What do you do for payment remittance?

Our board is considering dropping our current bookkeeping company which costs us $2,200 a year. In addition to handling all of the administrative work, they also process our HOA payments. Our board is fine with the administrative side of it, but none of use want to take on the burden of driving to the bank once or twice a month to deposit 20 checks.

Do any of you board members use any payment remittance services? I've looked around, but they all charge so much just for payment processing. Not only is there a flat a monthly fee, but an additional 2-3% fee if our residents choose to pay with credit card or EFT. When I add up the potential monthly cost, it's actually more practical to keep our bookkeeping company who processes our payments and handles all of our paperwork.

I'd still like to know what types of payment remittance services you use, though, in the event that there's a good one out there that doesn't charge so much.

Wow, I'd never do all that. Our by-laws prohibit trustees from being compensated for acting as a trustee. We can only be reimbursed for costs incurred in the operation of our duties. Otherwise, I'd have no problem running the checks to the bank.

Ron,

I think the issue is that your current bookkeeper is vastly overcharging you. The $2,200 per year you quoted amounts to nearly $10 per home per month.

We have a contract with a management company for financial services only. They collect the dues, process late fees, maintain owner balances, pay the bills (from invoices we approve) and produce the monthly financial statements. They do all of this for approximately $2.50 per home per month. They are also a full service management company with thousands of homes/condos under management. They have staff and systems in place to handle all of the financial functions. There was almost no incremental costs for them to add our 800 homes to those processes. So they can provide that service at a very reasonable cost.

Check with other associations in your area to find out who does these functions for them. Then send a request for proposal to those companies. I think you will find you can get the services for a much lower cost than you presently pay.

Ron

You said you pay $2,200.00 per year for the book keeping service. How many units are they collecting from?

Thanks

John I'm going to guess 20.

Yes, it's $1,800 a year for the basic bookkeeping and $400 for the tax prep. We did our own taxes this year and are looking into payment remittance options so that we can decide whether or not to handle our own admin as well.

Good point on directors vs. officers. While I knew they were different, I somehow didn't draw a distinction when it came to compensation. Still, who decides on the amount of compensation? Surely, there has to be some provision somewhere that keeps the president from compensating himself by not having to pay the monthly dues.

Again, I don't recommend it. However, there are Associations that do pay their Officers.


If documents are silent, it would be decided by the Board.


The Board makes the decisions for the Association and the Officers implement those decisions.

Officers only have the authority the Board or governing documents gives them. They do not have a vote at Board meetings (only Directors do). If an individual oversteps their authority (as an Officer or as a Director) it's up to the rest of the Board to rein that individual in. If the Board doesn't do this, then it's up to the membership to rein in the entire Board (typically by recalling the Board or simply voting them out at the next election).


At no time should assessments be waived as compensation.

Typically there is language within governing documents that require every member to pay their assessments. The Board typically does not have the authority to waive assessments (although they typically may waive additional charges/fees). If Officers are to be compensated, then the Board should write a check (just as they would for any other expense).

As a side note, if the Association does pay their Officers, the officers would then be considered employees of the Association and, as an employer, there are IRS requirements that must be complied with (issuing of W-2s, etc.) and specific taxes paid. Additionally, there are specific legal benefits to being a volunteer vs. a paid employee or paid professional.

If your Association is considering paying their Officers, I would strongly suggest consultation with the Assocaitions attorney and with a CPA or tax attorney so the Association can make an informed decision.

This was a great idea. While our bank charges a whopping $250/mo for lockbox service, it prompted me to ask if they accept deposits by mail. Indeed they do! All I have to do is fill out a deposit slip and mail in the checks in bulk. This is probably the route we're going, but the runner-up option is a service they offer where we are given a check scanner. We scan the checks and the deposits are made automatically. This is only $50/mo, but we like the mail-in idea better.

The time consuming aspect that I experienced was not the actual trip to the bank.

Ron, it's not necessarily the money spent, it's the time commitment required.

Time requirements:

opening the mail: 0:00:10 (seconds)
Verifying what lot the check is for: 0:00:10 - 0:01:00 (depends if lot number is written on check or if it had to be looked up.
Posting the check (paper ledgers): 0:05:00 (pull out file, make entry, calculate balance, put file away)
Preparing the deposit slip: 0:00:45 (average per entry and then calculating total)
So, that is approx 5-7 minutes per check.

If a letter is required to be prepared it averages 5 min per letter (gathering info, writing, printing, addressing envelope, signing letter, stuffing and sealing envelope, apply postage, place in mail box, file associations copy of letter)