EXCEL Association Management on Credit Reporting with Sperlonga


Grant: Adam, how are you sir?

Adam: Hey, doing great Grant. How are you?

Grant: Very good, very good. Appreciate you taking the time to join me today for this zoom video. I'm really excited to have you on. Excel, as many people know is one of the largest and best managed companies in Texas. Well, you are renowned, well known throughout the industry. But we're really happy to have you on, really happy to be partners with you. I wanted to take just a few minutes of your time today and just kind of run down, you know, you guys have been reporting now for about nine months, give or take?

Adam: Yes.

Grant: And just wanted to get sort of your impression of the service and some of your thoughts on it. Is that all right with you?

Adam: Absolutely.

Grant: Perfect. So let me just start at the beginning. What were you guys doing before we were added to your collection process? What was your standard sort of method?

Adam: So, you know, at the beginning our managers would go through the AR reports, determine who needs to be sent a letter for collection. And we get that all processed and send a letter and as it goes they pay or they don't pay and then sending another letter. And it was a very manual process to try and track these down and not to even mention getting into attorney action or anything like that. And so, it was a very manual process that we had to go through to try and get these accounts paid current.

Grant: Because of tens of tens of thousands of units. So, that’s massive.

Adam: Yes. I mean, we're managing thousands of doors across the North Texas area. So it was a big time suck for our managers to go through each of their associations AR reports and say, "Oh, send this person their notice or skip this person for this time." And so when we switched this for longer, they kind of automated that whole process in a way. And took a lot of that time consumption out of our managers monthly routines.

Grant: Awesome. And where you guys given any kind of benefits to the homeowners that were paying on time?

Adam: Unfortunately, the only benefit that homeowners who paid on time got is that they wouldn't receive an angry delinquency letter. But outside of that, there wasn't really an incentive for anyone to pay on time other than the headache of, or monetary issue of paying a late fee, dealing with an attorney or anything like that. It was always the threat of more monetary fines.

Grant: Right. And now they get the positive points on their credit score every single month.

Adam: Yes. Yes. And now we have thousands of homeowners who pay on time getting those positive marks to their credit, just for doing what they've already been doing at no additional cost to the association.

Grant: That's awesome. And how did you - when you guys had heard about us and had been talking with us, what was it that caused you to pull the trigger, helped you decide to do business with us?

Adam: Well, several of our associations had been asking for credit reporting and we tried it with another company years and years ago now, and it wasn't really at a place or in a process that works with us, but when we started talking with you guys it had really gotten a lot more sophisticated and just kind of melded into our processes very easily. So it was easy to pick this up and provide this service to the associations who wanted it. And then even the ones who didn't think that they wanted it, we could present this to them as an additional option to leverage. And many of them have loved having that additional tool in the arsenal.

Grant: That's awesome. That's awesome. Do you find that that tool in the arsenal as you call it, helping you guys win business? Differentiating yourself in the market?

Adam: I think what we've started to notice is that, credit reporting is becoming more and more common. So I wouldn't say necessarily that it's differentiating us, but we're not losing business because we're not providing the service. You know, it's not a service for all associations. Some want to be more hands on and go knock on their neighbor's door. But other big associations or associations that do have an issue collecting money they want as many options as possible to try and collect these. And once you send a first or a second letter and you don't have a response, it doesn't matter if you send 10 more letters, you're probably not getting a response from that person. Most of the time, if you send a first letter, you know, "Oh my gosh, I forgot to pay you. I'm so sorry." And it gets brought up. So once you're in the two plus letter stage, it's a hard truth, but you know, you may not be getting that money back without legal assistance.

Grant: Right, right. You know, and that's bringing up a great point. I think it might be a good segue to talk about some of the performance stats. And we're into the ninth month now, over the first eight months, you know, we've been able to recover, your associations were able to recover $265,000?

Adam: Yes. And that's so great. Like $100,000 of that is a debt that's been over 180 days old. And so...

Grant: In that multilevel letter bucket, right?

Adam: Absolutely. I mean, and you know, in these past nine months, that's a decrease in 38% of our total delinquent accounts across our portfolio. And that's without any additional letters hitting the mail, without any additional work from any of our staff in our office or anything like that. It's just another automated process that we've started and our associations have seen that 38% decrease.

Grant: That is awesome. Yes, those numbers are just stellar. So kudos to you and your team for, you know, I mean notification and getting the word out there. That's a big piece. And you guys have been really great with that. Companies that really just do it by the book and get it in front of people and show the benefits and, you know, let the other delinquent folks know this is happening. That's because to see that, that money is coming in.

