When fees aren’t paid, property values can go down and it can be difficult to get mortgages and refinance community assets. HOAs already enlist a number of tactics for dealing with delinquent payments, like offering payment plans and, if necessary, taking legal action. While these methods can be effective, you may be surprised to learn that you can decrease collection costs and increase your HOA’s revenue by offering more payment options.
The Negative Impact of Checks on Monthly Net Revenue
Traditionally, most HOA payments are made by residents with a paper check. Even if an HOA has a good month of collections and every resident pays their dues on time, they still have to deal with the operating costs associated with processing their check payments. Processing each check payment can cost an association up to 10 dollars in operating and processing costs depending on the circumstances. Regardless of the number of payments an HOA receives and the number of residents they have, processing checks inevitably lowers their monthly net revenue.
In a bad month, checks can bounce or residents may be late on their payments, either because they are short on cash or they simply forgot. This only compounds an HOA’s operating costs and leads to a bigger decrease in their net revenue month after month. Additionally, payment accuracy is always in issue with payment methods that aren’t electronic. Without the right configurations in the back office, having to enter check information manually into a system can lead to errors. Processing payments from homeowners across multiple buildings or HOAs can also be costly with a rudimentary system.
Increase Net Revenue by Offering More Payment Options
Offering more payment options to residents through the implementation of an electronic payments solution is an effective way to reduce operating costs and encourage the timely payment of HOA dues. When residents have more options to make their HOA payments, they are more likely to pay on time, especially if their HOA enables them to pay from the comfort of their own home or on the go, using a mobile device. And with electronic payment capabilities, residents will even have the option of scheduling recurring payments, which process quickly and eliminate the risk of a payment arriving late. In the long run, offering residents more options for paying their HOA dues will reduce the number of exceptions and delinquent payments an HOA receives, which in turn leads to higher net revenue each month.
In recent years, the biggest change in the payments landscape has been a shift from checks to electronic payments, especially for payments that reach values of hundreds and thousands of dollars. This is mostly due to innovations in electronic bill payment and presentment (EBPP) and the fact that such technology is now widely available. Payments solution providers have become so efficient at implementing such technology that more industries are able to benefit from electronic payments than ever before.
Bill payers are attracted to making electronic payments because it offers them greater security and a much easier way to pay their bills than writing and delivering a check. But HOAs should also be attracted to electronic payments because of the costs it can save. When an HOA partners with a payments provider, they can implement a new electronic payment system seamlessly into the HOA’s current payment channels and keep the association running smoothly.
The best electronic payments solutions are also fully customizable. If an HOA still chooses to accept paper checks as a form of payment, they can still do so with a new billing platform. They can also choose to accept debit cards, credit cards, and ACH payments from their residents.
Bill Payers Expect Multiple Payment Options
When an individual needs to make a payment to a company or organization, they expect to have a number of payment options for paying their bill. The options that an HOA offers their residents are up to the association’s discretion, but if residents are still making all of their payments using paper checks, the HOA will lose revenue to processing costs.
Offering electronic payments as an option is a good start for avoiding some of these processing costs and increasing net revenue. Even if residents are slow to adopt electronic payments, the HOA can expect widespread adoption over time, especially as more Millennials enter the housing market and begin joining HOAs. Eventually, HOAs may want to consider accepting payments exclusively through electronic channels.
A payments solution provider can help an HOA implement a new billing platform to make all of this possible. The association can set up online payments, allowing residents to pay from the comfort of their homes, and mobile payments, which will allow residents to pay their dues on time if they are at work, away on vacation, or stressed for time. Electronic payment solutions represent the future in multiple industries because they offer efficiency, accuracy, and cost savings to payment collectors while also offering convenience to payers.