7 Tips For Better HOA Financial Reporting and Management

7 Tips For Better HOA Financial Reporting and Management

Financial reporting and management are key components of your job as a homeowner association (HOA) manager. Your clients depend on you to help them keep the HOA in good financial standing. This includes everything from day-to-day tasks like collecting fees and paying bills on the HOA’s behalf to assisting your client during annual audits and budgeting sessions.

Every HOA is different, so each of your clients may have unique needs for financial reporting and management. Depending on the size of the HOA and its membership, your specific duties may be heavily involved in the association’s finances, or you may only handle a few small aspects of accounting. Regardless, there are always ways to improve and provide better HOA financial reporting and management.

As with anything related to the HOA’s finances, always consult your client’s board members before enacting any changes in the association’s best practices. However, you can use the seven tips below to suggest better financial reporting and management methods. By implementing these tips, you can help ensure that your clients’ HOAs will have a bright future.

Tip #1. Use HOA Accounting Software

First, use HOA accounting software. Managing the finances of an HOA can be a huge undertaking. If you don’t have a background as a professional accountant or financial advisor, handling an HOA’s finances on your own can become complicated or even overwhelming. There are ledgers to balance, transactions to monitor, checks to deposit, invoices to pay, and more. Plus, crunching numbers by hand can leave room for human error.

HOA accounting software like CINC Systems helpfully automates many of the necessary tasks involved in the financial management of an association. HOA accounting software can:

  • Automate Bill Pay: This enables you to pay bills or invoices for your clients electronically on a regular schedule, or whenever the HOA receives them.
  • Collect Resident Fees Online: Instead of receiving and processing checks from residents, your HOA accounting software lets you create an online web portal where residents can pay fees online. Then, payments are automatically deposited into the client’s accounts.
  • Generate Financial Reports Automatically: With the click of a button, you can create easy-to-read financial reports to send to your client’s board members. This data is automatically generated and can be customized by date or category. It eliminates the need to prepare reports by hand.
  • Balance The Books: Most HOA accounting software includes a standard general ledger feature, which means you can balance the books for your clients automatically and help them stay on track with their budget.

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Tip #2. Understand State Laws About HOA Finances

Next, do your homework. Study the laws in your state that affect HOA finances. Association regulations can vary dramatically from state to state, with some states requiring very little while others impose heavy restrictions. These restrictions may include limitations for HOA fees, auditing protocols, or other aspects of financial management.

Make sure you understand all the laws and regulations that may impact your clients. This will ensure that you provide the best financial reporting and management. Plus, you can also use your knowledge to help advise the board on any financial decisions.

Tip #3. Keep HOA Budgets Simple

As an HOA manager, you are not responsible for setting the association’s annual budget. This is done by the elected board members. However, it’s not uncommon for board members to refer to managers for advice while planning the HOA’s finances. If you’re called upon to act as a financial consultant to your clients, you can help them achieve better financial reporting and management.

One of the most effective ways to do this is to keep budgets simple. Don’t overthink it! Complicated budgets are more difficult to track and can create confusion about expenditures. If there are too many specific budget categories, you may have difficulty figuring out which transactions fall under which category. This can also result in excessively long, overly complicated reports.

So when it comes to budgeting, encourage your clients to stick to basic categories.

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Tip #4. Use Old Records And Reports For Reference

Whether you’ve just been hired by a new client or you’re re-evaluating the financial operations of a current client, it can be very helpful to refer to old records and previous reports. If the HOA is in good financial standing, it’s better if reports remain as consistent as possible in order to maintain the association’s success — “if it ain’t broke, don’t fix it,” as the old saying goes.

However, if the HOA is experiencing financial issues, it may be better to switch to a new model of reporting. By referencing the old reports or other relevant financial documents, you can help determine why the HOA’s finances may be problematic. Referring to these reports may be able to reveal the mistakes that were made and help you assist your client to avoid them.

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Tip #5. Monitor Financial Transactions In Real-Time

Monitoring financial transactions in real-time will help you prevent fraud or financial misuse within your client’s associations. Using automatic bank reconciliation in HOA accounting software like CINC Systems, you can easily sync each of your client’s bank accounts to your management dashboard.

Then, you can watch transactions occur in real-time. If something looks suspicious, you can flag it and bring to your client’s attention.

Tip #6. Store Financial Data In The Cloud

Storing financial data in the cloud means that your client’s information is stored on secure remote servers instead of physical files or a harddrive on a single computer. This is a great tip for HOA financial reporting and management because it allows you to access data and manage the HOA’s accounts from any computer or internet-enabled device.

Tip #7. When In Doubt, Ask!

Finally, remember to ask for help when necessary. If you have questions about some aspect of the HOA’s financial reporting and management, ask the association’s board members. Most will be happy to explain things to you.

With these tips, you can offer better HOA financial reporting and management for your clients. Try a free demo of CINC Systems to see how you can also provide improved service with HOA accounting and management software.

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