Dues collection is often a pain point for many homeowners associations. If you struggle with this aspect of community management, setting up electronic payments for HOA fees may be the answer to your problem.
The Benefits of Using Electronic Payments for HOA Fees
Homeowners have an obligation to pay dues to their association, and the HOA board is responsible for collecting them. While there is nothing wrong with pursuing the traditional method of collecting dues, there are a few key benefits that an electronic setup offers.
1. Save Time
Online HOA dues payment is a time-saving option for both residents and the HOA board. The traditional way of dues collection — which involves mailing physical checks, recording them one by one, and then depositing them — is a time-consuming process. Using electronic means to pay and collect dues can save your treasurer a lot of time.
2. More Convenient for Everyone
When you utilize electronic payments for HOA fees, it is simply more convenient for all parties involved. Your HOA board does not need to manually process and deposit checks, while residents can pay their dues in an instant from anywhere with an Internet connection.
3. Reduce Instances of Late Payments
Homeowners miss payments all the time for any number of reasons. Sometimes, they don’t have time to write and mail in their checks. Other times, they simply forget. An HOA online payments system, though, can greatly reduce instances of late payments.
Depending on the platform you use, you can automatically withdraw payments or just make it generally more convenient for owners to pay their dues. Not having to physically write and mail in their checks can have a big effect on reducing delinquencies. This is beneficial to both the HOA and homeowners. With on-time payments, homeowners avoid incurring late fees and the HOA doesn’t have to worry about a budget deficit.
4. Track Payments Easily
Another benefit of electronic payments for HOA fees is you have an easier time tracking all the payments. Because everything is electronic, you can simply gain access to the online database and see which homeowners have not yet paid. It is also faster to pull up payment histories and records in case there are any disputes.
Selecting a Platform for Electronic Payments for HOA Dues
Today’s technology has made a wide range of options available for online payments. But, how do you know which one best suits your association?
Bank Transfers or Auto-Debit
There are two ways HOAs can use bank transfers to collect HOA dues online. The first is to have residents manually transfer money from their account to the HOA’s account. The second is to set up an auto-debit or auto withdrawal system.
If you go for the second option, you must check with your local bank to know whether there are any fees involved. Some banks charge setup fees or miscellaneous fees for this service. Though, if your HOA has a strong enough relationship with your bank, they may consider waiving these fees for you. It is also a good idea to ask for a sample of the reports you will get. This way, you can determine whether the reports are compatible with the software you are currently using.
Many associations use automatic withdrawals, and homeowners are fine with it because it is the same system used in many other services and utilities. But, that does not mean your board should let its guard down. Make sure to still oversee the entire process to catch any accounting errors immediately.
ACH or Electronic Checks
Automated Clearing House (ACH) payments are electronic checks that homeowners can use to pay their dues right from their checking account. With ACH checks, there is no need to write physical checks. Both ACH checks and wire transfers are bank-to-bank processes, though the main difference is that wire transfers are instant and ACH checks take longer. This is because ACH checks have to go through a clearinghouse, so payments may take up to three (3) days to appear in an account.
Third-Party Service Provider
If you would like to remove the bank from the equation, another option is to use a third-party service. There are many HOA website providers that come with an HOA payment portal. Several HOA management software also comes with built-in payment systems. If you want residents to pay HOA with credit card or debit card transactions, most providers offer those, too.
When deciding which provider to use, don’t just go with the first or cheapest option you find. Weigh the features they offer against the cost of the service. Make sure they have proper security measures in place to keep your HOA’s and the residents’ information safe and private. Find out how their customer support works in case a problem occurs (which can happen). Checking reviews is a good place to start.
What to Consider When Choosing an HOA Fees Electronic Payments System
Not all homeowners associations have the same needs and resources. What might work for one community may not necessarily be the best for another. Before you make a decision, take the following considerations into account:
1. Fees and Other Costs
For most associations, the first factor in the decision-making process is cost. How much will this service cost the association and its members?
As previously explained, partnering with a bank may come with a fee, whether the fee is for setting up the service or for every transaction. Talk to your local bank to know what methods they have available for your HOA. If you have a lot of owners signing up, they may be able to waive the fees entirely.
A third-party service provider might not have transaction fees, but it will require a sizable investment amount. Thus, this option will obviously be the most expensive one, though it usually does come with other features that make the product worthwhile.
2. Ease of Use for Homeowners
The entire point of using an electronic payment system is to make it more convenient for everyone. As such, you should consider the users. The system should be easy enough for homeowners to navigate, so much so that they will actively choose to use it over traditional methods.
You should also obtain homeowner feedback before actually migrating to an online system. For some communities, i.e. those with less tech-savvy residents, electronic payments may not make sense. You can also consider offering an electronic method while still retaining the traditional method of paying dues.
Bank transfers are simple enough, and most people already use them for other payments. But, if you adopt a third-party service, you must teach owners how to pay HOA fees online. Perhaps you can schedule an orientation of sorts to help them get familiar with the portal.
3. Accounting and Bookkeeping
Dues collection makes up a big part of your association’s accounting. Thus, you should make sure the option you choose can be integrated into your accounting and bookkeeping system with ease. If you currently use accounting software, ask your bank or third-party service provider to send you a sample of their report. This way, you can check whether the report can be uploaded without error.
On the other hand, it may be smarter to go with an accounting system or HOA software that already offers online dues payments. HOA management software is more comprehensive and comes with all the bells and whistles your board will need.
A Simple Yet Sophisticated Solution
Clearly, both your HOA and its members will benefit from adopting electronic payments for HOA fees. The hard part, though, is choosing what platform to use among all the options available. Although bank transfers and ACH checks offer their fair share of advantages, HOAs have more to gain from an HOA management software.
For that, Condo Manager has got you covered. We offer HOA software for self-managed associations and management companies alike. Call us today at (800) 626-1267 or contact us online for a free demo.
- What Payment Methods Should Be Made Available For Homeowners?
- Should Early Payments Of HOA Dues Be Encouraged?
- What Should An HOA Do With Late HOA Payments