Practical comparison
Advance or arrears payment of condominium fees
Every property manager must decide how to time fee collection: asking owners to pay their installment before an expense is incurred, based on the approved budget, or collecting the money after the building has already paid the costs, based on the final statement. This is not just a technical choice: it affects cash flow, the risk of unpaid fees, the size of year end adjustments and relationships with suppliers and banks. This guide compares the two methods, explains when each one works best and how to manage them correctly with the support of management software such as AmministraPro.
Compared
| Criterion | Arrears | Advance |
|---|---|---|
| Basis of payment | Final statement, after expenses have been incurred | Budget approved by the assembly, before expenses |
| Building cash flow | Depends on the cash fund, risk of advancing without cover | Regular, fed by periodic installments |
| Arrears risk | Concentrated at final statement time, heavier outlays | Spread over smaller installments, easier to monitor |
| Year end adjustments | Almost coincide with the entire annual charge | Limited to the difference between budget and final statement |
| Supplier relationships | More exposed to delays and late fees if cash is insufficient | Timely payments, lower risk of suspensions |
| Best suited to | Small buildings with stable ordinary expenses | Buildings with complex systems or planned major works |
Checklist for the property manager
- Check what the condominium bylaws say about the fee collection method
- Have the assembly approve a realistic budget if adopting the advance method
- Monitor the gap between installments paid and actual expenses during the year
- Send due date reminders well in advance and track every payment per owner
- Start reminders promptly and, if necessary, the injunction order in case of arrears
- Prepare the final statement with documented expense items and clear adjustments
- Consider using management software such as AmministraPro to keep budget, final statement and shares aligned
How the two collection methods work
Arrears payment means the building advances expenses using available cash or the reserve fund, and only afterwards does the assembly approve the final statement and allocate the costs actually incurred among owners, according to the ownership shares set out in articles 1123 and following of the Italian Civil Code. This has historically been the most common model in small buildings with limited expenses.
Advance payment, by contrast, is based on the expense budget approved by the assembly under article 1135 of the Civil Code: owners pay quarterly or monthly installments before invoices arrive, so the building has liquidity to pay suppliers, utilities and contractors without resorting to loans or delays. At year end the budget is compared with the final statement and an adjustment is calculated, either owed or due back to each owner.
Effects on cash flow and supplier relationships
Under the advance method the building has cash available from the start of the year: it can pay utilities on time, honor maintenance contracts and cover unexpected expenses without delays that generate late fees or service suspensions. This also reduces the risk of having to draw on the fund provided for under article 1135 for major works, because part of the provision has already been collected.
Under the arrears method, the building effectively acts as the one advancing funds: if the manager or the cash fund does not have enough margin, payments to suppliers can slip, with a real risk of late payment interest, suspension of supplies (a common case being electricity for common areas) or difficulty finding contractors willing to work on credit.
Impact on owners falling into arrears
Advance payment spreads the expense over regular, predictable installments that are easier for owners to plan for and easier for the manager to monitor: a deviation from the approved payment schedule shows up immediately, and reminder procedures or, if necessary, the injunction order provided for under article 63 of the implementing provisions of the Civil Code can start promptly.
Arrears payment, tied to the final statement, instead concentrates the outlay into a single payment or a few installments after the budget is approved: for the owner this can be financially heavier, with a higher risk of falling into arrears precisely at the moments when the payment request is largest, for example after a year with major works.
Budget, final statement and adjustments: who handles what
Under the advance method, the budget becomes the central document of the management cycle: it must be realistic, kept up to date and communicated clearly, because every installment paid by owners is based on that estimate. An overly optimistic budget generates large year end adjustments, which in turn fuel tension and disputes at assembly meetings.
Under the arrears method, the final statement carries all the informational weight: it must document every expense item already incurred precisely, because owners only see the amount due once the final statement is approved, without having already spread the cost over time.
In both cases, tracking payments, sending due date reminders on time and recording each owner's payments individually are tasks that management software such as AmministraPro simplifies, keeping the budget, the final statement and each owner's share aligned without parallel spreadsheets.
Which method to choose
There is no method that is universally better: the choice belongs to the assembly, within the condominium bylaws or the annual resolution on the allocation plan. Buildings with stable ordinary expenses and a solid cash fund can tolerate the arrears method without major risk. Buildings with complex systems, substantial maintenance contracts or planned major works instead benefit from advance payment, because regular liquidity protects both the building from supplier delays and individual owners from concentrated, unexpected outlays.
Frequently asked questions
Is the fee collection method decided by the property manager or by the assembly?
The decision belongs to the assembly, which approves the allocation plan and the expense budget under article 1135 of the Civil Code. The manager proposes and applies the method, but cannot unilaterally impose it on owners without a resolution authorizing it, nor change it without a new assembly vote.
Does advance payment really reduce arrears in condominiums?
It tends to reduce them because it spreads the burden over smaller, predictable installments that are easier for owners to sustain and for the manager to monitor. It does not eliminate arrears entirely: individual delays are still possible, but regular installments make it easier to spot them immediately and act promptly with reminders or, if necessary, the injunction order provided for under article 63 of the implementing provisions.
What happens if the approved budget turns out too low compared to actual expenses?
At year end, when the final statement is approved, an adjustment owed by owners emerges, covering the difference between what was already paid based on the budget and the actual expense. This is why an accurate budget, updated with current contracts and real utility rates, reduces the risk of large adjustments and tension at assembly meetings.
Can an owner refuse to pay budget installments and insist on paying only at final statement?
No: once the assembly has approved the budget and the related allocation plan with the majorities required by law, the resolution binds all owners, including those absent or dissenting, unless it is challenged within the legal time limits. An individual owner cannot unilaterally choose a different payment method from the one resolved by the assembly.
How can budget, final statement and adjustments be managed in practice without errors?
It requires precisely tracking every scheduled installment, every payment received and every expense incurred, per owner and according to the correct ownership shares. Management software such as AmministraPro automates these calculations, generates payment notices, flags deviations between budget and final statement, and reduces the errors typical of manually managed spreadsheets.
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