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Maintenance fees – Waterfall or trickle?…The A-B-C’s of assessment billing & collections

by Paul D. Goodrich
Vice President of Inveentory Control
SPM Resorts, Inc

Published November 1, 2008

Remember the Dusty Springfield song, “Wishin’ and Hopin’”? The gist of it was that wishing and hoping wasn’t going to be enough to win a guy’s affection. Dusty sings, “You’ve got to show him that you care.” Wishing and hoping won’t get resorts anywhere with their owners annual assessment fee receivables, either. In a way, successful resort managers need to follow Springfield’s advice and show owners we care about seeing that every owner lives up to their resort’s assessment fee obligation.

As president and coo of Palmetto, a resale marketing company, and vice president of inventory control of SPM Resorts, Inc., a multi-site management company, I don’t claim to be an expert on music, but when it comes to communicating with owners, you’re singing my song.

When we check our owners in at the front desk with a big, friendly smile and make sure their unit is clean and fresh; when we use mail and email to perform owner outreach and communications and when we hold our annual and quarterly (or more frequent) BOD meetings, we’re telling them we respect, need and like them and want them to stay in our resort’s “family.” But, when it comes to ensuring our owners pay their fees on-time and in full, we need to ‘sing a different tune,’ if you will. We need to take bolder steps. Remember, in tough economic times, your owners will prioritize their obligations by relegating the least necessary items to last place. A worthy goal for a resort is to persistently and, whenever possible, gently, remind the owner that their vacation ownership purchase is a necessary and vital part of their mental, social and physical wellness program.

Here are some steps to ensure your receivables flow like a waterfall, rather than trickling in like a leaky faucet:

A) Provide No-‘Buts’ Bills.
Provide your owner with such a succinct and clear bill, there will be no ‘buts’ about what, why, when and how much they owe. By the time you read this in early November, we hope you will have already sent out your annual assessment invoices and received at least 50 percent of your payments.

We manage several resorts with January deadlines for annual fees. Among these are Sea Watch and Royal Dunes, located in Hilton Head, South Carolina. Each year for the past few years, we’ve been able to report to their February Board meetings that 91 to 92 percent of their fees have been collected without requiring late fees or interest. But this wasn’t the case when SPM Resorts first came on the scene. We had to work to reassure owners that their invoices were accurate. Plus, we had to instruct them as to the ‘new’ policy, showing them how to make payments and when they were due.

If you’ve received less than 90 percent of your resort’s annual assessments by year-end, maybe you need to take a look at your invoices to make sure they’re accurate and contain clear instructions. Does your invoice have an 800-number and email address for owners to use if they have a question? Is it easy for them to see to whom, where and how to send their payments, and when they’re due? Are any special assessments clearly defined? If there has been an increase in the annual assessment, is this explained?

How about your owner list? Hopefully, your team verifies the owners’ addresses, telephone numbers and email addresses at check-in and on the phone. But, did you know the post office also has a service available to verify addresses? For more information, look at http://www.usps.com/business/addressverification.

B) Conduct Consistent Collections.
Set up a collections program that is consistent and considerate. Allow me to explain. At SPM Resorts, we send out invoices for the resorts we manage as early as the Master Deed and Bylaws allow (when allowable up to 2 – 3 months before the payment is due) prior to the due date and follow up with a series of reminders and late notices that gradually become more serious in tone. Our owners are clearly informed as to when their amounts are due. We encourage them to make contact and communicate with us before the collection charges get added as well as do outgoing calls where possible. We are considerate of the owner and respectful towards them at all times. But we remain firm.

Every resort has an owner or two who is consistently late. However, following the same routine year after year will greatly reduce the number of stragglers. It will also empower your staff when they are able to demonstrate that enforcing the collection of a late fee is not their decision, for instance, but rather the resort’s regular policy.

Today’s consumers are accustomed to paying by credit card and most resorts can accept payments by telephone or on-line. Smaller resorts may wish to partner with a management company to handle these functions.

Overall, we have found the key ingredient for success in collections is consistency. Sending out clearly-worded, accurate invoices and communications and then sticking to a uniform policy will assure great results. For example, when we took over the management of one of our resorts on Cape Cod in 1999, the homeowner association (HOA) was only able to collect 78 percent of the annual assessments. After clearing up some inventory issues, we were able to straighten out the HOA’s database of owners, do some skip-tracing to find quite a few delinquent owners and put together an accurate billing program. Now that a few years have passed, the resort’s income is now a much more amenable 90-plus percent each year.

C) Establish a ReSales ReSource.
Inevitably, there will be owners who simply cannot meet their annual assessment fee obligations. In such a case, resorts can ask for a deed-in-lieu of payment; in other words, request that the owner surrender their vacation ownership week or product, in exchange for the right to walk away. If your resort does not already have one, your resort management needs to establish an effective resales solution. A resales program that benefits both the resort and the individual owners pursues two fundamental objectives:

1. To sell the weeks that have been returned to the HOA through foreclosure, deed-backs, and bankruptcies, while maintaining as much of their value as possible.
   
   
2. To offer an outlet for owners who wish to resell their weeks.