How Bad is the Bad-Debt Problem?

Just how bad is the bad-debt problem of The Summit's HOA?

Every month the financial report includes this statement: "Collection activity is currently being conducted in accordance with Association policy."

For years I have said that there is either something wrong with collection activity or with the Association policy, or both.

Review the problem. Line 1200 in the monthly financial statements is Accounts Receivable. Line 1300 is Allowance for Uncollectible Accounts.

Line 1200                     Line 1300

Accts. Rec.     As of     Allowance*  Percent of A/R

$360,203.86  12/31/20 $263,621.85         73.2%

$373,450.65  12/31/21 $340,906.19          91.2%

$428,833.59  12/31/22 $404,495.43          94.3%

$441,421.22  12/31/23 $397,279.10          90.0%

$498,657.27    3/31/24 $397,279.10          80.0%

$379,739.43    4/30/24 $299,167.13**      78.8%

$473,997.99    9/30/24 $299,167.13          63.1%

$447,445.77  10/31/24 $299,167.13          66.9%

$436,466.71  11/30/24 $299,167.13          68.5%

$429,575.52  12/31/24 $299,167.13          69.6%

$632,517.76    1/31/25 $299,167.13***     47.3%

* Allowance for Uncollectible Accounts

** Between 3/31/24 and 4/30/24 the Association wrote off $118,97.84 in Accounts Receivable and $98,111.97 in Allowance for Uncollectible Accounts WITHOUT any Board action at an monthly Board meeting and without mention in the Minutes. Why was this done in secret?

*** Why hasn't the Allowance for Uncollectible Accounts changed since 4/30/24?

The $632,517.76 balance for Accounts Receivables jumped in January 2025, when a large number of homeowners did not pay the January $255.00 assessment on time. If all had on time, the Association would have collected $632,400 (2,480 x $255).

Accounts Receivable increased $202,942.24 between 12/31/24 and 1/31/25. Does that mean that 795 homeowners (32%) did not pay on time? How many paid in February?

Would it be wise for the Association to have its own accountant/CPA to advise on what is really happening with the Association's money? 

The Percent of A/R number is not reliable, because the Allowance for Uncollectible Accounts did not change in nine months.

The Board never reveals how many homeowners are in arrears or how far behind they are. How many homes are in collection, and how many are in foreclosure?

The HOA is a non-profit corporation, but it is not a charity. The Board must collect the dues. 

Is there one financially-astute board member who should be in charge of reporting monthly to the Board and the Members on this important category? Or is that the role of the Property Manager?