By Janet Romano / Published August 2016
Community association board members and managers rely on accurate and timely financial information to make decisions and effectively manage their communities. As bank technology has improved, more and more boards and managers are trying to evaluate which of these new bank services will benefit their organizations. Some of these bank services are widely used and accepted by associations, and some of the newer offerings are just being understood and applied to the community association financial management arena.
Accounts Receivable Lockbox—this is probably the most widely used bank service. This service allows unit owners to make their assessment payments directly to the bank. The bank deposits the payments into the association’s account, notifies management of who paid and what method of payment was accepted, shows images of the payment received, and interfaces with the association’s software to update unit owner accounts. Most banks offer many ways to pay, including direct debit, checks issued by bill pay services, and credit and debit card payments, as well as checks.
Remote Deposit Capture—this service allows the association to deposit checks without going to the bank or filling out deposit slips. It requires the use of a check scanner and the Internet. The scanner captures the image of the front and back of the deposited checks. Advantages include later deposit deadlines, convenience, and cost savings by saving the expense of courier service or employee time away from the office.
Mobile Banking—this technology allows the association to deposit checks using images captured on a smartphone. It is not widely used by associations.
Direct Deposit of Payroll—with direct deposit of payroll, an employee’s net pay is automatically deposited into that employee’s checking or savings account. This prevents a paycheck from being lost or stolen, provides immediate availability of funds for employees, and reduces the chance of check fraud for the association.
Positive Pay—this technology is designed to provide enhanced security for the check disbursement process. The association provides the bank with a file listing check number, date, amount, and payee of each check issued. The file is provided to the bank, and the bank compares each check presented for payment against this file. Checks that do not match are listed in an exception report and the association can verify whether the check should be paid by the bank or returned unpaid. This service provides enhanced internal controls, identifies posting errors as they occur, safeguards the account from tampered or counterfeit checks, and expedites month-end bank reconciliations.
ACH Block—this system allows the association to inform the bank which companies are allowed to initiate automatic clearing house (ACH) debits against the account, and blocks all other ACH debits, preventing fraud on the accounts via the ACH system.
Accounts Payable Lockbox—this fairly new technology has begun to streamline the way community association management companies do business. In the best systems, the bank works with management to notify all vendors to send bills to the bank’s accounts payable lockbox. The vendors that can send electronic bills are encouraged to do so, and those who use paper billing should mail their invoices directly to the lockbox. All invoices are scanned. The bank works with the management to integrate the payables lockbox with their accounting system. Parameters can be set up for each vendor and for each association so that proper approvals are in place to expedite payments. Managers and board members can view and approve invoices online, and invoices can be approved and scheduled for payment at a later date. These systems are secure, and with a smartphone, a board member can approve invoices on the go. For the manager, reports and payable information is instantly retrievable via a smartphone, so board questions can be answered in detail at a meeting.
As you can see, the technology keeps improving, and the industry is evaluating what is useful and what to adopt. Your banker can be an important part of your management team and, as always, should be willing to demonstrate how these products work to help you decide if they will be a benefit to your association.
Senior Vice President of Association Services for Stonegate Bank
Janet Romano is Senior Vice President of Association Services for Stonegate Bank. Stonegate Bank, the private bank for business, specializes in loans to all types of community associations—condominiums, co-ops, and HOAs. Loans are provided for repairs, mortgages, emergency lines of credit, capital improvements, insurance premium financing, and low closing costs. For more information, call (866) 227-0441 or visit www.stonegatebank.com.