Article reposted with permission, from Wes Trochlil, Effective Database Management, www.effectivedatabase.com/blog
I started my career as a membership assistant at a trade association. We had 500 organizational members, and dues renewals were run once per year, late in the year, due on January 1.
But we also had a 90-day grace period, meaning the companies had up to 90 days past the due date to pay their dues. Which meant, of course, that we spent nearly six months out of the year chasing dues payments from current members (first dues notice went out in late October or November, last one went out in March).
It’s time for associations to get rid of the membership grace period. And here’s why:
- Times have changed, technology has changed, and both companies and individuals can pay much more quickly. Back in the day (back in my day), there was only one way to collect dues: Print an invoice, stuff envelopes, and mail them out. And then wait. After 30 days, do the whole thing again for anyone who hasn’t paid.
With today’s technology, we can invoice our members by email and they can pay instantaneously online. So an invoice run this morning could actually be paid that very same morning! And I’ve found that many of my trade association clients have members who insist on paying by credit card online rather than with a printed invoice. Technology allows us to get rid of the grace period.
- A grace period simply teaches our members to pay later. Behavior that is rewarded is encouraged. And by carrying our members past their expiration date, we are rewarding late payment of dues.
Yes, I know, some companies take 60 days to pay any invoice. And other companies may be on an accounts payable schedule that only allows them to run checks once per month (or quarter, or whatever). But these are the exceptions. Most companies, and almost all individuals, are able to pay invoices as soon as they are received. We’ve just been teaching them (for years) not to pay right away.
- A grace period devalues membership. Associations need to get better about insisting that membership has value, and unpaid members are not actually members any longer.
I once worked with an association that had a one-year grace period. One year! The simple fact was the association was terrified of losing any members, so they carried all their members, even when they didn’t pay. And surely many of their members knew this. There was no incentive to pay, since they got all their membership benefits whether they paid or not.
Associations need to have the courage of their convictions. Either membership has value or it does not. And if your membership has no value, you may need to reassess your business model.
The best reason to get rid of your grace period is that it makes knowing who is or is not a member so much easier. Either a member is paid through a certain date, or they are not. No more questions about whether or not they are in a grace period.
When is the last time you considered how long your membership grace period is, and why you have one? Chances are it’s a relic from the past that no longer serves any purpose. It’s time to get rid of it.