The phrase “elephant in the room” refers to an obvious problem that everyone is aware of but no one wants to address directly. It’s something big and unavoidable, yet often ignored or overlooked because it might be uncomfortable, challenging, or inconvenient to confront.
Within the community association management industry, there are many elephants lurking in the room. Complex and ever-changing legislation, burnt out management staff, board member frustration – the list is endless. The good news is that management company owners have the ability to control most of the core challenges facing the industry today.
Let’s talk about one of the biggest – and most often overlooked – elephants in the room: HOA delinquencies. Nationwide, community associations shoulder a staggering $9 billion in delinquencies and collection costs, most of which stem from legal fees. The collection process, which is often cold and impersonal, only adds to the strain of struggling homeowners, making an already difficult situation worse.
The problem with an outdated collections process results in some of the other elephants we’ve mentioned earlier, such as management burnout and board frustration. But here’s the bigger problem – most management companies don’t realize that their collections process is outdated.
With the rise of Generative AI in community association management, the HOA collections process is primed for a transformation that doesn’t just focus on collecting debts, but on doing so in a way that benefits both the homeowner and the association. By automating key components of accounts receivables (AR), association management companies can enhance their efficiency while properly mitigating difficult conversations.
The Problem with Traditional HOA Collections
You may be reviewing your collections process within your management company and think, “What’s the big deal? We’ve always done it this way.” And since you have many big priorities to tackle, changing your collections process could be at the bottom of your to-do list. But when owners consider the amount of time and stress debt recovery takes, many realize that drastically cutting time spent collecting debt would actually give you the ability to prioritize more of your to-do list.
Transforming HOA Accounts Receivables with AI
Generative AI is disrupting the status quo by enabling HOA collection processes to be both efficient and empathetic. Imagine, if you will, that a Gen AI solution could study the psychographics of a homeowner to determine and automate the recovery process based on their communication preferences. Imagine if that AI can also determine the likelihood in which that homeowner will make a payment, therefore empowering the manager to prioritize their own communications and properly prepare for legal ramifications only when it’s necessary.
Oftentimes we think of Gen AI as technology that removes personnel from tasks, perhaps dehumanizing our world. The reality is, when AI is embraced to support individual needs, the opposite trajectory happens. Homeowners feel more heard and connected, while managers can spend more time focused on high level strategy for their communities.
Benefits of AI-Driven HOA Collections
- Cost Savings: AI can significantly reduce the cost of collections because of the decrease in third party involvement. What’s more, by using Gen AI to determine which homeowners are most likely to need third party involvement, managers can better estimate their differing legal needs.
- Improved Efficiency: Automating the accounts receivables process with AI enables faster resolution of delinquent payments. Automated communications reach homeowners quickly, while AI-generated repayment plans are designed to fit the individual’s circumstances, leading to quicker recoveries.
- Better Community Relations: AI-driven communications are personalized to the timing and preferred methods of the homeowner, making them feel heard and supported. This helps maintain positive relationships within the community, even during tough times.
The Future of HOA Accounting with Gen AI
The rise of AI in HOA accounting isn’t just about new technology—it’s about reshaping how community associations handle debt recovery and community relations altogether. Generative AI offers a solution to the $9 billion elephant in the room, providing a way to streamline the collections process while preserving the integrity of community relationships.
To learn more key insights and emerging trends on this topic, download our report and see how you can transform your collections process for good.
