HOA and Condo Online Payment Options: What is the difference between a Recurring Payment, a Variable Auto-Payment or Bank Bill Payment?
The greater number of ways an owner can pay your community dues the better. More and more communities are working with a financial /property management company to provide online payments in addition to payment by check. When it comes to online payments there are a few choices.
For HOA and Condo Online Payment Options: What is the difference between a Recurring Payment, a Variable Auto-Payment or Bank Bill Payment? We’ll review them one by one:
Bank Bill Payment: This is when the homeowner goes into their bank bill pay and creates a recurring payment for their community dues. This is a step in the right direction as the homeowner doesn’t have to fill out a check and mail it themselves every month. Nothing is required from the community as this is done through the owner’s bank. The drawbacks of this method are: 1) the bank is printing and mailing a physical check. The mail can take longer than expected and your mail can also get lost both of which result in potential late fees from your community; 2) If your community’s dues change you’ll have to manually go in and adjust your bill payment; 3) since you are not mailing it with a coupon this payment will go to an exceptions file which has to be manually associated to your account which can add a few days as well. Tips: a) make sure you leave enough time for the mail to get your payment in with time to spare including weekends and holidays; b) make sure you put your account # on the check memo so staff can associate your check to your account.
Recurring Online Payment (Fixed Payment): This is when your financial management company offers online payment processing. This is typically done by a 3rd party, vetted by banks, who specializes in payments and has systems and software to ensure your banking information is safe. The first benefit is this is more secure than traditional Direct Debit /ACH methods where the financial / property management company staff has to collect homeowner banking information. Another benefit is you can set up the payment to happen automatically on your set frequency. Another benefit is this removes the postal service from the equation so your payments post faster. Lastly, since you set it up the software knows what account this is for so there is no delay in working an exception like with Bank Bill Payments. A small inconvenience with this method is that if your association dues change, you’ll have to login and update your payment to the new amount. If you forget to do this you’ll be short paying your dues and accumulate a balance you at some point have to make an additional one-time payment to cover.
Recurring Variable Auto-Payment: This is an enhanced “Recurring Online Payment”. This option has all the benefits of the recurring online payment noted above. However, this also has the additional benefit of being able to automatically adjust to an increase in your community’s fees! How it works: the payment processor receives the payment information from the software your financial / property management company uses. When that increases if you selected this option your payment will automatically increase to the new fee. This saves you from having to remember and login to the system to adjust the payment. A helpful feature the payment provider Community Financials uses is an owner can set a max limit on the variable auto-payment if they feel anxious about this process. If the payment is above the max limit specified, the owner will receive an email to approve the payment. Note: if the owner had already set up a recurring online payment “Fixed Payment” and wants to switch over to a Variable Auto-Payment they will have to cancel the fixed and create a new variable payment.
When using either the recurring fixed payment or recurring variable auto payment there are three ways to pay. An owner can pay by entering their bank routing and account number into the payment provider’s secure site (management company staff do not see this info) and this is either free or has a minimal $1 fee. Or an owner can pay by bank debit card which has a flat fee of approximately $5-$9 or a credit card with a 3%-3.99% convenience fee. The owner pays these fees and saves the cost of the check, stamp and envelope or pays the credit card fee to avoid late fees and other delinquency process fees.
Community Financials believes that providing more ways for owners to conveniently pay their dues will reduce delinquencies and improve community cash flow. If you have questions about how to add these features to your community please feel free to Contact Us.
