Cashing in

Article in ‘Running Rugby’ in January 2009

How has the Pre Budget Report impacted your club? The reduction in the standard rate of VAT to 15% has had a mixed response. Take my local coffee shop, for example. A small, black Americano ought to have been reduced in total price by 4 pence to £1.66 but this cafe, a branch of a national chain, has reduced it to £1.65 to save me the irritation of carrying lots of one penny coins in my pocket. Interestingly, another one in the same area, which is not part of a national chain, has not yet altered their prices.

Bars are a little different. At the same time as announcing the VAT reduction, the Chancellor also increased the duty on wine, beer and spirits. So like .my local bar you may have left the price of a glass of wine or pint of beer the same because of the duty increase for alcoholic drinks.

I wonder what your club has done about prices. Have you altered the prices on rugby shirts and related clothing in your club shop and non alcoholic drinks that do not have duty and of course catering? Or like many clubs I have come across, has such a discussion not yet taken place because playing issues are more important. You do not have to reduce your prices and HMRC privately confirmed to me that if you do not the economy can still benefit because the business that does not reduce its prices has a little more that will filter back into the economy in other ways.

Every club must have a policy on prices and related matters, especially at the current time. I recently met the chairman of a national club and we discussed, amongst other matters, the collecting of subscriptions. I enquired whether they collected their subs by direct debit. He responded that they did not, as they considered it too much hassle to set up such a system.

Via the web I started to investigate how frequently subscriptions are collected by direct debit. It turns out that few rugby clubs use this facility. The charity sector, for example, is particularly good at collecting subscriptions or similar payments by direct debit. Very frequently the payers are offered a modest discount for paying by such a means. For many clubs, subscription income in terms of quantum is second only to bar sales - so it makes very sound commercial sense to do all you can to ensure that members’ dues are received by the club at the right time.

In the current economic climate it could prove difficult to collect subs from people whose finances are now suffering. They are much more likely to terminate their membership when they have an unpaid subscription that most clubs will not pursue after the member has left.

Many rugby clubs claim not to collect subs by direct debit as they are concerned that payments may be made incorrectly. To cover this, there is a direct debit guarantee scheme which provides a measure of rectification where a payment is made in error. Their second concern is the administrative burden. They are generally unaware of how simple it is to set up and run a direct debit system.

Most people offering the scheme use a one page form that requires rather less detail than you would imagine. It is a standard form and you will need your membership secretary to spend a little time setting it up when it is new. Thereafter you should not find that it is an administrative burden. Quite the opposite in fact. Most people using the scheme offer an incentive to pay by direct debit because it is more advantageous for them in terms of cash flow and administration to run a direct debit scheme than to send subscription demands and receive cheques.

A vast number of rugby clubs have their subscriptions due during or near to the end of the holiday season and it takes quite a while to collect them as people drift back from holidays. If you have a direct debit system and subs are due on say 1st August you can collect a significant amount of income whilst your members are relaxing beside a pool oblivious to the approaching rugby season.

So what other areas can you look at to improve your financial position? There has never been a better time to build better relationships with the business community. Many clubs that receive this magazine have excellent clubhouse, bar and dining facilities. Such facilities are frequently considered as wedding venues but are under utilised for business meetings. It is surprising that within the national leagues, where there is generally a clubhouse presence throughout the week, their most valuable asset is under used.

Your local businesses might be very receptive to talking to you about using your facilities, perhaps saving costs compared to the venues they already use. Encouraging business people to come to the club, may also result in you attracting some more supporters and members at the same time.

This brings me back to tax. Eighteen months ago in these pages I wrote in detail about Charitable Amateur Sports Clubs, of which there are now 5,000 - a relatively small increase in 18 months. CASC’s are not for everyone but there is at least one in each of the top three tiers of rugby, albeit for the amateur section, and there are benefits. I recommend that you give CASC status serious contemplation as it may help improve your financial position.