Speed up receivables collections. Get access to rent and dues quicker. Lockbox services makes it possible.

Property management companies and homeowners associations face unique challenges when it comes to managing their receivables. Failure to meet these challenges can negatively impact cash flow — which in turn, can lead to other financial problems that may threaten the viability of the organization. Receivables lockbox solves many of those challenges.

Fast and efficient receivables processing is crucial

Receivables for property management companies and HOAs consist primarily of dues and assessments paid by homeowners, usually on a monthly, quarterly or annual basis. Therefore, it’s critical these organizations collect, process and post these receivables as quickly and efficiently as possible in order to keep cash flowing smoothly.

According to Cadence Bank Senior Vice President and Corporate Association Services Manager Lester Santos, one of the most effective tools property management companies and HOAs can use to accomplish this is a receivables lockbox service from their bank. “This is one of the key bank services used by most property management companies and HOAs,” says Santos.

What is receivables lockbox?

Receivables lockbox is a payment collection and processing solution offered by banks to their commercial customers, including property management companies and HOAs. Here’s a brief explanation of how receivables lockbox works:

• Invoices for dues and assessments are sent to homeowners just like they normally are, but instead of listing the address of the property management company or HOA, the invoice lists the address of a special post office box for homeowners to mail their checks to
• This PO box is monitored closely by the bank, which collects checks at frequent intervals throughout the day
• The checks are then deposited with same-day ledger credit to meet early check-processing deadlines
• Once the checks arrive at the bank, remittance documentation (such as the payment coupon) is scanned and payment information is captured and sent to the property management company or HOA electronically

Same-day image and accounts receivable posting files are usually available with most bank lockbox services, as are customizable output files to streamline accounts receivable posting. In addition, check images are typically archived for up to seven years and categorized by unique client details. Proactive lockbox alerts can also be personalized to the property management company’s or HOA’s requirements, so they are notified of all check deposits on a timely basis.

A huge boost to efficiency and cash flow

Using receivables lockbox provides a tremendous efficiency boost for property management companies and HOAs, as well as helps improve cash flow management.

“Receivables lockbox eliminates an entire step in the receivables processing cycle,” says Santos. “Homeowners’ checks go directly to the bank, where they’re quickly deposited without any effort on the part of the property management company’s or HOA’s staff.

“The result is streamlined collection of receivables and enhanced cash flow, since assessments and dues are deposited much faster than if checks went to the property management company or HOA and then had to be deposited by staff,” Santos adds. “The property management company or HOA doesn’t have to deal with the front-end piece — they just have to manage reporting on the back end.”

Using receivables lockbox also makes it easier to keep track of which homeowners are current with their dues and assessments and which ones aren’t. This information can be downloaded and integrated into the property management company’s or HOA’s software system, and reminders can then be sent to homeowners who aren’t current in their payments.

More payment options = stronger cash flow

In the world of property management companies and HOAs, the more options homeowners have for paying dues and rent, the better. “Giving homeowners as many payment options as possible makes it easier for them to pay their dues and assessments on time,” says Santos. “And the more timely these payments are made, the stronger the organization’s cash flow.”

He notes that many homeowners prefer to pay electronically (by ACH bank draft or credit card), since the amount is usually recurring on the same date and in the same amount. “This is also usually the most efficient payment method for the property management company or HOA because it automates the collection of receivables and eliminates the need to mail out payment coupons,” says Santos.

But a large percentage of homeowners still prefer to mail a check for their dues or assessments, along with a payment coupon, to the property management company or HOA. Given that they need to offer the check payment option to homeowners, the question for property management companies and HOAs becomes how can they process checks as quickly and efficiently as possible.

“The answer is to use receivables lockbox services from your bank,” says Santos. “This is by far the best way to collect, process, and post dues and assessments paid by homeowners via check. In my opinion, receivables lockbox is an indispensable cash management tool for any property management company or HOA.

This article is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the article. The article is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.