And so, you're talking - I don't know if you want to talk anymore on where it's improved on your business and the results you've achieved obviously. The reductions to the delinquent balances for your clients. But you're saying that it lowers the workload, removes that workload for your managers. I mean, is that something they talk about with you regularly? I mean, you just see a happier face all the time? Or "Stacy, she's got Sperlonga, I can tell."

Adam: Well, it's an interesting dynamic because as you know, we serve the associations and the boards. And so some boards have taken this and completely eliminated any other type of collections process and decide to use this as the main means of trying to gain collections. But others, they still want to keep some of their same processes in place, whether it's just not wanting to change or maybe they have a particular policy in place that they need to follow. But in those instances, you know, that's at least a set procedure, but the ones where they decide to leverage this in its entirety, I mean, the manager doesn't need to do anything from a collections point of view, on a month to month basis. And then if after say six months, someone still hasn't paid and they're not doing credit monitoring, so they don't even know that this is happening or they've stolen the letter in the mail, letting them know that it started, then the association can begin consulting with an attorney to try and gain that collection.

Because, you know, like I said earlier, it's just another tool in the arsenal. And not all tools work on the same person, but it works on, like I said, 38% of the people. And that's been huge to cut down the attorney fee costs for our associations. For many of the attorneys that our associations use the first letter that they send to a delinquent owner is equivalent to about six months of credit reporting. And so a lot of associations kind of holster the attorney until credit reporting has gone on for a few months and they know, "Okay, this person is not paying. We need to put a little more pressure on them."

Grant: Right. And that's a great point. I mean most people, they think, "Oh well we like our attorney." We don't replace the attorney, right? You absolutely have the sledgehammer right over there.

Adam: [laughs] exactly.

Grant: …put a lien on the property. You need to foreclose. You need the lawyers to prosecute these accounts. But like you said, this is a more of a scalpel, right? This is the tool to come in and shave around the edges. Okay, we can clean up a lot, but sometimes you still need to foreclose. So, you need the attorneys.

Adam: Absolutely.

Grant: And we love working with them. I mean, we've talked to a lot of your attorneys down there and you know, they sing our praises. And like you said, when you put it together as this cohesive collection policy, best practices, they work sort of hand in hand. And we help their efforts, they help our efforts and your efforts and so great relationship with those folks.

Adam: Definitely.

Grant: And so did you think the service would have as big of an impact as you've seen?

Adam: I mean, I don't think I had a specific number in mind when we got started with you guys. I was more excited to see what it would turn out to be. But you know, that 38% change has been a welcomed change to our number of delinquent accounts. I think if I had to put a number in the back of my mind that I thought I would see it would have been, you know, in the 20%, 25% range. Just kind of shaking the tree, getting about a quarter of 'em down. But you know, nine months in we're knocking on the door 40%. And that's outstanding.

Grant: That is great. And most people think of a much lower number. I know, I think you as a tech savvy guy can quantify the power of credit reporting a little bit better than some people. And people are like. "Oh put this up. Maybe we get a 5% reduction." You know, I think it's great your target was 25. [Laughs]

Adam: The big win is really that it's changing the behavior of a lot of the homeowners. Because you know, we'd always have those problem people who just ignore the notices of the association and everything, rack up the late fees and then just pay it all in one fell swoop before it goes to the attorney or right after it does. And that's just how they decide to deal with the association. And yes, the association gets its money, but some associations have a cashflow issue or they're a condo and they have a lot of things that need to pay month to month and maintenance that comes up. So even though they get that money at the end of the year perhaps, or whenever that homeowner decides to pay, the association is still kind of in a bind up until that point. Or on the flip side, we'd have people who receive a late notice and decided to be cutesy with it and just ignore the late fee. And that sits on their account indefinitely.

But now that we're using Sperlonga, it's really cut down a lot of that because people are seeing that that behavior causes an adverse effect to their credit, which of course touches all other aspects of their lives. And so I think that's the biggest win that we've seen after starting with Sperlonga.

Grant: Adam, how likely are you to recommend us to other people?

Adam: Oh, I mean, I'd recommend Sperlonga as a service to any association who, or management company who's just looking to diversify how they would like to collect. As I mentioned earlier, it's not for every association and each association is different, but the ones who have been asking for it and want it, it has been a godsend. I mean, it's just been a really nice feature that people have been asking for for a while that we can now provide to our clients. I mentioned at the onset how we kind of tried credit reporting with another company several years ago now. But you guys have just really timed up the process, made it really easy for us to implement across our portfolio.

Grant: That's awesome. Well, thank you so much, Adam. I really do appreciate your time. Just an excellent interview.

Adam: So thanks so much. Grant. I love what you guys are doing and I appreciate you taking the time to talk with me about it as well.

Grant: This is Adam Clark, a Senior Executive at Excel Management out of Dallas, Texas.