One of the biggest headaches during end-of-year accounting is dealing with the debt that accumulates over the previous months and years. HOA accounting software can prevent this debt from amassing, improve your association’s financial stability, and make collecting bad debt something you barely have to think about during these busy months.
Using HOA accounting software
Accounting software for your homeowners association that has robust reporting makes end-of-the-year processes run quickly and smoothly. Regularly reconciling bank accounts with accounting software for homeowners associations helps the association stay organized throughout the year. Volunteers will already know where the association stands with debt heading into the busy year-end season. By keeping tabs on how long debts remain unpaid, volunteers can decide whether to continue to pursue collection of the debt, or write it off as “bad debt.”
When a member of the association stops paying dues or doesn’t pay a fine for a violation, HOA management pursues the next step toward collecting the payment, eventually fielding the debt up to the HOA’s lawyer for collection.
If the HOA fails to collect the debt after an extended time, they’ll write the outstanding balance off as “bad debt.” At the end of the fiscal year, volunteers should evaluate the debt left behind and decide whether to continue to pursue collection or write the debt off as bad debt to clean up and close out the books.
This decision should be taken seriously. Word can spread among members that if one stops paying their fees for long enough, the association will write them off. But, many situations could cause collecting the debt to become impossible, such as bankruptcy protection or a former member’s failure to leave a forwarding address. In cases like these, the association has no choice but to write the debt off.
This hurts the HOA’s financials. The best thing an association can do about bad debt is to avoid it. Accounting software for homeowners associations can help associations prevent missed payments and outstanding debt.
How HOA accounting software can prevent bad debt
Homeowners associations either employ an external management company or are self-managed by volunteers. External management companies can be helpful, but they are expensive. Associations looking to save money and keep dues low often look toward self-management. Saving money isn’t the only reason to consider self-management. Board volunteers who live in the community truly have their community’s best interests in mind. But, not all of them have accounting experience. Managing finances for an HOA is complicated. Volunteers can easily be overwhelmed.
Here’s where accounting software designed specifically for a homeowners association is so helpful. The right HOA accounting software is easy-to-use, even for people with no accounting experience. It is streamlined to fit the needs of a homeowners association. This eliminates the need to pick and choose helpful features from other software, causing management to rely on a multitude of programs. This is messy and time-consuming, requiring multiple logins, double entry, and more instruction needed for volunteer transition. Since people may only serve in a treasurer position for a year, it’s better to have one software that can do it all to ensure nothing is lost in transition.
Collecting dues and dealing with members who fail to pay assessed fines may be new and uncomfortable for some board volunteers. Using accounting software for homeowners associations can put some psychic distance between the indebted member and the volunteer trying to collect.
When shopping for accounting software for homeowners associations, look for the following features:
- mass communication tools that can be customized to send to members with an outstanding balance
- automated reminders for fees and fines collection
- sample letters and the ability to print and automatically mail them
PayHOA’s accounting software for homeowners associations has all of these features and more. With PayHOA, online payments allow HOA management to collect dues easily and automatically. Important documents, payment history, and communications are stored within the software, allowing for easy tracking and utmost organization of payment collection. No accounting experience is necessary to operate PayHOA’s intuitive and user-friendly software for homeowner associations. More than 25 reports are available at any time so that you can stay ahead of the association’s finances.
Methods for collecting payments
Nobody wants to deal with unpaid fees and fines. PayHOA’s accounting software for a homeowners association is accessible to both board volunteers and homeowners. From the portal, homeowners can make payments easily with online payments. PayHOA also offers a versatile lockbox option for people who prefer to pay with a check. There is even an autopay option so paying dues doesn’t take a second thought. The software automatically creates a record of payments so there are no discrepancies on whether fines or dues have been paid or not, The software encourages open and ongoing communication between the association and homeowners.
However, no matter how convenient payment options are for homeowners, there may still be people who do not pay their dues or fines. In this case, you can follow these best practices for trying to collect unpaid dues and fines from members.
- Consistently use late fees and penalties for members. This helps to establish the association as the authority and makes members more likely to quickly pay their fees and fines.
- Communicate often with members who have stopped paying. First, let them know they have an outstanding payment. Give an overview of the escalation protocols. Send reminders, and a final warning before forwarding to collections.
- Post a homeowners association lien on the property. The property owner will not be able to sell the property until the debt is paid off. This is one of the most reliable ways to ensure payment, sooner or later.
- Offer a payment plan. Offering the option of smaller payments could encourage a homeowner to pay off a debt they would otherwise avoid. Once an agreement is reached, PayHOA’s autopay feature enables easy, automatic monthly payments.
Overall, using accounting software for homeowners associations can help improve your association’s financial stability, while also making things easier on your volunteers.
Give easy a chance
Accounting can be overwhelming for board volunteers, but it doesn’t have to be. PayHOA’s software is designed with homeowners associations in mind, making collecting and tracking payments seamless and easy. The software records payment history, and communication between homeowners and volunteers, and has robust reporting features to keep organized even as the board transitions from year to year. When it comes to handling bad debt, PayHOA’s accounting software for homeowners associations can help prevent debt from ever getting that far. But, in the case it does occur, the software has options for communicating the escalation process, including online messaging and printing and sending paper mail to the homeowner. PayHOA’s autopay feature can help a homeowner pay down their debt with smaller, automatic, monthly payments. PayHOA’s HOA accounting software is a one-stop shop for all things HOA, eliminating the need to rely on other software or an outside management company.