HOAs rely on consistent cash flow. And that cash flow is funded in large part by dues payments. When even just a few homeowners don’t pay, it can greatly disrupt the budget, and the myriad things that depend on it.
Timely HOA dues payments aren’t guaranteed, but the HOA or management company has a fallback when homeowners are slow to pay:an HOA collection agency.
How an HOA Collection Agency Works
In most states, when a homeowner doesn’t pay their HOA fee for at least three months, they are considered ‘delinquent’. It’s at that point that an HOA should consider hiring an HOA collection agency. For most, collection agencies make money only when a payment has been remitted, then they take a portion of that payment and release the rest to the HOA.
Benefits of Using an HOA Collection Agency
If your community finds itself with several cases of homeowners that are 3+ months behind in dues payments, an HOA collection agency can be a great solution for the following reasons.
- Saves Valuable Time: With all the tasks board members are responsible for, debt collection can be difficult to manage. Outsourcing it to a third-party gives you a lot of time back that can be spent bettering the community.
- Expert Advice: Third-party companies have expertise in debt collection that can help get the funds you need faster. It’s their job to use the most effective methods of dealing with delinquent residents. They will also be well-versed in the legalities that come with it so the community’s interest will be protected.
- Provides Consequences: If your HOA is self-managed, you may find that homeowners are slow to pay partially because they’re well acquainted with the board members (their neighbors) and feel no sense of urgency, the way they would with say, a creditor. . If residents are contacted by a third party instead of a board member they are familiar with, they will immediately be aware of the seriousness of late payments.
The Importance of Communicating with Homeowners about Collections
Sending someone to collections should not be taken lightly as it can affect their credit. That’s why it’s critical to maintain open and consistent communication with your homeowners throughout the collection process. They may inform you of emergencies or unforeseen circumstances that they’re dealing with, in which case your association may choose to grant extra time for payment, rather than solicit the intervention of a collections company.
While sending multiple notices may seem excessive, with the right messaging and information included, it makes homeowners aware of their delinquency and gives them ample time to contact the board before they’re forced to send it to collections.
This is where professional HOA notice mailing services, like those offered at Page Per Page, are so beneficial. Their team of expert designers specialize in HOAs and communities, and can design, pack and ship notices in timely manner, ensuring it reaches the homeowner on time, every time. It’s an invaluable service to maintain homeowner communication and streamline the notice mailing process for boards.
How to Choose the Right Agency
The most critical step after deciding to hire an HOA collection agency is finding the right partner for the community.
Ask Other HOAs for Referrals
Don’t be afraid to also ask for referrals from your industry network. Hearing the experiences of others with HOA collection agencies can be a great value in helping you confidently choose who to partner with.
Create a Vetting Process
After you’ve narrowed your list, you’ll want to set up a rigorous vetting process. Don’t hesitate to ask questions such as:
- What certifications does the agency have? Look for the PCI DSS, SOC 1 Type II, SOC 2 Type II, or Professional Practices Management certification. Each of these help to protect the payer and hold the agency accountable.
- Do they have receivables management technology? This type of software helps to maintain a steady workflow and prioritize clients meaning it results in more collections.
- What type of reporting can be expected? It’s important to have complete transparency with your agency. Make sure they submit reporting on a schedule and that it includes information detailing each account and they work they’ve completed on them.
- Do they have experience? It’s important for an established collection agency to have vat experience in the field with a proven track record of reaching KPIs for clients. It may also be beneficial to find one that has worked with HOAs before.
Remember, when homeowners pay off their HOA debt through the third-party, the collection agency will receive a fraction of the funds. This makes it even more imperative that you understand their terms and history. The average fee ranges substantially from 25-50% so don’t hesitate to vet more than one option.
Request Reports of Recent Collections
Always request a report. HOA collection agencies have the ability to black out homeowner information and show you recent collections. This also gives you a good idea of their success rate and if you’ll make what you need for the budget. For example, if there is a large difference between what they collected and what was paid to the HOA–move on.
Put Your Homeowners First
While it’s important for the success of the community to keep income consistent, it’s more important to build positive relationships with homeowners. Make sure to express a generous degree of empathy and to emphasize the fact that you as an HOA are working for the good of the whole. Communicating clearly and sympathetically will set you on the path to creating a positive community that people want to be part of.
Sending out paper notices adds a personalized touch and even conveys more urgency. That’s where Page Per Page comes in. From dues, assessments, and late notices, Page Per Page has mastered design, printing and mailing that has had a huge impact on communities nationwide. Their expert designers can help lead you through the process and ensure the message you provide the homeowners in your community is clear and professional. Join forces with Page Per Page today to streamline your HOA mailing needs.