Financial management for a homeowners association (HOA) can be complicated, but it doesn’t have to be. You don’t need to be a CPA or an expert with crunching numbers to help your HOA clients with their finances. With a little organization and software tools like CINC Systems, your HOA management company can handle every client’s finances with ease.
Before you take out your calculator or start making spreadsheets, check out the five tips below. Each of these tips will help make HOA financial management easier than ever. No matter what kind of HOA you’re managing, you’ll be able to deliver better service by implementing these tips.
Here’s what we recommend for all HOA management companies who offer financial services for their clients.
Tip #1. Use HOA Accounting Software
If you’re not using HOA management software that includes accounting features, you’re missing out. This software is one of the most valuable tools in an association manager’s arsenal. Although any type of financial software is better than crunching numbers by hand, HOA accounting software includes unique features specifically designed to meet the needs of an HOA.
Some of the great features of HOA accounting software like CINC Systems include:
- Automatic Bank Reconciliation. This feature gives you the ability to sync each of your client’s financial accounts to one location in your software’s dashboard. In other words, you won’t need to login to multiple websites to check the current balance of an account or see if a transaction has finished processing. Best of all, your client’s accounts are updated in real-time.
- General Ledger Accounting. A general ledger is essentially a master balance sheet for your client’s HOA. General ledgers provide a snapshot of the association’s current financial health, detailing deposits and withdrawals. The general ledger also includes accounts payable (money the HOA owes to vendors or other costs) and accounts receivable (money owed to the HOA). In the past, general ledger accounting needed to be done by hand. Thankfully, association management software does this automatically.
- Invoicing. When the HOA needs to generate an invoice, this can be done electronically. You can send the invoice via email and the recipient can pay online. Then, you’ll see when the invoice has been fulfilled and be notified when the money is successfully deposited into your client’s account.
- Automatic Online Bill Pay. Many HOAs pay for monthly services, such as landscaping, waste disposal, or private security. Instead of paying each bill with a check, you can use association management accounting software like CINC Systems to set up automatic bill payments online. Once set, each monthly payment will be processed electronically without the need for further action on your part.
- Customization. Every HOA has unique needs. You can streamline your efficiency by customizing your association accounting software to include the features you need for your clients and eliminating the features you don’t need. This helps you work smarter, not harder, to manage your HOA clients’ finances.
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Tip #2. Perform an Annual Audit
An audit is key to the long term success of any HOA. Audits provide valuable information about the association’s financial history, as well as its current spending habits and its projected fiscal future. Audits help the association set its annual budget and make decisions, such as whether or not to raise association fees. They also give you and your clients information about the HOA’s reserve fund.
In some states, associations are required to perform audits annually, or whenever the association’s members vote to request an audit. However, whether or not the audit is mandatory, it is recommended to perform a thorough audit once a year to help the association stay on track. The audit process can be expensive and lengthy, however, it’s one of the most valuable investments an HOA can make.
As an association manager, you can help your clients prepare for an audit by compiling financial reports. Use your association accounting software to generate reports automatically. These reports can be customized based on date, category, or other unique factors. Then, you can send reports electronically to your client’s board.
You can also act as an advisor and help the board find a CPA to conduct an all-inclusive audit. In an all-inclusive audit, the CPA can thoroughly investigate all of the HOA’s accounts and verify the information for total accuracy and transparency.
Tip #3. Switch to Online Payment Processing
HOAs are largely funded by fees paid by members. Collecting these fees is one of your responsibilities as an association manager. In the past, this process could often be very time-consuming and complicated. Residents used to pay with checks, which needed to be collected physically, then deposited at the bank.
Then, HOA managers needed to update their bookkeeping documents and cross-reference payments with the membership directory to ensure each member paid on time and in full. This process left room for human error and slowed down operations for everyone involved.
With association accounting software, you can create a web payment portal where members can submit payments electronically via credit card or e-check. They can even set up automatic payments. Once paid, the money is automatically deposited into your client’s account.
HOA accounting software also generates lists of delinquent payments with the click of a button, allowing you to take immediate disciplinary action with residents who are behind on their dues.
Tip #4. Track Budgets and Monitoring Accounts
Thanks to the automatic bank reconciliation feature mentioned above, it’s easier than ever to track budgets and accounts for your clients. Tracking your HOA client’s finances is one of the best tips you can implement as an association manager.
By tracking budgets and monitoring accounts in real-time, you can ensure that your clients remain in good financial standing. You can also help eliminate fraud by flagging any suspicious financial activity as it occurs.
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Tip #5. Use Cloud-Based Accounting Tools
Finally, you can deliver better service to your clients by using cloud-based accounting tools. Storing your client’s financial data in the cloud is not only more secure, but it’s also more efficient.
Cloud-based financial software gives you the ability to access data from any location and work remotely. To see the benefits of cloud-based association management software for yourself, try CINC Systems.