Fax Us Your Ledgers (Just Kidding)

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As we begin to enter a new decade, this is a good time to look over how your association handles their collections. If you are still waiting on your monthly collection reports, or manually applying your collection costs, or even faxing or scanning your delinquency ledgers for collectors, you may need to overhaul your system to drag your community into 2020.

As of this writing, the average national delinquency rate in community associations is between 8-10%. Communities that utilize the best practices we’ll go over in this article can see their delinquency rates drop to 3-4% or lower.


There is a huge swath of methods associations can use to collect from delinquent accounts. From law offices to even using credit reporting, there are distinct pros and cons to each different method we’ll quickly touch on.

Law offices are one of the most common ways community associations collect debts. While they can sometimes be effective, law offices tend to use the same passive process for every debt. This process may work for some collections, but there are many ways to improve upon this cookie-cutter approach.

Another common mistake is assuming a law office that specializes in community associations will also be effective in debt collection. While the knowledge they have could be helpful, they might not have the expertise to proactively perform in a way that works for both the community and for the homeowner.

Another option for community associations are collection agencies. While these can be a good avenue for collections, a common problem with this model is when some collection agencies recover a debt, they may keep some percentage of the overall debt. For example, if they collect $3000 in assessments, they might keep 30% and only send $2100 back. In the end the association would have a deficit of $900 from the collection they have to make up somehow.

There are some collection agencies that specialize in community associations and offer an approach that recovers all of the principle. Equity Experts is an example of this type of agency, and we offer a deferred fee approach so the association has no upfront costs, and in 98% of the cases we return 100% of the assessments with no negative impact on community cash flow.

Occasionally credit reporting services will be used in an effort to get debtors to pay. The main issue with credit reporting services is that reports don’t only cover debtors, but instead they report on EVERYONE in the community, whether they owe money or not. While there are some indications these services might work, they are generally tedious for managers and boards.

DIY collections, while being an option, can be extremely problematic for the CAMs or boards that file their own claims or liens. If there is a mistake, or even an alleged mistake, there is a risk you could be personally named in any lawsuit that occurs because of your collection process. The initial targets for these legal actions are usually the board members or managers who sign the legal documents. There is also the chance board members or managers could be accused of the unlicensed practice of law, so if you do decide to utilize DIY collections, the best advice is to tread lightly and ensure you have appropriate compliance measures in place for state and federal regulations.

While some managers choose to do collections themselves, their success can be limited. Seemingly simple processes like filing small claims or liens can become complex when converting those actions into cash. If you are not prepared to do creditor exams, garnishments, foreclosures, etc., then you will underperform the market.  On top of this, managers now have to balance being in the business of customer satisfaction for their community while performing collections on some of their customers, so it can be tricky navigating the fine line between those aspects.

Out of all of these methods, the question is which collection service should your community utilize?

The answer is actually not one specific collection service, but rather a combination of all four methods with a heavy emphasis on technology, customer satisfaction and proactive outreach.

TECHNOLOGY for collections

The point of leveraging technology to make your job easier through efficiency and accuracy, so you should take advantage of every advancement available to you and your community.

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Collections don’t always follow a set-in-stone format, mainly because each situation calls for a unique approach. That’s where the use of debtor data comes in. The way we use debtor data is to examine each delinquency case by case and evaluate the best path to take for each unit.

Debtor data takes into account a variety of data points from each individual debtor, which could include their employment status, home equity, demographic and psychographic characteristics and more. Once we have all of these unique attributes, we are able to determine the next best course of action for each homeowner.

If debtor data is what determines how to go about a collection, then workflow automation is what puts that plan into action. A workflow automation system should map out the steps and processes we have to take for a collection and schedules the execution of those steps. This system helps ensure we communicate with each homeowner at the time and in the manner that is best for them.

When working with a debt collector, the typical process is to manually transmit your delinquency ledgers, and in turn the collector will send back a summary report and a bill you need to manually apportion to each account. This manual process can be cumbersome for boards and CAMs, so the solution we recommend employs dynamic reporting and API (Application Programming Interface) Integrations

The way dynamic reporting works is that collectors have limited access to delinquency data in your software.  This provides your collector with real-time delinquency data. Many management systems allow API connections so collection updates are visible in the management software, enabling the CAM/board to see those updates in real time without the need for supplemental collection reports.


In many cases, delinquencies are unrelated to a homeowner’s ability to pay. Sometimes it can be a homeowner just doesn’t know the gravity of their situation, or they decide not to pay because of other concerns or complaints, not realizing this ultimately hurts them. 

Through making the debtor understand the risk of inaction and presenting them options for debtor relief depending on their situation, a community can decrease their delinquency rate while maintaining a good relationship with the homeowners. We find the vast majority of homeowners we deal with will pay their debt within 90 days, long before legal action is needed, simply because we took the time to listen and help them resolve their account. Through using all of this new technology in collections, you can easily improve your community’s resolution rate.


The three ways your association can maintain an excellent customer satisfaction rate is through tracking your response rate, your success rate and your resolution rate.

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Your response rate should measure how fast and how effectively you respond to your clients. We view an adequate response rate as a 95% phone answer rate, a 25 minute phone call response time, and a 30 minute email response time. Being available and responsive to homeowners and CAMs/Boards is essential in getting quick resolutions for your clients.

The resolution rate is what we use to measure how fast an association can get money back for their communities. We find a good resolution rate is getting money from a debtor in around 90 days, which is achievable through using different methods to contact the owner as well as utilizing different payment methods and plans for the homeowner.

And finally, the success rate is exactly what it sounds like: how successful you are in recovering money for your association. Through utilizing these best practices, you can attain up to a 98% success rate in recovering delinquencies through the use of the different collection methods we talked about earlier, as well as a combination of technology, proactive outreach, and customer satisfaction.

Recently, Equity Experts was invited to present a webinar through the Community Associations Institute (CAI). During the webinar, we talked about these topics and more, along with answering some questions from our audience. If you would like to watch the webinar, you can go to the recording here.