HOA Finances Made Easy
In addition to creating an enjoyable community culture, making crucial decisions, and maintaining common areas, a homeowner’s association board of directors is also responsible for managing the community’s finances. While managing HOA finances can seem overwhelming with the number of moving pieces, taking charge of HOA finances doesn’t have to be difficult. Take a look at these eight tips to help manage finances with ease.
- Implement Internal Checks on Invoices
Paying vendors is an important part of managing an HOA. To adequately protect finances, it is essential there is a check and balance system in place. When invoices are received, they should be reviewed to assure accuracy and that the work was done and is satisfactory.
- Strengthen Bank Account Security Procedures
Never allow bank account access to just one individual. It is recommended to require two signatures on checks above a certain value, money requests, or changes to the account. This level of accountability can help avoid fraud or embezzlement.
- Trust a Professional with Your Books
Managing HOA finances requires knowledge of proper accounting skills, rules, and regulations. Those responsible for the books should have prior experience in managing finances.
- Create a Budget Strategy
A budget strategy includes more than just the budget for the HOA. A full strategy encompasses projected spending along with how financial decisions will be made as a board. This helps the board make decisions throughout the year that match the initial strategy and limits excessive spending.
- Plan Ahead for Major Purchases
It’s impossible to predict when large expenses like road maintenance will occur. It is a good idea to preplan for these types of expenses by setting money aside monthly into a reserve account following a reserve schedule.
- Hire Help when Necessary
There comes a time when an HOA may need additional assistance outside of their board to manage expenses. Sometimes the amount of activity is too time-consuming or complicated. Hiring a property management company can help streamline and eliminate stress in these instances.
- Follow State Laws
Every state has different requirements for HOAs to abide by. Research state laws to ensure reporting requirement and annual audits are met.
- Hire an Auditor
Hiring a professional to audit community finances is sometimes required by governing documents. Even if it isn’t a requirement, an annual audit is a sure way to know the HOA’s finances are in order. An auditor is an unbiased third-party that reviews records, expenses, and payments to make sure everything is legitimate and in working order.
If your homeowner’s association needs assistance with managing finances, contact the team at AR Management today for additional information or a proposal.