Top Tips on Avoiding Overdue Dance Fees

Hello, friends. I'm Amanda Barr. And I'm Rebecca Lou Brennan. And welcome to Dance Principals United, the podcast. Together, we are passionate about helping studio owners with the business of running their studio. Join us as we talk everything from marketing systems, studio culture, motherhood, life and everything in between. This is the Dance Principles United podcast. Well, hi, friends. I hope you are super amazing this week. I am here with the incredible Nathan today, who is going to give you some great insights as he always does. How are you, Nathan?

Hey, Bec. Really good. Managing to stay dry just here down in, like, I was going to say sunny New South Wales, but it's the exact opposite of that. Right. Like, absolutely horrible week. Soccer canceled two weeks in a row for the kids. We're going a bit stir crazy, but at least dancing can happen in the rain, right?

Exactly. How sad that soccer was canceled for you. I'm sure you really hated not being out in the freezing cold, watching them run around after a ball.

Look, I did, but Amanda, like, was so super, super excited, to be honest.

Absolutely. Absolutely. But we're here to chat to you guys today about fees. The biggest studio owners hatred thing is chasing fees. It's so painful. I've definitely changed a lot, thanks to you, with how my business works with this stuff. But, yeah, I think it's like the Pet Tate, right?

Absolutely. It's something that we always see, like, you know, every now and again, especially sort of as we get halfway through the year to the end of the year, we start seeing the questions on Facebook groups, does anybody know a good collections company? All those types of things. Like, yeah, it's, it's the Pet hate. Because especially, you know, what we see from most dance studio owners is they're just such kind, generous, giving people and that notion of being a bit of a hard nose that chases the cash and chases the money and says to the kids, like, you know, we're gonna have to stop dancing because mum and dad haven't paid fees. It's just so against so much of what, of what you stand for. Right. But at the end of the day, you know, we're a business and what, what I see with so many studio owners is not only the fact that they're not getting the money, which is a big issue, but unfortunately, how much of their headspace it takes up as well and how much it sort of affects them. Yeah. Like I said, more so from the headspace aspect and not being able to focus on positive things in their studio and their business.

Absolutely. I, I know back in the day, probably 10 years ago now, Nath, I used to do the invoicing at the beginning of the term and I remember most terms I would have 20 to $25,000 owing by the end of the term. And trying to collect that and trying to just the cash flow aspect of that, like not having the cash to pay your staff, it was a nightmare, an absolute nightmare.

Oh, 100%. And like you said, like that. Yeah, that is a percentage, obviously, like you run a very big studio, so that number is obviously like a smaller percentage of your total fees and whatnot. But still it's a big chunk of money whichever way you look at it. And for every studio has that, you know, whether it's like 3 or 4% or even like 5 or 10% of your fees for that term, that amount of cash for any studio owner is something that we need, like you said, to pay the bills through the holidays and all of those kinds of things. And like I said, it's just always such a sticking point and something that we need to, I guess. Yeah, yeah. Flip out. Our way of thinking about it. There's so many different ways we, I think we can attack it to, number one, stop it getting to that point of having the biggest big dollar amount outstanding, but then also just more effective ways of. Of chasing it if it, if it does get to that point as well.

Absolutely, yeah.

Sorry, I was going to say, but I think today we're focusing more on how to stop it getting to that point.

Right, yes. And I was going to say the biggest game changer for me was swapping to direct debit or a membership like you do at a gym where that money just comes out each week of everybody's account. And that was massive for me to change that over. Massive.

