Save Money Doing Your Own Electronic Billing -  It’s A Cinch With New Technologies

It used be that here in the States, most martial arts schools would use a martial arts billing company to collect payments for them.

The student made their first payment at the school, and the billing company took over after that, collecting payments by mail, credit card, or electronic funds transfer (EFT/ACH).

This seemed like a great deal… Except for the fact that martial arts billing companies charged martial arts school owners 5 or 10 times more in our industry than businesses were paying for billing services in other comparable industries.

New Technology Creates A Power Shift In The Martial Arts Billing Industry

Once school owners started wising up, they began looking for alternatives to expensive martial arts billing companies. Some of us started using the same companies that businesses in other industries (fitness, for example) used.

I did this for a while, then I figured out that with advances in credit card and checking account billing technology, I could easily do the same thing myself using a merchant credit card acceptance account and an online payment gateway.

While some schools are using PayPal to handle their own electronic billing, I prefer to use my own merchant credit card account because it allows me to have complete control over my entire billing process. And, the rates are usually 1 – 2 % cheaper than PayPal.

Here’s how I do it…

How To Do Your Own Martial Arts Billing

How this works is that you get a merchant credit card account set up with a company that will also allow you to bill checking and savings accounts, and that has a recurring billing service for their merchants. They also need to have an online payment gateway (sometimes called a “virtual terminal”) that you can use to create recurring billing accounts for each student that enrolls.

So, when a student enrolls, once you determine how they’d like to pay their tuition each month (credit card, debit card, checking account, or savings account) you simply login to your online payment gateway and set up their recurring billing for the amount of their tuition each month. Simple, right?

Saving Time, Money, And Increasing Your Cash Flow By Doing It Yourself

Sometimes it’s best to outsource a task in order to improve efficiency and increase productivity in your business. However, your martial arts tuition collection is one case where it’s actually better to do it yourself.

For starters, it doesn’t take you any more time to do. You have to fill out the same paperwork, regardless of who handles the payment processing. And, it only takes a minute or so to enter the billing information into your payment gateway… but that extra minute of work can save you thousands over time.

The best part is, it cuts out the middle man (the billing company), potentially saving you tens of thousands of dollars in billing fees. All you pay is the processing fee for the payment – typically 1 – 3 % for credit cards, and a flat fee of .25 to .50 cents per transaction for debit card and electronic check processing.

Your payment gateway should be around $10 a month, and the merchant credit card processing company usually also charges a fee of $10 a month for sending you a statement (I know, it’s lame, but it’s an accepted practice in the industry).

I figure that I’ve saved at least $4,000 a year since I started doing my own billing this way in-house. And, the best part is that by billing everyone electronically, my on-time collections actually increased from 75% to over 95% when compared to using the billing company to handle my collections for me.

The Myth Of Being “The Bad Guy”

But wait… won’t this make you “the bad guy” with your students if you have to take their money every month?

Give me a break – that’s a myth that was created by the martial arts billing companies as a way to sell you on their over-priced services. Their argument was that, when you had to call students to remind them to pay their tuition, you’d become “the bad guy” and they’d stop coming to classes.

Well, I’m here to tell you that’s a load of bull. Here’s why:

• For one, billing everyone electronically virtually eliminates late payments. So, it’s rare that you have to call students regarding late payments.
• Second, on the odd occasion when you do have to call a student to find out why their payment didn’t come through, you can actually take the position of being the GOOD guy: “Hi Mrs. Jones, this is Mr. Smith over at Smith’s Martial Arts. I noticed your payment didn’t go through and I was just calling to see if your debit card may have expired. I wanted to correct it before the late fees kick in so you don’t have to pay an additional fee.” See? You’re actually trying to help the client out.
• Third, if someone doesn’t want to pay you their tuition, there ain’t nuthin’ any amount of phone calls and late notice letters are going to do to make them pay.

Look, virtually every billing company I ever used had a “collections department.” And, in all the years I used those over-priced billing companies, do you want to know how many times they actually collected on my delinquent accounts? Can you guess? That’s right… zero, nada, zilch, never.

So, don’t buy into that load of bull about being the bad guy. Honest students know they have to pay you, and they know you have to collect your tuition to make a living. Feeling bad about getting your money is just one step away from feeling guilty about making a living teaching martial arts. Don’t fall into that trap.

Handling Paperwork And Setting It Up

It’s up to you to get a signed written agreement with the client stating that you have permission to bill their account for “X” dollars each month, and also stating that this agreement is in effect for “X” number of months. I also recommend that you use a membership agreement (member contract) that states in plain language what you’re providing the client, and what the client’s duties are to you.

If you’re going to go this route to collect your tuition payments, here’s what you need to do:

1. Get A Merchant Credit Card Account - First, set up a merchant credit card account with a merchant credit card services provider. Make sure they offer recurring billing, the ability to take electronic check payments, and an online payment gateway. Click here for a company that offers all three.

2. Get Paperwork On Each New Student – Then, when a new student enrolls you should have them fill out an electronic billing authorization agreement, as well as a student membership agreement.

3. Enter The Student’s Billing Information Into The System – Your online payment gateway will allow you to enter the student’s payment information securely using your desktop computer. Make sure you specify the date the first payment should be billed! Most systems will default to the current date, and this could result in your accidentally billing the student twice – so be sure to double check payment dates and amounts before you submit the information.

Typically you will accept payment by cash or check for the first payment. This will be for either the introductory course, or for the student’s first month of tuition and registration fees, depending on how they enroll. But remember, you can use your merchant credit card processing account to accept credit cards and debit cards for those initial payments as well.

However, I prefer to get cash or a check, at least until I have some sort of written agreement between my school and the student – this helps prevent chargebacks on your merchant account (chargebacks are to be avoided, as they can cause your processing rates to increase).

Wrapping It Up…

And that’s how you do it. Simple, right?

But, by spending a little time and effort to get set up to handle your own electronic billing, you can potentially save yourself thousands of dollars over the course of the year… and tens of thousands over the many years you’ll own your school.

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