HOA Board members, here’s a quick question for you: How would you characterize the financial health of your Association?
Hopefully, you have a pretty accurate and informed answer to that question. For many Board members, however, wrapping one’s head around HOA finances is a daunting task. Simply put, a lot of HOA Board members are not business people, and aren’t used to dealing with such expansive financial challenges on a day-to-day basis.
That’s not a knock against HOA volunteers, whose service is always welcome! However, it does point to the need to go the extra mile in getting a handle on your Association’s finances.
We might offer these tips:
- Make sure to keep close tabs on accounts payable and receivable. Review these accounts often—at least on a weekly basis. This ensures accuracy and it prevents embezzlement. If you need to outsource to a bookkeeping service or to an HOA management company then by all means do so!
- Be consistently tough in your collections. Don’t allow delinquent payments to drag on and on; when payments become late, enforce your HOA collections policies immediately—and without any signs of favoritism.
- Make sure you review your vendor contracts on an annual basis. See what you’re paying and what you’re paying for, and consider whether some cuts or adjustments might be made.
- If you have a community manager, make sure that he or she is doing a reserve study annually, and presenting the findings to the Board. This is perhaps the single most important snapshot of your Association’s financial health, and you want to make sure you really know what it’s telling you.
- Solicit the input of homeowners, and try to get more community members involved. Find out what people want to see happen in the HOA, and how they want money to be spent. This will help you make financial decisions that are in line with what homeowners want, and in turn it will reduce conflicts and complaints.
Much of this boils down to being proactive—keeping those HOA finances ever in front of you, and doing what you can to understand them more fully!