100%. And we see so many advantages from it. Right. Number one, and this was something that came up in one of our SGC calls the other day was, yeah, people talking about, you know, start of term, because there are still, we know there's still loads of studios that invoice for the term upfront. That's the more traditional way of doing that. We know that and we completely understand that. But talking about, you know, how we always have that start of term drop. And one of our members suggested and pointed out that they feel like it's probably come down a bit since they've swapped to that weekly direct debit, because instead of getting the bill for $800 up front at the start of the term, it's just $80 a week coming up. Now, obviously we all Know it's the same amount over the term, but that $800 invoice makes their parents stop and think, oh, crap, 800 bucks. That's. Yeah. Okay, a bit of money. Interest rates going up, the price of, like, price of groceries going up. I'm hearing all this inflation stuff, like, do you really like dancing, Susie? Like, like all those little things. It's just, it's that stop and think point. But once we shift to the weekly direct debit, I'd be fairly certain as well. And I don't have, like, the stats or the data to back it up, but I'd be fairly certain that that's definitely true. That it's just. We've got. They're used to just paying that $80 or whatever it is per week, and that just comes out. The start of next term, it starts coming out again, and little Susie just keeps on coming to dance, right?

Yep, absolutely. It's, It's. It's a huge game changer. I'll tell you what else it's a huge game changer for. And I know I said this before your cash flow, because I know every week exactly how much money is coming in. And then, yes, you know, we still have a few people who obviously, their money doesn't go through and we have to give them a call and chase them, but it's. It doesn't get to an astronomical amount. That's the thing, because you're just chasing them straight away. And I think we know what we're sitting at each week and we know where we go. It's just a total game changer.

Yeah. And exactly like you said, like, yes, we have people whose payments bounce. We get that as well. But, you know, using that $800 a term example, again, what would happen in the past and like, this happened in our studio as well in years, like before we converted to direct debit. And you were saying it happened at pause as well, is that you get that you send the $800 term invoice and something happens in the family situation. They've always been a good payer, but the invoice goes outstanding for that term. And in the back of your mind, you're like, ah, that family's always a great payer. All good. They'll fix us up. You send a couple of emails and whatnot, but then it comes into next term as well, and you send out the $800 again. You get caught up in crazy comp season and all those. All the things that we do when we start running as studio owners and all of a sudden you get to the end of the next term and the next $800 and a couple of costumes haven't come out as well. So we've gone to like 1600, possibly like $1800 as well. Outstanding. And you're like, crap, what's happening here? And then again, we get caught up in the running and they've always been a good pay. You put it to the back of your mind, next thing, the bill ends up around concert time at $3,000 outstanding because you haven't chased it up properly. And you put yourself in a bit of a bind, to be honest, by not chasing it up. But if we're on the weekly direct debit, it just means we can start opening those conversations really early when they miss their first $80 payment, hey, just notice your payments bounce. What can we do to help fix this up? And then we're just continually. If we're on top of our admin and those sorts of things, then we're catching it at the 80, 160, 240 dollars mark. And we can start making changes then, whether that's them pulling back classes or they get on top of it. Because at the end of the day, like I said, it's. It's our nature to be so giving and generous so many of the time. And we always trust people's better nature, which is often to our detriment a lot of the times. But once we, once we start because people end up paying or prioritizing us where we allow them. So if they know that they can sort of get away with it, that means that they're going to put us towards the bottom of their prioritization around bills. But if they know that we're going to be following up with them and just gently questioning as long as if we're going to blow our lid after the first non payment. But if we're, if they know that when they miss a dance payment, they're going to be like, they're going to get a little message about it and if they miss two, they're going to get a phone call about it. That puts us up the top of their priorities and making sure that we're always going to get paid, right?

Absolutely, absolutely. So that's definitely our first top tip is that direct debit stuff. But the other thing we wanted to chat to you guys today about is just some crazy fees and rules and things that we found some of our studio owners have that can put a bit of a sour taste in people's mouths. And I haven't told you this story, but I'm. I went to the gym last night. Okay.

Yes.

And I couldn't. Couldn't get through the gate for my class. So you have to kind of tap to go into your class. And the guy was like, oh, let me check what's going on there? And he goes, oh, you've got a class fee. And I said, what for? And he said, oh, you didn't turn up to one of the classes. So we charge you a fee when you don't turn up to the class. Right.

Yeah.

