One of the biggest expenses and hassles for a homeowner association is collecting the regular homeowner fee. Every month checks, money orders and cash are processed, tallied, bank deposits made and books posted. Then, letters are sent to those that haven't paid for one reason or another. Followup phone calls are made, sometimes two or three to the same person before connecting. All of this takes time and money. Meanwhile, the HOA's finances suffer since there is no government bail out to fill the coffers. Isn't there a better way? Absolutely.

Many folks already take advantage of automated bill paying for mortgage, auto, utilities and a myriad of other regular payments. Automated payments ensure that bills are paid on time and in full. Vendors know it works and welcome those that take advantage of it. Here's one of the most important factors: Folks set up for automatic payments rarely default. The payments are made directly to the HOA's bank so making bank deposits is no longer necessary.

So how does your HOA take advantage of this boon? First, set up the system with your bank or find a bank or financial service that has the capability. An alternative is available from Vanco Services which provides an internet-based option. Then, offer a financial incentive to all members that use the automated payment system. Your budget may need to be adjusted somewhat to pay the fees but eliminating most of the collection problems more than offsets the cost.

The HOA can also make automatic payment mandatory as part of the Collection Policy. There is nothing sacred about check and cash payments. If it's in the HOA's best interest to go paperless (and it is), the Board should formalize it as policy. Then, every current and new owner should receive the information, forms, etc. required to get set up for the plan. A transition period of 30-60 days is more than enough time.

This collection strategy is simply too good to pass up. It gets to the root of the HOA's greatest need: money to pay the bills. By eliminating most collection problems, the HOA will come closer to the ideal than previously thought possible. Automate and enjoy some of that carefree living the developer marketed.

Published: June 9, 2004

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Richard Thompson owns Regenesis, a management consulting company that specializes in condominium and homeowner associations. He is a nationally recognized expert on HOA management issues. Regenesis publishes The Regenesis Report, a monthly newsletter for HOA boards, developers and managers. To subscribe, go to Regenesis.net. He can be contacted by email at .