: Blog, Club Director
In youth sports, about 10-12% of total revenue goes uncollected. Let's put that into perspective: If a club anticipates $200k in gross revenue for a season, approximately $20k is never collected. That's $20k for which you, the director, are still responsible.
Here are a few ways your club can reduce the sting of uncollected payments and better budget for unexpected events that could get in the way of you getting paid:
1. Build an uncollected funds reserve into your budget.
Calculate your projected total revenue for the season, then remove a percentage of that total -- even if it's just 3-5% -- to account for uncollected funds. This can be a line item within your club's overall budget with a description such as "Uncollected Funds Reserve." Doing so can lay the groundwork for absorbing at least some of the missed payments.
2. Consider cash flow insurance.
Unexpected events will inevitably occur throughout the season, whether it's an athlete undergoing a season-ending injury in the first tournament or a parent switching teams midway through when their child is not getting enough playing time. Cash flow insurance guarantees the club will still get paid when an unexpected event happens. It insures against non-payment of registration fees and tournament expenses, too.
3. Restructure your payment collection.
When setting a funds collection schedule, collect heavier amounts upfront and leave the lighter payments for the end of the season. Have a contract in place outlining how much parents need to pay and when they need to pay it. For example, with a $1,500 per player season, an effective payment collection structure could look like this:
|Due Date||Dec 1||Jan 1||Feb 1||Mar 1|
4. Avoid taking cash and checks.
About half of youth sports clubs in the U.S. are still taking cash and checks. Cash and checks, though, can be the least efficient form of taking payment, slowing down the entire collection process. Bounced checks are also a significant risk to organizations and can take up to two weeks to be discovered. Credit and debit cards, on the other hand, can be cleared and deposited immediately. And when you plan for credit card fees when budgeting, the money they can save you in convenience alone can be worth it.
Some uncollected payments each season are inevitable but, with careful planning, you can reduce their effect on your organization. Want to learn more about combating the problem? Don't hesitate to reach out to us.
PaidUp is the Preferred Club Dues Management Provider of the JVA.
About the Author
Darby is a Content Marketing Associate at PaidUp in Austin, TX, a payments company supporting youth sports organizations. Our mission at PaidUp is to remove the burden related to payments from youth sports organizations. We strive to improve the operations of these organizations by facilitating a more efficient, do-it-for-you platform and service to collect payments, manage reconciliations and provide reporting.