Invoices cannot go out fast enough. Budgets were prepared, voted on, approved, and posted in the latter part of 2009. Now we are financially ready to tackle this upcoming New Year. However, all of this is based on one main vehicle called Revenue, Assessment Revenue specifically. Will each homeowner pay their dues on time? Would more homeowners rather pay a full quarter, or even a year in advance? Considering the stagnant economy, many will prefer to pay month to month, while some will neglect dues payments all together. In situations like this, the “art of collecting” comes in to play. You can’t be too aggressive, as most homeowners often opt to pay the most demanding and aggressive collectors. Remember, many homeowners are faced with decisions like “Do I pay the water bill or pay my HOA dues?” The key is to make the dues as much of a financial priority as any other with regards to budgeting.
Regardless of the community’s billing cycle for the New Year (annual, semi-annual, monthly, or quarterly), invoices were sent between mid December 2009 and January 1st, 2010. The standard process would be to send a “past due” notice, then should the account still remain to be unpaid, a 15 day demand letter is sent. This specific demand letter satisfies North Carolina’s law of notifying the homeowner that the account shall be forwarded to the Attorney (if not paid within 15 days) regarding further legal action. The homeowner is also given the option of entering into a payment plan agreement; provided that the schedule of payments and payment plan term is feasible in the eyes of the board of a particular community. Should a payment plan be granted, a notarized payment plan schedule is signed by the homeowner and submitted to the HOA board / management company. If the payment plan is not followed as agreed, the next step would be to turn the account over to the attorney for immediate collection.
Advising homeowners of their options to a payment plan is usually a feasible way to improve the process of collecting homeowner dues. There are, in some instances, homeowners (that are not in default) enter into payment plans when they know that the upcoming monthly dues will be a financial challenge. This shows a consciences effort of the homeowner and is both appreciated as well as implemented.
Another step of improving of the collection process is to keep the percentage of uncollected dues between 3% to 10% on a monthly basis. Going above 10% would usually be a clear indication that the community will be unable to fulfill its financial obligations by the 4th quarter of the current fiscal year.
And as always, helping the homeowner understand their bill – the reason for the dues – the billing cycle the community uses – penalties and fees incurred, will facilitate an expedient payment. We all know that the more we understand what we are charged for and the reason for the charge, the more willing we are to pay promptly.
Slowing revenue growth has indeed been a harbinger of a slowing economy, and if the slowing is pronounced enough, of a recession. Seeing a significant decline in the growth of revenue rather than an outright decline is reason enough for the “process” of collection to turn into an “art” of collecting. Here at Cedar Management Group, we want to strongly encourage all of our communities to keep a steady hand over all debts owed. While dues are a binding agreement between the community and the homeowner, this is an economic time where we must push the homeowners to make their dues a priority in their monthly and yearly budgeting. With a proper hold on dues, we will keep all customers happy.