Now, this is a pretty, like, boutique kind of gym. Not. I've never been to a full class, especially the virtual bike class that I apparently didn't turn up to. I've honestly, like, I think I have the most amount of people that's ever been in there. There's 30 bikes in there. There'd be three of us, max, in any class time. Right. That's the class that they were charging me for. Guess how much they charged me to not turn up to that class and not push cancel on my app? Because the rule is you have to push. So if I'd push cancel five minutes before the class, I wouldn't have got charged. But I didn't do that. What do you reckon they charged me?

$32.

Yeah, it was $25. I nearly died.

Yeah.

I was like, far out. This isn't a cheap gym. I'm paying $65 a week for this gym. It's a bougie gym. And I got charged $25 for not turning up to a class that I knew wasn't full. Now, I still went to my class. I'm still joining. I'm still at the gym. But it did put a sour taste in my mouth.

Absolutely. And if you were on the fence about, you know, one of your friends had just joined another gym, and it said to you a few times, hey, Beck, like, I'm going to this great new gym. Maybe you should come, like, come along with me. It's heaps of fun. Like, if you were sort of in that. Yeah. On the fence situation, that would probably been the catalyst for you to go right out.

Yes, exactly.

And I think that's something that we see studio owners doing a lot of the time with our policies and procedures. Right.

Yep, it totally is. And look, we're not saying to not put some policies. Obviously, you've got to have some policies in.

Without a doubt.

But I guarantee you I'll tell that story to a lot of people. I told it to Tim as soon As I got home and sat on the couch with him. I've now told it to you and all of our listeners. I'll probably tell my friends, I'll probably. You know what I mean? Like that's a story that I will tell because it pissed me off. And that's the problem with some of this stuff is that it's gonna then circulate around that. That's not a great gym and it is a good gym. Every other experience I've had there is amazing. The customer service is incredible. It's a beautiful gym. I feel really bougie in there, which is why it's my feel. You know, it's got Saers and Dyson hair dryers and like all that sort.

Of stuff wouldn't be much good for me then.

No, but it's for me. It's, it's, it's definitely the place for me. But that just put a sour taste in and I'm now going to give it bad reviews to friends and family.

And the biggest thing is as much as like, I think it's just human nature, right, that we not whinge but like we are quicker to highlight negatives than we are positives. Yeah, right. A lot of the time. And so especially for the next few weeks, when somebody asks you about the gym, that'll be the first thing that's in your mind and that'll be the first thing that you tell about it. And I think that's so important with, you know, the reputation management of, of our studios because you know, it was. And I think a lot of it come, I was having this chat with one of our studio growth club members in our one on one this week as well is that I think a lot of that comes down to money mindset things. And having that money mindset of, you know, instead of white knuckling money and holding onto it because that's what a lot of our, sometimes our like really rigid payment structures are about as opposed to having that more abundance mindset. And I was chatting about like the money mindset, like my money mindset from, from my upbringing, you know, it was very different to Amanda's. So you know, Amanda was brought up by parents that always ran businesses that sort of took more risks around those sorts of things. And I had a fantastic upbringing as well. This isn't a poor me by any stretch of the imagination because I had a very amazing and very comfortable upbringing as well and didn't want for anything. But it was, you know, both of my parents were teachers and it was that, you know, having good stable jobs with stable income, sort of low risk aversion and just like building, saving and all of those sorts of things. But, but you, you build and you save and you, you hold onto things and you don't take a lot of risks. So that was, and I believe that sort of mindset is how a lot of people's like payment policies, especially those, those sort of hard align payment policies are sort of built around rather than that sort of more abundance mindset. And that's where like we set up our fee schedule and our payment policies with more of that abundance mindset in mind. And that was like when Manda first suggested it because back in the day when we had the pay by term sort of thing, it was quite rigid and structured. Right. And when Manda suggested no, we should just, just charge pay bi weekly and if they leave in week three, then you know, that's it. And they stopped paying. And like, like I said, I went straight to the point of what, what do you mean? Like we've run projections and budgets and for the whole term and we couldn't do that because that means, and like, just like I said that, that, that might, that sort of more closed money mindset of like holding on to everything for dear life was like, was what was driving my thought process around the time. And so at Dance Sensations we changed our payment policy to be that you need two weeks notice, you need to give us two weeks notice in writing and then we stop your payments. That was the policy that, and we could have enforced that policy but what we actually ended up doing most of the time was if somebody emailed us on the Thursday and said, look, little Susie's just not feeling dancing anymore so we're going to, we're going to stop classes. If we got that email on a Wednesday or Thursday of a week, we'd stop charging them from the next week and we'd send them off with love and thanks and then just say the doors always open if you came back. And like I said that scared the absolute hell out of me because I was the one that was looking after the money. But you know what? It works, it really, really works because everybody that goes doesn't have nobody has a sour taste in their mouth about money. And that's what people get the biggest, being in their bonnet about. We know. And then they do feel welcome to come back. They never have anything bad. Just like they, they're always leaving on a positive. Right?

