Strata Debt Recovery: How to Get Unpaid Levies Back on Track

Australia’s community living boom is triggering positive change for the strata industry by placing skill sets, customer experience and efficiency under the microscope. And with unpaid levies set to remain a common financial challenge, strata managers need to master the four critical steps to initiating successful debt recovery processes.

According to Terry Kemp, general manager for Kemps Petersons Receivables, Australia’s leading levy-debt collection agency, unpaid levies are the domino that can bring strata properties to a standstill.

From void insurance covers, delayed repairs and maintenance, to an inability to pay for strata services and contractors, unpaid levies impact all stakeholders and increase the difficulties of management.

“Positive debt collection processes, however, that are navigated by the strata manager, provide a way to get properties back on track quickly. And managers should find the right kind of debt recovery should help reduce workloads and improve committee relationships,” says Terry.

With an erroneous past, debt collection can suffer from misconceptions and be feared by the debtor (the person owing the money) and creditors alike (the individuals who are owed money).

Australia’s debt collection industry has incredibly high industry standards that are closely regulated by the Australian Competition and Consumer Commission and a range of state and federal laws including strata regulations, credit protection laws, fair trading, privacy laws, and bankruptcy.

As Australia’s strata boom continues to unfold, managers should be guiding committees to collection agencies that have specialised industry knowledge. What’s more, they should have seamless online collection portals that encourage minimal face-to-face contact, have established recovery processes, and the desire to listen to their clients.

“Debt recovery should now be viewed as a tool that sits alongside good, compliant strata management and contributes to customer satisfaction.

“We have been delivering debt recovery for more than 70 years, so we know what matters to committees. And, it’s having a strata manager who knows who to recommend, understands the facts, and helps breakdown the funk that consumes committees when money is owed.

“It is, naturally, a highly emotive subject. When steered correctly by a strata manager, owners and committees will find there is less stress, and that the issue is generally dealt with in quicker timeframes. In my experience, there are four critical steps strata managers can take,” says Terry.

1 Communicating Obligations and Providing Information

From the outset of their interaction and consultation with customers, strata managers should provide information about owner’s obligation and responsibility to pay levies.

Terry says this should include providing owners with information, such as creating a website page or leaflet, that covers: 

– What levies are 

– Their legal responsibility to pay what’s due 

– Dispute management 

– How levy payments are determined – What happens in the long and short-term if levies are not paid 

– How levy notices are received – Due date for the levy

– Where the interest from unpaid levies goes – And confirm that strata managers cannot waive levies or interest at any stage.

2. Breaking Down Misconceptions – It’s Okay to Seek Help

While strata managers never want to portray that neglecting to pay levies is acceptable, Terry also discussed the importance of strata managers having the communication skills to let committees know that it is okay to seek help.

“People can fall into debt for all kinds of reasons, including changes in circumstances, divorce, and ill-health”.

Often committees are fearful of using debt recovery systems because there is a misconception it will result in costly legal battles. Likewise, debtors fear the processes too. Strata managers, however, play a key role in dispelling the myth that it is a rare and scary process.

“Debt collection isn’t about getting people to file for bankruptcy—it’s about getting people back on track and keeping strata properties compliant. Strata managers can help communicate this” says Terry.

3. Knowing the Facts

For managers, an important part of initiating these positive debt collection processes is knowing the facts. This includes knowing that debt collection doesn’t have to involve expensive legal battles. According to Terry, if managers know the facts and success rates, committees will be more likely to embrace such services.

“In fact, our data shows with our recovery cases, 85 per cent of claims don’t require legal action and the overdue money is recovered within 14 days”.

4. Being Ready to Recommend a Strata Debt Specialist

As the strata boom redefines traditional approaches, one such aspect that is sharply coming under focus is the strata manager’s approach to customer experience.

According to Terry, there is a lot to be said for strata managers who are professionally armed with quality referrals and contractors who can get things moving quickly again, and who deliver a comprehensive service.

“When it comes to selecting debt recovery organisations, strata managers should be recommending recovery agencies that have extensive industry experience and are certified by the International Organization for Standardization. Quality assurance means customers can guarantee a reliable service,” says Terry.

“It’s useful for strata managers to know how to look for this. If an agency is certified, an organisation should have displayed on their website— or collateral—a standardised ISO number. For example, ours is displayed as ISO:9001:2015 certified.

“The ISO stands for International Organization for Standardization, the following four numbers classify the standard of quality management, while the final four numbers demarcate the specific standards that are being met,” says Terry.

As the industry changes at a rapid pace and customers continue to rely upon the unique knowledge of strata managers, helpful tips on who to refer to and what to look for will be key to delivering excellent customer experiences and keeping committees on track.