The idea for PaidUp was originally conceived as a lending platform to provide loans to parents that have a child participating with a youth sports club in the U.S. PaidUp was agnostic to the type of sport and the club in general, but was attempting to provide loans in the amount of approximately $2,500 to parents to help with the cost of season dues and fees associated with the club. After of season with this lending model, Paid Up pivoted to an outsource accounts receivable model where PaidUp was responsible for assisting the club with ongoing payments. PaidUp monetized this outsource business process model by charging a small percentage on the payments that came through the PaidUp platform plus a small onboarding fee.
Allan conceived of the idea for a fintech products in the youth sports space while living in Dallas, shortly before moving to Austin, TX in the summer of 2013. Allan was fortunate to meet his co-founder, Felipe Fernandes, through Felipe's wife who was a fellow commercial banker in Austin. Felipe became the technical co-founder and Allan primarily responsible for growth and expansion across the U.S.
Clubs were often losing 8-10% of what they were owed by parents primarily due to lack of process associated with the collection of payments along with the manual process of reconciling payments while trying to run the youth sports club.
Reconciliation issues were also a significant issue for the club because many of the parents needed custom payment schedules due to the high cost of youth sports. Costs per season ranged from a few hundred dollars per season to $3,000-$5,000 per season depending on the sport, amount of travel involved and level of competitiveness of the club.
Given most of the youth sports clubs were founded by former athletes who excelled in their chosen sport the focus of the club founder was on coaching and to a lesser extent on the business side of the organization, including the collection of payments. The club founders wanted to be able to focus on the athletes and often did not want to be chasing parents for dues.
Often the club did not have the personnel internally to manage payments so PaidUp became an extension of the clubs management team. The process of managing contractual financial relationships with the parents became the joint responsibility of the club and PaidUp and club founders would direct the parents to PaidUp for any payments related need.
Alongside the improvement of the payments collection process and the removal of the burden from the club, PaidUp also developed a fintech product that allowed a parent to setup their own payments schedule over the course of the season and manage those payments in the online platform. Many parents needed custom payments schedules so each situation was unique, which presented challenges to PaidUp from a product perspective.
With the process assistance the club received plus the fintech product PaidUp created, the club was truly able to "outsource" payments to the PaidUp team. PaidUp, via associates in the U.S., alongside developers in Columbia and a small call center in the Philippines, PaidUp was able to manage the entire payments process on behalf of its clients.
As mentioned above, some clubs were experiencing uncollected funds in the 8-10% range. With PaidUp, this was drastically reduced to under 1% providing an immediate return to the club while providing PaidUp with a revenue stream.
As the clubs were able to outsource the collection of payments and focus on the athletes, relationships with parents improved primarily in situations where flexibility in payments from month-to-month over the course of the sports season was necessary. PaidUp was able to provide this flexibility.