Community management companies help associations manage their invoices, allocate resources efficiently, and make informed financial decisions. With proper financial management strategies in place, community associations can work toward their established goals. Here are several ways property management firms help maintain associations’ finances:
Community management companies work with the association’s board of directors to prepare annual budgets. They can help estimate income and expenses for the upcoming year, considering aspects like maintenance, utilities, insurance, and reserves. Community managers work with the board to customize the budget to the community’s needs and project goals.
For proper budgeting, these professionals review historical financial data, existing reserves, and outstanding or anticipated expenses. They can help the board prioritize expenses to fund indispensable services and maintenance requirements. After drafting the budget, the board can make revisions based on their assessment and the management company’s recommendations.
Routine financial reporting provides accountability, transparency, and updated information for making sound monetary decisions. Community managers can generate income statements for the associations to see their revenue streams. These statements may include assessment fees collected, rental income, and investment returns. Management professionals can also review balance sheets to understand the association’s financial standing at any specific point in time.
Cash flow statements help identify whether the association is generating sufficient income to cover expenses and invest in future projects. Community management companies can conduct a comparative analysis of these statements, allowing stakeholders to see how the association’s financial performance in the current period compares to the previous period. This approach can be valuable for identifying financial trends and addressing issues early.
Community managers are responsible for preparing and sending out invoices or statements to homeowners. These documents outline the due amount, date, and relevant payment instructions. The management professionals work to provide multiple payment options to homeowners, such as online payment portals, direct deposit, and checks.
When homeowners fail to pay on time, community managers assess and collect late fees and penalties as outlined in the association’s governing documents. They also maintain accurate records of each homeowner’s account. This includes tracking the fees and assessments each homeowner owes, payment history, and associated penalties or interest charges.
Auditing and Compliance
Auditing and compliance efforts can contribute to financial transparency among homeowners associations (HOAs). Property management firms can work with independent auditors or accounting firms to facilitate financial audits. This helps coordinate the audit process so that it is conducted efficiently and complies with relevant standards and regulations.
Community managers help gather and prepare the necessary financial documents and records for the audit. This includes financial statements, bank statements, ledgers, invoices, and receipts. Once the audit is completed, community managers review the audit report and financial statements for irregularities or areas of improvement.
Community association management firms help the HOA board evaluate and select appropriate insurance coverage. They can suggest getting liability, property, director, and officer insurance to protect the association’s assets and members. Management professionals also review the insurance policies to determine if they provide adequate coverage and are up to date.
In the event of a claim, management companies can coordinate the claims process. They work closely with the insurance provider so that the association receives fair compensation following an efficient and timely claims process. These experts can also help develop and maintain emergency response plans for unexpected events like natural disasters.
Vendor and Contract Negotiation
Community management companies can help HOAs identify and select reputable vendors and service providers based on their quality of service or pricing. They may maintain a network of reputed vendors in the area, including landscapers, maintenance companies, security firms, and janitorial services.
Management experts review and analyze contract documents to determine if they align with the association’s goals and comply with governing documents and legal requirements. They also help prepare bid specifications, request proposals, and analyze the bids to find the most cost-effective and suitable vendor. After contracts are in place, management companies monitor vendor performance to make sure they deliver the agreed-upon services.
Choose Reputed Community Management Professionals
Property management companies facilitate various financial aspects of HOAs, such as budgeting, financial reporting, and fee collection. They also help with audits, vendor selection, and contract negotiation. Consider working with experienced community managers to help your association make informed financial decisions.