August 31, 2016
Some community association managers and board members think outsourcing fee collections and debt recovery means losing control, but you may discover engaging a reputable agency offers key financial advantages. When you view hiring outside firms to collect association dues and past due balances as simply an added expense, you miss opportunities to control costs more effectively.
This Axiom article will explain why outsourcing may be the ideal solution to eliminate your cash flow problems.
The Pathway to Controlling Delinquencies: Communicate, Educate & Advise
In a Utopian world, all homeowners would receive association fees statements and immediately make full payment – there would be no delinquencies, and everything would be perfect. In reality, financial crises happen, people lose jobs, family members get sick and disputes delay payment. Although your community association may never achieve full compliance, it is possible to dramatically reduce slow and no-pay ratios if you approach cash flow management with a proactive style similar to alternative dispute resolution (ADR).
Harvard Business Review highlighted some of the major benefits of implementing an ADR policy and summed their findings up this way, “ADR’s predicted benefits [you can expect are]: lower costs, quicker dispute resolutions, and outcomes that preserve and sometimes even improve relationships. “
The straightest path to improving compliance is a three step process:
- Communicate effectively
- Educate your stakeholders about expectations and responsibilities
- Advise homeowners about positive and negative sanctions of their choices
Communication: The first step toward controlling cash flow
Strong relationships are built on effective communication. For community associations, this means your homeowners receive advance association fees change notices, easy to understand statements and access to staff members trained to answer their questions efficiently. In a digital age, communication often involves multiple channels – email, telephone, text and online chat services. When you outsource debt recovery to a full-service, professional team like Axiom, you can have full confidence every caller experience is customer-focused and goal driven.
Education: Comparing ADR to traditional debt recovery protocol
ADR techniques are primarily implemented to avoid legal fees and protracted dispute settlement. Traditional debt recovery policies typically focus on demand and wait tactics. If an account remains unpaid for an extended period of time, sometimes the only solutions are to write-off charges, which isn't an option for most covenanted communities, or turn the account over to the legal team, which means added costs and financial burdens.
While effective communication is crucial for collection teams, without educating the debtor, you cannot reach a positive resolution. It is essential for recovery agents to approach the conversation with an outcome-based focus. The goal is two-fold: first make sure the account holder understands the charges, and secondly, establish a payment plan that makes the association whole by settling the debt. The education phase of bad debt collection involves exploring options openly and honestly to establish realistic, attainable resolutions.
Advise: Reaching a settlement plan
By communicating expectations and responsibilities clearly, and educating the debtor about their options, agents are better positioned to reach an agreement plan designed to eliminate the debt that encourages compliance. When homeowners understand the benefits of entering a debt recovery plan, and they feel that the agency understands their position, they are more likely to comply.
The agency you choose to manage debt collections is essential for positive outcomes
If your association struggles to collect association fees or has a high volume of bad debt on the books, you need a debt recovery team that understands the community association industry intimately. Axiom has a proven collections strategy designed to lower costs, improve relationships and save time for your on-the-ground team. Visit our Axiom Resources website for more information, and feel free to contact us if you have questions about our HOA and COA services.