Yes. I think there's so many of us that let these students Leave on a negative for various reasons. And we just have to be so careful of that because that can really bite you in the ass later on. I used to be one of those studio owners for sure. And yeah, I used to do the same. Well, you've started, you've. You're into the term week three, you have to pay for the rest of the term. That's just the way it is. That, you know, it was crazy and, And I feel the exact same. We're much more lax about it now, but I think it's giving us a better feel in our. Look, I still charge charges if they bounce. If their money bounces. We charge them for their money bouncing and we're pretty strict on that because we want their money to not bounce. But as far as them opting out, I love what you said, Nath, about, you know, I send you with love. That is so important to do in your head space as well, because sometimes you lose big clients and it hurts. Like, it really does hurt. But you're right, we have to send them with love, wish them the best. And you know what? They might come back to you a year later. You just never know.

100%. And yeah, exactly what you said. Like, you know, because the weekly direct debit has. Comes with its own obviously, like processing fees and things like that, which is an objection that we hear from studio owners a lot around that. And we were the same. If their payments bounced, then that's on them. But again, it's that holding them accountable and holding them accountable to it quickly is exactly what I was talking about before. It means that they know that we're on top of it. We're holding them accountable, which keeps us at the top of their. We have to pay these people. We don't get slid down there like payment priorities list, because, like, we all do that. We're all humans. We all have those things like, oh, I can probably just put that bill off a couple of weeks. Like, doing those things and holding people accountable around it makes sure that that cash flow comes in steadily as well. Right?

Yep, Absolutely. Absolutely. It's interesting, though, I'm going to go back to my gym thing because I think about that now, Nathan, I think. Yep. Well, at the end of the day, I probably will remember to cancel that class next time. Like, you know what I mean? They are teaching me something by doing that. Whether they're teaching me in the right way or not, I'm not sure exactly. But it's. It's interesting. You've got to find that fine line But I think it'd be great for our studios owners out there today to self reflect, to think about the fees and the rules that you have in place with fees and think about if that was you getting those same fees and rules from a gym, for example, would it put a sour taste in your mouth? How would it make you feel? Or if it was your child going to a different activity, how would it make you feel if that was the case? If that if you were taking them to karate and it was week three and the child was screaming and crying and absolutely did not want to go because it was so hard to get these kids out to an activity they don't want to go to. We've both been there and so how would that make you feel that you had to keep paying it for the next seven weeks and just self reflect on that I think is the key. Right?

Yeah, without a doubt, without a doubt. So we talked about in terms of like making sure that we are able to chase fees most effectively. We talked about weekly direct debit or fortnightly direct debit. But whatever it is, having that steady regular cash flow not only like helps with making sure that those fees don't get too high in the first place, then the next bit is making sure that we chase it up and hold people accountable. I think a lot of it comes down to as well, like people being a bit afraid of the phone calls around it. So like we can set, we can shoot an SMS about it, we can send an email about it, but sometimes, third one, we have to pick up the phone and call and call with empathy, like always lead with empathy around these. Especially if it's people, like I said, that have always been good players. Payers, sorry, not players, ring them and say, hey, I just noticed that your payments have actually bounced the last three weeks. Is everything okay?

