When the economy shows signs of slowing down, one thing becomes certain: unpaid bills start stacking up. While no one can say for sure whether a recession is imminent, community association management companies need to be ready. The key to addressing economic uncertainty in homeowner’s associations? Staying on top of AR recovery.
According to Goldman Sachs, the probability of a U.S. recession in the near term has ticked up to 35%, signaling that management companies should start thinking now about how they’ll handle financial stress across their portfolios.
What happens to HOA assessments during a recession?
During a recession, accounts receivables may bloat as clients are slower to pay – or may even default – on bills. The same principle applies to HOAs and COAs. As homeowners face job losses, rising living costs, or medical bills, assessments often fall to the bottom of the financial priority list.
When communities aren’t prepared with systems to handle delinquent accounts quickly and compassionately, cash flow takes a hit; and that affects everything from reserve funding to vendor payments and operational stability.
Key Impacts of a Recession on HOAs and COAs:
- Increased Delinquencies: Economic hardship and job losses can lead to more homeowners falling behind on dues.
- Strained Budgets: A rise in delinquencies can reduce funds for daily operations, maintenance, and reserves.
- Higher Assessments: HOAs may need to increase dues or issue special assessments to make up for budget shortfalls.
- Amenity Reductions: To conserve funds, some communities may pause or reduce access to certain amenities or services.
- Need for Proactive Planning: Financial stability requires early action, including cost-cutting, strong collections, and transparent communication.
- Collections as a Priority: HOAs should prioritize collecting overdue assessments, possibly using collection services or legal support.
- Special Assessment Considerations: If needed, special assessments must follow legal guidelines and governing documents.
- Transparent Communication: Clear and frequent updates with homeowners are essential during financial uncertainty.
You can’t predict a recession, but you can prepare for one.
While one can make predictions based on micro and macro economic factors, the reality is, there’s know telling whether or not the United States will hit a recession this year. With that said, community association management companies don’t need to predict economic downturns. What they do need to do is prepare accordingly with a scalable, automated system for managing AR recovery that allows them to:
- Reach homeowners faster before accounts become legal matters
- Communicate in ways that reflect financial empathy and flexibility
- Reduce reliance on expensive, reactive legal action
That’s where Generative AI comes in.
How GenAI Helps Associations Stay Ahead of Economic Stress
GenAI workflows are already helping community associations respond faster and more effectively to delinquency, before legal escalation ever happens. With the right solution, boards and management companies can:
- Automate reminders and follow-ups customized to homeowners’ communication preferences
- Use predictive insights to determine which accounts are most likely to default
- Create flexible engagement paths that allow for payment plans and early intervention
- Reduce legal costs by resolving a majority of delinquencies before an attorney is ever involved
And when the economy tightens? These tools don’t break under pressure; they scale.
Resilient Communities Start with Smart AR Recovery
You don’t need a crystal ball to know that financial cycles are inevitable. But how you prepare makes all the difference. By implementing GenAI-powered AR recovery now, you’re not just bracing for a downturn; you’re building a more stable, resilient future for your communities.
Don’t wait for a crisis to start improving your collections strategy. Start today with smarter, faster, AI-driven recovery workflows.
To learn more about the impact of GenAI on AR recovery, read our comprehensive report, and reach out to us to learn about our solution for your management company.
