For beauty professionals, collecting fees from no-shows can be harder than giving a perm to someone with a comb-over. For September’s Disbursements Tracker™, in collaboration with Ingo Money, PYMNTS speaks with Dan Chandre, SVP of Integrated Payments for Booker, about how the company’s services can help beauticians and barbers collect their dues when a customer bails. Plus, news from around the space, a remote deposit tech Data Dive and 10 new additions to the provider directory, inside the Tracker.
The beauty industry can be a real beast, especially when it comes to getting paid for services.
That’s because for beauty professionals, getting paid can be less of a walk in the park and more of a trek through an untamed jungle fraught with uncertainty. The overwhelming majority of beauty professionals are self-employed, not on an establishment’s payroll. When it comes to managing their time and collecting payments, these workers are on their own. And, if a customer does not show up for an appointment, beauty professionals could be left in a tight financial spot.
According to the most recent statistics from the Professional Beauty Association (PBA), a trade organization representing salons, spa establishments and beauty professionals, there are 1.2 million such businesses and self-employed professionals in the U.S. — professionals who offer a variety of beauty treatments and services. In its latest economic snapshot of the industry, PBA reported these establishments generate $50 billion in annual sales.
Several software providers offer solutions for establishment owners or self-employed professionals to help them accept reservations and payments, issue appointment reminders, manage employees and maintain relationships with customers. Notable names in the booking software industry including MINDBODY for health and wellness, FareHarbor for tours and activities and RMS Hotel and Hotelogix for hotel management and reservations, among others.
While there are more than 1 million beauty industry employees in the U.S., most of these professionals are contractors and not in a payroll system. For self-employed professionals, that means flying solo when it comes to getting paid. Fortunately, new payment tools are being released that can help these workers manage time and tame the beast of uncertain payments.
Software provider Booker offers services that help both establishments and self-employed professionals in the health and beauty industry to accept payments and make reservations. The solution offers a service for both beauty contractors and the small- and mid-sized businesses (SMBs) that lease space to them. Dan Chandre, Booker’s senior vice president and general manager of integrated payments, recently spoke with PYMNTS about giving beauty professionals the tools to maintain a steady cash flow and how the company’s services ease the out-of-pocket pain of no-show appointments.
Beauty and the contractor
According to the most recent statistics from the PBA, the 1 million people working in the beauty industry include stylists, hairdressers, barbers and other beauty professionals.
While these workers can be found at certain beauty salons and barbershops, chances are they are not employed by those establishments. Instead, there’s a greater probability they are renting a station at the business from the business owner. PBA reports approximately one-third (31 percent) of these beauty workers are self-employed.
Broken down by field, barbers can boast their profession has the highest rate of self-employment (37 percent). Not far behind are professionals who work as hairdressers, hairstylists and cosmetologists (36 percent). Other beauty professionals, including makeup artists, manicurists, pedicurists, shampooers and skin care specialists have a 17 percent self-employment rate, based on PBA’s findings.
While straightening out and untangling a client’s hair is all in a day’s work for many professionals in the beauty industry, being forced to do the same for payments for their services can be frustrating, like trying to give a perm to a customer with a combover.
That’s where Booker’s services come into play, Chandre said. The company offers an app for beauty contractors leasing space from salons, enabling them to accept and process credit card payments so as not to rely on cash or check payments from their clients. Chandre said the Booker system can also help contractors manage their schedules or connect with clients, and offers pre-negotiated rates with credit card companies.
Most importantly, Chandre said, the services expedite merchants’ ability to access a steady cash flow, which can have far-reaching benefits.
“Access to funds immediately is a huge advantage,” Chandre said. “It changes the way [merchants] go about their business, their budgeting and deployment of funds.”
With the service in place, Chandre said, beauty professionals can gain access to their funds within 24 hours, enabling them to be less concerned about collecting payments and avoiding “creative budgeting” to hold them over while waiting for payments to arrive.
“It’s very difficult to align the day you need to get paid with the day you need to make payments,” he said.
A no-show makeover?
Last-minute cancellations and no-shows are an inherent piece of the beauty business that, when added up, can really cut into a professional’s bottom line.
Time itself is one of a industry’s most important resources, Chandre said, which is why a no-show or cancelled appointment can be costly to a beauty professional. While the reason for a customer failing to appear may be harmless — a bout of forgetfulness, for example — when a merchant loses his or her time, he or she also loses revenue.
“No-shows are the back-breaker of this industry,” Chandre explained.
Booker’s tools are aimed at reducing the pain of a no-show customer by making it easier for beauty professionals to recapture some of the revenue lost to them, Chandre said. Booker offers professionals the ability to obtain a customer’s payment information to hold a reservation.
The system notifies a customer of the cancellation policy of either the professional or the beauty establishment during the appointment booking process. Once enough time passes at the time of the scheduled appointment, and the beauty professional suspects a customer is a no-show, he or she can take action.
“We are advocates of helping those merchants obtain payment information to hold reservations,” Chandre said. “As soon as the merchant feels like there’s a no-show occurring, he or she clicks ‘It’s a no-show’ [in the platform] and the credit card is charged immediately.”
Chandre added that the no-show charge hits the processing batch the same evening and the funds are usually available to the merchant the following day, meaning cash flow is not interrupted.
If you charge them, will the no-show come back?
While Booker is designed to help professionals manage reservations and collect fees for no-shows and cancellations, Chandre noted many beauty professionals and businesses are reluctant to penalize customers, despite the lost revenue.
“The unfortunate reality is a lot of merchants don’t enforce their no-show policy for fear of losing a customer,” he said.
Chandre said Booker works with professionals to educate them about the true cost of their wasted time in terms of lost revenue, but acknowledges it will be challenging to get the beauty industry to change its lax enforcement of no-show fees. The purpose of Booker’s education efforts is to convince merchants that letting no-show appointments off the hook too easily could lead to financial hardships for these professionals and their bottom lines.
“We have the technology solution for no-shows,” Chandre said. “What we also hope to do is, as a partner for merchants, educate [them] on why they should be very strict with their no-show policy.”
The shift in attitude might take some time. But, when beauty professionals are ready to take a firm hand with customers, Chandre believes Booker has given the industry a tool to help tame the payments beast — and free up beauty professionals to spend more time taming their customers’ out-of-control manes.
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