Yep.

And like, and let them have a bit of a talk because you're much more likely to start working on a solution with them. Because to be honest, what we generally see with most people when you're having that conversation, you're not the only person they're getting those phone calls from as well at the moment. Right. So making sure again, leading with empathy. But you've got to open the conversation and sometimes it's a hard conversation as well, but it's a conversation we have to be comfortable with and that we have to stand firm on. Not horribly not jump up and down and throw the toys out of the pram. But like, okay, I completely understand. Maybe we need to cut back on a Couple of classes while we can get this under, like, under control, right?

Yep, absolutely. I love that you're going at it with understanding and, you know, I think it's that not being reactive and realizing that people, one, get busy and forget and to actually go through hardship and can't do it. And three, sometimes, like you said, just aren't prioritizing it because you're not prioritizing it. I loved what you said about that as well, Nath. But yes, going in with it. Gentle is definitely the key.

Yeah. We can be gentle and we can be firm at the same time. Yeah. Because we can't keep giving it away for free as well. And you've got to be able to, like, get comfortable with what, you know, what you're going to do about it and not jump up and down. But yeah, like I said, we can definitely be kind and firm at the same time and still get the result that we need out of it, which is our cash coming in.

I love it. I love it. You were telling me a little analogy. You were telling me a story the other day when we were on the phone to each other, and I wanted you to tell our listeners to finish off today. Can you tell us that beautiful story, Nath?

Exactly. And it was around those, you know, those really tight, rigid fee structures that we have in place. Right. And the analogy, the analogy came when I was, like, when I started in another life, when I started my teaching career. And one of the professional developments we had early on there was about the school values and especially around making sure that everybody's on board with our school values so that we can do what we want. We wanted, which was educate the children. And it applies exactly the same to dance. And it's about how do you get everybody to stay around and do what you want? And it was, the analogy was when people first started building cattle stations out in the, in the, out in the, like right out in the outback in the middle of Australia. And obviously they're coming from places close to the coast or even like back overseas where they had small paddocks and they build fences around their cows. Right. But then they get out into these wide, vast expanses and there's no way that they can build enough fences because it's just too huge of property and whatnot. And they're like, okay, well, how do we solve the problem of all our cattle running away? Because we need them to stay here because that's what generates our income. Right. And somebody came up with the bright idea like, well, all animals need Water. And we're in the outback in the desert here, so there's not a lot of water. Let's just put a really big well right in the middle of where we want them all to stay instead of having to spend all the money and resources on not only building, but maintaining those fences around them. And what they found was that that achieved their goal. And the analogy from an education perspective was that that well is the center of everything we do. It's our values. It's. And so within our studio, right, it's the values of our studio, it's the amazing product that we offer within our classes, it's the family friendly feel. It's everything that we do that keep our students and our families in around us. Now what we see sometimes is with those really rigid policies that we try to build fences around them and then we try and like steel, reinforce those fences and, and things like that. And it just takes so much time, effort and resources to try and reinforce those fences all the time. And people hate like they're feeling being trapped in those fences. But if we've got a really strong set of values and beliefs and everything that's at the core of what we do, then it keeps our families and our parents in there and happy. And like I said, like, it is a big leap to make that to. Our payment policies are included in that as well. But it's that idea of like, people will keep coming back and people will keep paying you and be more on time with their fees. Like I said, that was the biggest shock to me was that when we actually relax those policies, when we had more of that well idea, rather than trying to build the fences around it, we actually saw our revenues and our profits start to increase. It was completely foreign to me and completely unexpected, but it's 100% what happened.

I love it. Nathan, you are such a rock star and so inspiring. I hope you all got heaps out of today's podcast. Make sure you self reflect on what you're doing in your studio with payments and with all the things and reach out to us on the DMS and let us know if you change something because we love hearing from you. Thanks so much everyone and thanks for listening. We'll talk to you next week. Bye bye.

Thanks everyone. Bye.