Ten Tips for a Successful Maintenance Fee Collection Cycle

“Maintenance fees are the lifeblood of a timeshare resort association,” is a statement you’ll hear Bill Young, President/ CEO of SPM Resorts, Inc., say frequently. Collecting maintenance fees is the very foundation of a timeshare resort’s annual budget, making the billing process critical in the continued success of an association. Drew Langway, vice president of financial services for SPM Resorts, shares ten tips for resorts to incorporate into their billing cycles to ensure accuracy, timeliness, and customer service to help keep the delinquency rate low and contribute to the overall success of the resort for its owners.

1. Establish or update your resort’s collection policy.

Having an effective collection policy in place is essential to collecting maintenance fees from your owners. Items in the policy should include the maintenance fee due date, the date that late notices will be sent, late fees and interest amounts that may be associated with past due balances, the dates delinquent accounts will be turned to a collection agency, and any other actions that may happen as a result of an unpaid maintenance fee bill including, but not limited to, foreclosure and inability to use the unit.

2. Create a schedule with deadlines.

There are many people involved in making a maintenance fee billing successful, and creating a scheduling calendar with tracking in place to keep up with deadlines will make the process smooth. For example, deadlines that should be established should include a target send date for the mailing, a list of possible inserts to include with the billing, a target date to receive the inserts, a review period, upcoming board meeting dates, upcoming annual meeting dates, board approval deadline, the date the final contents are due to the mail house, a reminder email schedule, and any other items that may be included in the collection policy.

3. Establish a system of checks and balances to ensure the billing is free of errors.

When you manage a large billing, a small error can result in a big expense if the mailing needs to be sent again. Therefore, preparing the billing documents well in advance and having a system of checks and balances in place to make sure all items are accurate will result in an error-free billing package. There should be plenty of time for resort staff, corporate staff, board members, and any other team members to review and make subsequent changes to the contents. Langway noted, “Over the years, we have created a system that includes folders with printed checklists, which are circulated among designated staff with places for approval signatures. Our system of checks and balances has evolved over time and ultimately minimizes the chance of error.”

4. Make sure the owner addresses on file are accurate.

Preparing the mailing is another key step in the process, and making sure the owner addresses are up to date by using a company to cross-check the addresses on file against the standardized postal addresses will reduce the number of returned statements. Throughout the year, asking owners when they check-in to verify their contact information and allowing them to update it online will also keep your database up-to-date for annual billings.

5. Bill early.

Billing early gives owners a chance to plan for making that annual payment. It is not abnormal to have bills sent out as early as 4 months prior to the due date. The collection policy adopted by the Board will often dictate how early a resort can bill and it needs to be consistent with the governing documents. For example, some associations may have to hold an annual meeting prior to sending the annual bill. Those annual meetings must be held in a specific month as found in the association’s governing documents.

6. Make the maintenance fee bill package about the maintenance fee bill.

Keep the contents simple to not distract from the purpose of the mailing. Promote the ways the owners can pay the bills, but do not include so much information in the envelope that the maintenance fee bill gets lost in the contents. Reducing the clutter will reduce any potential for confusion: just include standard information that is related to the billing statement like payment instructions, the budget, the collection policy, and the check-in calendar. Use a newsletter for the other topics like resort updates, upcoming events, and fraud warnings, and mail it separately from the maintenance fee bill.

7. Find the most efficient ways to process payments.

Langway explained, “When it comes to processing owner payments, the goal is to increase efficiencies and decrease manual posting errors. We offer a lockbox option and online payment options in addition to resorts’ accepting payment over the phone or in person.” He explained the lockbox system that SPM has in place, and continued, “The payments are directed to a lockbox set up by our financial institution partner, who accepts and processes all payments. This reduces the impact on the resort staff, so they can focus on resort operations, and it minimizes the chance of errors.” The bank sends a digital remittance file that is uploaded to the association’s property management and accounting system, keeping track of all owner payments.

8. Provide great customer service by offering methods of payment that make it easy for your owners to pay.

Making it easy for your owners to pay will boost your ability to collect their maintenance fee. Langway offers some examples of options that work well for SPM and said, “Our secure, log-in protected Owners’ Portal allows owners to pay using a credit card or eCheck. This year, we launched a recurring payment option that allows owners to pre-pay their maintenance fee, and spread out the payments into smaller increments throughout the year. We have seen a big increase over the years in the number of owners opting to pay their fees online, and we expect it to continue to grow.”

9. Remind the owners about the billing several weeks before the due date.

Send reminders by email to owners that have not yet paid in the weeks prior to the due date to give them a chance to pay their maintenance fee before they begin incurring late fees. If you have the staff to handle it, “call-arounds” are effective as well. Placing a friendly call with a reminder to those that have not paid and explaining the various payment options will prompt the owner to make their payment.

10. Enforce the collection policy.

Finally, enforce the deadlines in the collection policy. Send out late notices with the late fees established in the collection policy right away. Turn over delinquent accounts to collections by the date established in the collection policy. By delaying any of the actions set forth in your plan, your resort will have less of a chance to collect the annual maintenance fee from your owners.

Even if your resort follows these steps, you will most likely still have delinquents. For many reasons, it is inevitable that every owner that is paying today will not necessarily pay tomorrow. Bill Young recommends, “Having a sound strategy in place to offset delinquent accounts will ensure the continued financial health of the association. Rentals and an active sales program are critically important to generate income from the unused inventory. Our associations have seen great success with our rental program, allowing them to keep maintenance fees low for dues-paying owners while continuing to make improvements to the resort.”