Grant: Mike, how are you sir?
Michael: I'm fine today, Grant. How are you doing?
Grant: I'm doing great. I'm doing great. Thanks for taking a little time with me today. We've got Michael Crew, President, CEO of HMS Management, one of the largest and best run management companies in all of Georgia.
Michael: Well thank you very much. I appreciate it.
Grant: Well, one of our favorite partners. But yes, so I just want to get a little bit of your time today and, and run through a few questions if that's all right with you?
Michael: Sure. Shoot. What do you want to know?
Grant: Excellent. So let's start from the beginning. What were you doing before credit reporting was added to your collection policy process?
Michael: We do send out statements every month to everyone who has a balance. So we were sort of dunning them at a low level, I guess you would say. And then most of our clients have a collection policy, which has some kind of, I don't want to use the term acceleration, but some kind of increased enforcement, you know, there's a late fee and then after X many days they get a nasty gram from the board. It really comes from HMS, but it says, you need to pay up or you're going to go to collections. They get to 90 or 120 days or whatever that policy is. And we send them to the Association's lawyer and then the lawyer starts beating on him, so to speak. I don't have a lot of love lost for people who don't pay their assessments, so.
Michael: So, we just did the normal stuff except for the fact that I will say we send a late statement every month to anybody, whether they're a monthly pay or an annual payer, we send a statement every month if they're delinquent. So.
Grant: All right. And what sort of was the impetus of you guys finding Sperlonga and getting credit reporting rolling?
Michael: Actually, we were interested in credit reporting long before I ever learned about Sperlonga. We had had quite a few clients or prospective clients ask us, "Could we report to a credit Bureau?" Because I guess the board, the volunteers felt that that would help leverage their collections. And so, I actually hired a management consultant to go talk to Equifax and Experian and TransUnion about us reporting, joining the credit Bureau and reporting basically. And basically he came back with a report from all three of those guys that said, "You're too small and it's too difficult." So we threw in the towel at that point until Sperlonga came along.
Grant: Awesome. And so what's been your experience with the integration with your system? How does that, you know, we've been working for you, we're integrated with your platform. We try to make it very smooth.
Michael: Well, it's been good. I think, I will tell you that 90% or 95% of everything that goes on between our company and Sperlonga is handled by my accounting department. So, I'm not exactly in the weeds every day dealing with that stuff. But, I am sure if there was anything wrong, my accounting manager would be sitting in my office telling me about it. She's pretty much on top of everything that goes on in this company. But it's worked well. As you said, you're integrated with our software platform. So the work on our end is kind of minimal. We of course do have to deal with, I'm not going to call them false reports, but homeowners call in and say, "I got reported in and it's not right. Blah, blah blah." And you know, we turn that over to you guys to take care of it.
Grant: Yes. Disputes. So, and they'll do that. Right?
Michael: Oh, disputes. Okay. That's good. Whatever.
Grant: Right? Yes, they'll dispute. And know, 99.9% of the time, in fact, they were late.
Michael: Yes. I know, that's why it was kind of like, "Who cares?"
Grant: Right. And so, prior to this call, I have pulled a performance report and you guys have been one of our early adopters, like you said, you've been looking for this years before we even brought it to the market. But you've been reporting since 2016 and just running down some of these numbers here. Your associations have recovered $317,000 since the start date. When you heard that number was that a shocking number to you? We’re really proud of that.
Michael: Yes. Actually, I was a little surprised. Because, you know, uh, some, some boards want credit reporting and some don't. I don't necessarily agree with them, but they have free will, so we do what the client wants. So that number is pretty significant because it doesn't represent our entire client base. It just represents a slice out of it. Clearly it's working. I think even more interesting than the numbers themselves are one of my managers, it's funny because she just came to me like two days ago and told me this story. We, you and us just recently signed another one of our associations up to be a Sperlonga client. And their start date, their reporting start date actually isn't until October. So we haven't even started reporting there for them yet. And they sent out a notice to their neighborhood that said that they were going to report delinquencies to the credit bureaus. And the board president called in and said, "Boy, that works so well. So many people came in and paid their assessments.” They were so happy. Oh, clearly the leverage works. I mean, just the threat works. So, it's been effective. It's been effective and a good deal, I think for us and for our clients.
Grant: Awesome. And on the other side of that, were there ever any benefits given to the homeowners that are paying on time religiously?
Michael: Well, forgive my dark humor, but we don't haul them off to jail. So I guess they get that benefit. You know, when you pay your assessments, I mean, you get to use the swimming pool or the tennis courts. Amenities packages are a big thing in our market space. And so, they get that and, and I guess a homeowner has the satisfaction of knowing they fulfill their obligation, but there was no added bump to them. There's no dividend being paid. It's not like a credit card with points or anything.
Grant: So now they get the positive points every single month?
Michael: They do get something positive every month. And I think even more important though, really is, I mean, it's good that the other homeowners get the positive impact, but I can tell you I am absolutely positive of this. Okay. If you get reported in a negative delinquent account as a consumer, it whacks your credit numbers. And I've gotten my ear filled up more than once. Like people screaming about their credit numbers went down in 20 points. And that's effective, I mean, that is just plain effective. And it's really sad when we pile a 10% late fee on their account and they don't care. But when you touch their credit score. It lights them up. So, I like that. And our boards like that.
Grant: Yes. You know, we were looking at the numbers before the call and the number of delinquent accounts from start date to now has dropped 44%. And I know…
Michael: Yes. And that's a good value add for my company to be able to go back to my clients and say, "Look what we did for you." I mean, they do appreciate that. And they see it every month. We report delinquencies to them and they know that their delinquent account report is shorter than it used to be.
Grant: You know, based on all this, how likely are you to recommend us to associations or other management companies that might be thinking about launching this or bringing it to their toolbox?
Michael: Well, I'm not going to go back to all the people I've already recommended and tell them "I changed my mind." So, I think you're in good shape with me. Yes. I recommended you guys a bunch of times because I know it's working. I mean, I know it's working, so.
Grant: Well, we really appreciate it. We really appreciate it working with you, Mike. And thanks for taking the time today on this call. Once again, we have Michael Crew, President and CEO of HMS Management, best in all of Georgia.