Financial Management Best Practices for Homeowners Associations

Financial Management Best Practices for Homeowners Associations

The average homeowners association management organization takes in $191 per homeowner in fees each month. HOAs with amenities like pools or regular events may take in more. Handling money in and out can add to stress for any HOA board.

How do good HOAs stay on top of their finances? What makes it easier for some HOAs than others? You want to do the best job possible for your residents, but how do you get started?

We'll take the mystery out of managing the funds for your homeowners' association. Keep reading and we'll show you the best practices available to HOA managers today.

Open Budget Meetings

The more you communicate with your homeowners about HOA finance, the happier both sides will feel about the arrangement. If you maintain transparency, homeowners will have confidence that their dues go toward beneficial investments.

If the law in South Carolina changes, your HOA will have an obligation to maintain transparency on financial matters. A current session bill with the Committee on Labor, Commerce and Industry requires specific financial disclosures by HOAs.

Frequent Communication

Improving openness shouldn't stay limited to budget meetings, either. Do you have residents who miss payments or underpay dues often? Do some members miss notices about increases in dues?

Prompt, frequent, clear communication can reduce friction like this. Hiring an HOA management company can make this easier, but even then, you should know what you need to communicate and when.

Perform Regular Audits

Most HOAs undergo a regular audit once a year. While the law in South Carolina doesn't require such an audit, you can think of a regular financial audit for your HOA the same way you would an annual doctor's visit. It protects your organization and identifies potential problems before they become material problems.

Remember that your members can also force an audit. If a majority of your HOA feels that your board has not shown transparency, they can move to demand an audit. Taking the time to handle your documentation shows proactive crisis management, which all organizations should practice.

Pay Vendors on Time

Many HOA managers have put off paying bills for plumbing or landscaping only to find themselves in a budget crunch when late charges stack up. Good financial management for an HOA requires prompt payment of all bills.

Hire a Homeowners Association Management Company

A property or HOA management company can provide financial management and other services that help keep your HOA running. These organizations offer not only financial services, but complaint management, record-keeping, and maintenance coordination as well. If your HOA hemorrhages money, a management company's accounting services can get it back on track.

Where the Buck Stops

Solid homeowners association management relies on financial clarity. You cannot provide the benefits of a homeowners association if your HOA budget goes unbalanced. By communicating with vendors and residents and hiring professionals to manage the books, you can improve the operation of your HOA.

Looking for help with financial tasks like vendor coordination or accounting? Reach out to Adams Properties for a free consultation. Our parent franchise has been part of the business for more than two decades and can give you prompt, kind, and professional service.