Sometimes in community management, it is easy to forget that we are living in the 21st century; with yellow legal pads being the primary tool for some managers, filing cabinets taking up two-thirds of available floor space, and the guy in the mail room spending all day hand-writing little green return receipt forms, walking into a CAM Management company can feel like stepping back in time. Or maybe, visiting another world altogether. (Toto, I don't think we're in Kansas anymore!)
Follow the yellow brick road
There is a delicate balance that comes with any upgrade. On the one side, you have your existing workload that is paying everyone's paychecks. It has to get done, whatever the process. On the other hand, you have the mythical new shiny tool that is going to save you tons of time and energy, but you need time and energy to implement it! So how do you get across the chasm, from doing what needs to get done to having all that mythical free time? The answer my friends, is
You already know that there are only two ways to get out from under a large workload: hire more staff, or automate processes. You may have already tried the first method and found that it can be a downward spiral - you have to bring on new business to make up the expense of additional labor, and soon the extra person you brought on to shoulder the old workload has a whole new workload and you are right back where you started with an overwhelming workload. This leaves our only true choice as automation.
With so many different ways you can automate your management business, it can seem overwhelming at first glance. The secret is to focus on one thing at a time. It helps to know which area of your business will experience the most impact when automated, but let's start with an area of CAM accounting that is very time intensive for most management companies, and therefore usually a good jumping off point for automation: Accounts Receivable.
The AR module covers your entire receivables process from billing to processing checks to applying late fees and NSF fees. That's a lot of processing, and it is vital to the business - without a highly functional AR process, you may be missing out on money that is owed to you! The good news is that there are many options out there to help you begin automating your receivables process with little setup or investment, so you can start right away:
(By the way, if you are not using a bank that has specialists in community association management, you are doing your organization a huge disservice. Almost all of these items are available from and encouraged by a good community association banker. After all, it is in their best interest to see that your organization is financially stable.)
The concept behind a bank lockbox program is to provide a way for homeowners to pay their dues at the bank, instead of writing a check to you. This is great not only to save you processing time, but also to build a layer of security between you and the customer's money (so they know you aren't using it to go joyriding in a broom factory) It works like this:
- Before the beginning of your billing cycle (in December, for example) you generate a 'coupon book' which contains monthly invoices for the homeowners with their account info and amount due preprinted on each coupon, along with a bank code to tell the bank which account payments should go into.
- Each month, owners submit their payment to the bank, by including the month's coupon and their check.
- The bank then processes all receipts and submits them to you in an electronic format.
- From there, you can simply import the lockbox data into your management software.
Viola! At least 65% of your receipts are now going through the bank, and the bank is doing all of that data entry and processing work for you!
How to implement: Talk to your bank representative about adding lockbox processing to your existing services. Your bank may even be willing to help supplement the costs of printing the coupon booklets to get you started.
2. MICR Check Scanning
Even if you have implemented lockbox in your organization, there is probably a steady stream of checks coming in on a monthly basis, from homeowners who have lost their coupon book, don't trust the lockbox, or are simply doing it the way they've always done it. Rather than hand-typing them into your accounting system, consider getting a MICR check scanner. (MICR stands for Magnetic Ink Character Recognition.) Every check that is printed contains the bank account info in magnetic ink, to make it easily recognized by electronic scanners at the bank. The good news is that the banks aren't the only ones who are allowed to have these check readers!
How to implement: Check to see if your community association management software offers a program that can work with MICR check scanners to automatically scan checks you have received at your office. They work exactly like the scanners you've seen at the bank or the grocery store - they read the account data, and match that data to the homeowner account that is associated. Entering checks can go from 5 minutes each to one or two clicks, and done! (Some scanners can even attach an image of the check to the homeowners record, so be sure to shop around to find the right one!)
3. ACH / Direct Debit
Some homeowners prefer to 'set it and forget it'. As long as the monthly assessments do not change frequently, the homeowner may prefer to have the dues automatically withdrawn from their bank account. This is a little more complicated than an online payment, simply because the funds are directly coming from the owner's bank account, but it is more reliable.
How to implement: If you use a community association management software such as TOPS, ACH payments can be directly set up within the program and automatically instigated each billing period. However, you can set up ACH payments even if you are doing all of your accounting on printed 'green line' ledger books. Simply talk to your bank representative about setting up automatic transfers. There will likely be some paperwork for your homeowners to fill out to get the initial setup completed.
4. Online Payments
Talk about joining the current age! Online payments are perhaps one of the most commonly requested features for association dues. Online payments can take many forms, from allowing payments via credit card, to paying one month at a time or scheduling automatic payments. Any way you slice it, owners like it because they are in full control of their account.
How to implement: It really depends on what system you are using for your community association accounting. Some property management software integrates online payments into their community websites. Others offer it as an additional service. You can also check with your bank representative to see what options they can offer you. Finally, some communities have opted to go it alone, by setting up a community PayPal account or online merchant account.
Caution! Before you take that last bit about DIY online payments and run with it, please make sure you consult with your community association lawyer as to the legality of this as an option. Many community bylaws require that the full amount of dues owed to the community is what is received (exactly $100. Not $99.99 or $100.01!) This has introduced some sticky situations for communities attempting to process credit cards on their own because most credit cards and services like PayPal use the same standard fee structure, which is a small percentage off the top of each payment. This structure may be against the law for your organization!
Off to see the Wizard
So there you have 4 ways you can save time simply processing payments in your accounts receivable. Don't feel you have to implement them all at once to help get out from under that mountain of work - just pick one and take one step at a time - eventually, you will find your way to the Emerald City!
Andrea is the author of the whitepaper "One Simple Choice that can Increase Your Management Company's Profit Margins". Currently, she serves customers from within the Marketing department of TOPS Software.