How do you collect your monthly assesments?

I am curious how everyone collects their monthly assessments/dues form their association members? Currently we collect checks every month from our members. We are considering the option of allowing our members to pay their dues/assessments by electronic check or by Visa/MasterCard.

Does anyone know a company that provides this service? Do any of you provide this options for your association members?

we allow cash or check, and owners can pay ahead in lump sum, or by individual checks which our bookkeeper holds until the month due. This works really well for two people, who give us 12 months of post dated checks in january, and is done for the year. we do not allow credit card payment because we do not wish to pay the 3% to 5% fee, nor do we do debit cards or paypal. we do not allow barter either.

You can arrange automatic withdraws with the association's bank. In our HOA the member had to have an account with the HOA's bank in order NOT to be charged an automatic transfer fee. However, other members banks may allow automatic transfers to the HOA's bank account but charge a fee. That fee won't be the responsibility for the HOA to reimburse.
Be careful in handing out the HOA's bank account number. I would suggest having a SEPARATE savings account for members to deposit into. That way ONLY deposits can go in and NO withdraws. The HOA board/MC can transfer the funds later if needed. Plus the savings account collects interest.

We bill twice a year. We allow for ECH (electronic clearing house) payments where we draft their checking account, or receive checks. Since our associaiton is large, we have a lockbox system.

You can set up payments monthly, quarterly, semi-annually or annually, or however you wish.

We send a statement, since it shows where people are on their account. If they don't pay, then we send out another the following month with a late charge and interest, then with interest in subsequent months.

If you do electronic payments by visa/mc/other, you pay a 3 - 5% fee. If people are clammoring for that, then I would only offer the option if they are willing to pay the additional fee - it should not be subsidized by the other owners.

Mike, many management companies use the lockbox system since it is less work (more profit) for them. I would appreciate information sharing from those who like the lockbox system. For example:
1) How much a year does it cost the HOA? Consider all costs including any loss of income from lower yield on operating and/or reserve accounts.

2) What percentage errors occur? Such things as misreading the code on folded coupons can cause concerns for owners who have paid but there is no record of payment by the bank and management company.

3) What percentage increase in delinquent accounts occurs over mailing statements?

The lockbox with coupons is much less work (more profit) for a management company. But most Boards do not realize the hidden costs involved. An example is an HOA we recently took over from a large management company serving the front range of Colorado. They had an arrangement with a bank to handle their accounts using the lockbox system. There was a hidden cost to the HOA of over 10% of their budget which resulted from much lower income yield. Also, the number and amount of delinquent accounts was unbelievable. Fortunately for us, the owners did not challenge their balance due as most had no idea of how much they owed. The annual assessment was changing; there were late charge each month; and some of the printouts provided by the bank were missing (misfiled?).

We still mail statements (usually quarterly) with billing and payment history. Payments by check (no cash payments allowed) are received and recorded using a double entry system. Delinquent statements and, when necessary, intent to lien statements are mailed monthly. Seldom is there any questions on payments and when they occur an answer is provided during the phone call. To date the lockbox system doesn't provide us the prompt personal attention to clients which we desire.

How exactalyy does the lockbox system work? I assume it's a locked box that is on the site of the association, but who collects the payments? DOes the Bank do it? Or does the Property Management(PM) collect and process them?

1. The management company selects a bank which will provide this service. Not all banks provide this service and the costs involved for their services are often hidden by providing a much lower interest rates on all funds which are deposited at their bank. Otherwise the HOA pays for the costs involved for the banks services.
2. The management company has coupons printed at a cost to the HOA and provides them to the homeowners.
3. The owner mails their check with the coupon to the bank lockbox.
4. The bank scans the micocode on the coupon, records it with the payment, deposits funds into the HOA's account, and provides a printout to the management company.
5. The management company records the payments listed on the printout.

Thank you for explaining how the lock box works. I can see how it could be a benefit or a headache. I will have to see if I can find a bank that offers this and find out about their fees involved.

It sounds like the Visa/Master Card route is too costly.

Maybe I can find a company to process payments electronically.

Thanks for all your input!

James