According to the Association of Financial Professionals’ 2015 Payments Benchmarking Survey, the estimated monthly cost of receiving 20,000 checks in one month is $30,000. Homeowners’ associations looking for solutions to their payment collections problems are turning to online payment solutions more and more as the world becomes more digitized and the costs processing check payments become more of an avoidable hindrance. HOAs that are striving to overcome some of the same barriers to their payment processing goals should consider online payments as an innovative solution, but should you consider collecting all of your HOA payments online?
The Problem with Checks
Many HOAs still receive the bulk, if not all, of their payments in the form of paper checks. Traditionally, they’ve been the go-to form of payment for HOA members simply because they have no other option for paying their dues. But there are a number of problems associated with checks, and if accepting them exclusively is business as usual for an association, they may not realize how much checks are costing them.
Whether they come through the mail or directly from the hands of an HOA member, checks have to be physically delivered before they can be processed. This places an avoidable burden on members and is one of the leading causes of late and delinquent HOA payments. It can also lead to errors, misplaced payments, and more time spent settling delinquent accounts. Once the checks are in the hands of an HOA, they have to be processed and settled into one or multiple accounts, which can take days.
The Benefit of an Online Solution
Many of the problems caused by check payments can be avoided by implementing an online payment solution. Not only does collecting online payments offer faster processing times and an easier way for residents to pay their dues, it can lead to fewer late payments. Instead of waiting for checks to arrive, members can be contacted electronically to remind them that a payment is due.
On the backend, an online solution can give HOAs a clear and reliable view of all of their payments. The best electronic payment systems are designed to report all incoming payments together in one clear, comprehensible interface, regardless of the payment method used. In the long term, an online solution can lead to real cost-savings for your HOA and fewer outstanding payments to chase down.
Even if an HOA doesn’t intend to accept payments by debit or credit cards, moving all of their payments online is still a possibility. Doing so can also grant the association significant cost savings. ACH payments can be implemented through an online solution, allowing members to pay directly from their checking or savings accounts the same way they would if they presented a check payment.
According to the Association of Financial Professionals’ 2015 Payments Benchmarking Survey, the cost of receiving and processing a check is five times more expensive than the internal and external cost of accepting an ACH payment. NACHA—the Electronic Payments Association—also recently approved same-day ACH in the Spring of 2015, which means ACH payments are not only safer and more efficient than checks, they are faster than ever before.
What a Complete Online Solution Looks Like
By implementing an online solution across the board and eliminating check payments, residents would pay their assessments and fees conveniently from wherever they have internet access: at work, on a business trip, from their vacation home, or at their primary residence. Associations would no longer have to wait for members to pay on their own time. Notifications could be pushed out using email, SMS, or a prerecorded phone message, and payments could be made securely with the click of a button.
With an online solution, associations also have the option to accept alternative payment types, like those made with a credit card, if they so choose. And by partnering with a payments solution provider, the new online system can be integrated with a current system quickly, with little disruption. If the association struggles with the complexity of settling funds to various buildings, associations, or other divisions, an online solution can provide a means for sorting through all the requisite information and routing every payment exactly where they need to go.
Finally, collecting HOA payments online can cut down on the number of exceptions an HOA has to sort through and help them manage the ones that do occur. Without an online system in place, members can’t know whether or not their payment was processed correctly until the dollar amount that they wrote on their check has transferred from their account. With an online solution, if a member attempts to pay through an online portal, they will know immediately whether or not the payment was successful and accurate. In the event of an exception, the electronic system will notify the HOA and the Payer that there is a problem, allowing both parties to take immediate steps to resolve it.
Online Payments: For HOAs and Their Members
Collecting HOA payments online may seem like a large step, but it can help HOAs receive more on-time payments and eliminate the burden of paper checks. Organizations that implement electronic payment solutions see an average 15% reduction in missed payments and can receive payments from up to half of their Payers on the same day that a payment is due. Residents can pay online from their home computer or on the go with a mobile device. They can even schedule recurring payments, removing the risk of a late payment entirely and ensuring that the homeowners’ association receives the funds it is owed quickly, effectively, and on time.