...From the Third Party

by Linda George
President
Crawford Associates, Inc.

Welcome to the continuing dialog in support of a third party agency for collections. While this issue focuses on the Resort Home Owners Association, new readers can obtain previous articles from the Resort Trades’ Management & Operations magazine or under Articles on our website www.cairesortservices.com.

We are well into the new year and by now your management team has a report of unpaid assessment balances to consider. What action would reduce those balances, increase cash flow and help meet annual budget demands? Contracting a third party collection agency of course!

There are tremendous benefits to outsourcing this task to experienced and knowledgeable professionals. This article will expound on a few of those benefits and provide suggestions for choosing a third party agency.

With fourteen years experience in vacation resort collections, we understand few resorts can add extra staff or employees qualified to handle these duties and putting your organization at risk of defending a court case is just not an option. Even the larger resort groups have a designated office/department for in-house collections with trained, experienced staff. A third party agency can benefit a single resort association or a resort management company by providing such a collections office/department. The larger resort groups can also benefit from reduced workload and expenses by outsourcing the annual association collections and dedicating their staff to priority mortgage collections.

A third party agency can provide up to the minute activities on each collection account over a secure Internet connection, benefiting the association with accurate, detailed records. (A humorous but true example: A delinquent association member advised the management office they had never heard of our agency nor had they had any contact from us. The detailed history of the individuals account provided the dates of numerous letters as well as the date, time, collector name and notes from each telephone conversation-immediate payment resulted.) The association also benefits from reports for use in board meetings, to monitor productivity or specifically designed to meet a particular need.

A third party agency can assist your organization in meeting the regulatory requirements for collection activities. They can enforce the association by-laws by assessing any late payment penalty or monthly interest those documents allow. Utilizing these additional sources of revenue is always a benefit for the association budget. Most by-laws also allow the cost of collections to be added to the delinquent account balance. With due diligence to protect against excessive charges, the association benefits from a no cost service and the delinquent owners benefit from lower penalties.
Reducing stress for the resort staff is one of the greatest benefits a third party agency can provide. Whether a delinquency was created by default, health, job or financial difficulties, when a delinquent owner vents frustration by telephone a third party agency is trained to recognize and circumvent these calls. Staff members avoid the confrontational owner and remain focused on resort services.

There is just no down side to contracting a third party agency for the collection of delinquent maintenance fee and tax assessments. Therefore we will make some suggestions for choosing a third party agency.

The most crucial point we can make is that YOU are the CLIENT! Choose a third party agency that meets your needs, not one that makes demands from you. And remember, you have negotiating power when contracting fees with a third party agency. Lenders or billing and receivable providers may also offer collections, those services should be evaluated the same as any third party agency.

Some considerations we suggest for evaluating third party agencies include a demonstration for accessing and using websites to view records and reports; a written description of collection procedures to determine the attention your portfolio will receive. (How many/often collection letters are used, how many/often telephone contact is attempted.) Scrutinize contracts for additional fees such as for skip trace locators, return mail processing, or hourly fees for computer programming changes you may request. Make several calls to the office over a period of time to evaluate responsiveness and be sure to contact references.

Considerations are also suggested for evaluating special services provided by the third party agency. When the association has an interest in recovering title to unpaid weeks (avoiding the expense of lien and foreclosure action) compare the procedures for this service as well as the cost. An association with active sales should also evaluate third party agencies with timeshare-trained collectors. Such specialized training allows these collectors to re-sell the delinquent member on the benefits of ownership, provide a desirable addition to customer service, identify and promote problem resolving.

The differences in third party agencies become apparent when such factors are compared, and those differences can determine your choice. If unskilled computer users will access the websites, then the most user-friendly would be the better choice. And if personal customer service is important, then avoiding automated phone systems and voice mail would be the better choice.
Still not sure a third party agency is right for you? Negotiate a short-term contract, allowing the association to receive all the benefits while making that determination. If you are not 100% satisfied, by all means terminate the service following contract stipulations. If one agency does not meet your needs, continue with short-term contracts until you are completely satisfied.

Lastly but of equal importance, the philosophy and commitment policy of the third party agency should reflect your desired character and ethics. A third party agency who is committed to best serving their association client will be a devoted and loyal ally with the surprise benefit of developing lifelong friendships.

Congratulations to those who share a close working relationship and enjoy the many benefits provided by service...
...from the third party.