HOA/COA Accounting

One fallacy that a lot of management companies absolutely believe is that their mailroom is a revenue generation machine for their business. But if you calculate the true costs of your mailroom, you will find that it simply isn’t.

Management companies routinely underestimate the amount that is spent on mailroom activities, which needs to include the hard costs of equipment, supplies and postage, but also the soft costs of employee time and storage. When you add it all up, the amount you are charging in your Schedule A may not be enough to cover your true costs, let alone turn a profit for you.

So why does this idea persist?

We are Addicted to Paper

When the concept of going paperless was first introduced, it was all about the environment. Look at all the trees we are killing to make paper! Look at all the landfills we are filling with waste! Look what we are doing to our planet! Despite the warnings, by 2015, only 17% of all companies in the world had started the journey to go paperless, more than 30 years after the concept of a paperless office had been introduced.

The environmental arguments haven’t gone away (they are more true now than ever before), we’ve just become desensitized to them. It’s like trying to convince a smoker to quit by telling them the health risks. They know the risks. But they’re addicted.

In much the same way, we as an industry, have been addicted to paper. It seems so much easier, so much cheaper, so much less of a hassle to just print all the things we need. Whether it’s board reports, monthly payment coupons or even printed emails, we as an industry, have generated a LOT of paper over the years. So much so, in fact, that the average management company office devotes as much as 45% of available floor space to filing cabinets, printers, and other paper management equipment.

Industry experts have been saying for years that it doesn’t have to be this way. And perhaps you always intended to do it, some day. But change is hard, and it may have seemed like too much hassle to put in the work to go paperless.

Until now.

How You Went Paperless By Accident

The global pandemic and year-long lockdowns have caused a lot of changes for every industry. But none more so than the community association management industry, which has been dragged (kicking and screaming for some) into the modern digital age.

With employees and board members working from home, one benefit you may not have noticed is the significant decrease in the amount of paper your business is generating. Where once you needed a small forest worth of paper just to generate monthly board reports for the community associations you manage, now your board members are happily accepting PDF packages of board reports delivered via email. The same phenomenon has likely spread across your whole organization.

But what you may not have put together quite yet, but you will (numbers don’t lie) is that this change is actually saving your business money in the long term. In fact, when you get down to the bottom line, paperless community management saves your management company in a number of surprising ways:

How Paperless Community Management Saves $$

Save on Printing

A lot goes into printing: purchasing all of the paper supplies, ink and toner you need to print, purchasing or renting the actual equipment, from your printers to all of the other complicated machinery in your mailroom, to the actual time in employee costs it takes to manage all of the paper that your office generates. All of these are hard costs that can go away or be drastically reduced when you embrace a paperless office.

Save on Storage

Are your records taking up the bulk of the floor space in your office? For many management companies, the biggest cost factor in their budget is their physical office space, and much of the need for that space is accounted to mailroom machines, printers and file cabinet storage for all the community records they are maintaining. And that doesn’t even take into account the amount of time you are paying employees for the physical act of managing storage (filing).

Save on Distribution

Postage costs are just one part of the distribution costs of paper. How much are you paying for your managers to schlep reams of paper in monthly financial reports to board meetings each month? Or the cost to file that paper in the office?

How CINC Helps You Go Paperless

When you add it all up, the costs far outweigh the convenience of paper in your office, and the pandemic has proven that you really don’t need it. Especially if you are a CINC user:

• Monthly Financials – Generate board financial report packages in PDF and email them to board members, it’s easier, faster and cheaper!
• Electronic Invoicing – Kill the coupon books and move to electronic invoicing to issue statements to homeowners for their monthly assessments.
• Integrated Banking – reconciling accounts is a breeze when your bank automatically updates your accounting software as transactions go through with real-time reconciliation.
• Cloud file storage – Store all of the important records related to a home or a community with our integrated file storage system that puts all the important information you need at your fingertips
• Online Portal Access – Deliver record requests electronically by storing the CC&Rs and other important community documents in the cloud.
• Communications – Broadcast email and texting capabilities, as well as individual messaging and email options make it easy to communicate without the need to wait for the USPS.

Moving Into the Future

Looking at the functional categories of where your paper goes is helpful in determining a strategy to stay paperless after the pandemic is over. Of course, there are still going to be areas where you will need to retain paper records. But now you have an excuse to draw a line in the sand and say, the paper stops here.

Accounting plays a key role in association account management. When you’re managing a homeowner association (HOA) or condominium association (COA), you will have many financial responsibilities. You may be asked to monitor your clients’ HOA/COA bank transactions, balance their books, process resident fees, and more.

Accounting for HOA/COAs isn’t always the most exciting part of the job, but it can be very rewarding to help your clients stay fiscally healthy. Today, there are also many HOA/COA accounting software programs specifically designed to help you with association accounting. These applications, like CINC Systems, can be customized with unique features to fit each HOA or COA in your portfolio.

How Much Accounting Knowledge Do I Need?

Although it will certainly help if you have a background in accounting and finance, you don’t need to be a CPA to use association management accounting software such as CINC Systems. HOA/COA accounting software is very user-friendly.

To get started with accounting software for your HOA/COA management business, it will help to have some basic knowledge. Familiarize yourself with a few core accounting concepts, remember to be thorough when you add a client’s data, and let the accounting software do the number crunching for you.

Here are some accounting basics that will help you with HOA/COA management, as well as some key features provided by association management accounting software. Learning these concepts will help you manage your HOA/COA accounts more efficiently than ever.

HOA/COA Accounting Basics

Understanding certain fundamental accounting concepts will help you get the most out of your HOA/COA accounting software. More financial knowledge will also help you assist your clients because you’ll be able to clearly communicate their financial status.

Here are some accounting terms and concepts you should learn:

• Balance Sheets: balance sheets provide an overview of an HOA/COA’s net worth. A balance sheet will list the association’s financial assets, costs, and expenses. When an HOA/COA is in good financial health, it will have a positive balance.
• Income and Expense Ledgers: these ledgers compare how much the association spends with the income it receives. Income and expense ledgers are usually calculated on a monthly basis to help managers understand how the HOA/COA’s current finances compared to its projected budget.
• Check Register: also known as a cash distribution statement, a check register is a detailed account of each check written by the HOA/COA. This will include information such as the date, invoice number, and what the check was written for.
• Accounts Payable: this refers to any outstanding invoices the association may have, such as unpaid bills to vendors and service providers.
• Accounts Delinquency: in contrast to accounts payable, accounts delinquency refers to any payments the HOA/COA is owed. This generally means resident fees that haven’t been paid.

There are many features of HOA/COA accounting software that will enable you to streamline your clients’ finances. The following features of HOA/COA accounting software will make associations easier to manage. Best of all, you don’t need to know professional accounting techniques to make the most of them.

General Ledger Accounting

In simple terms, general ledger accounting covers all the above elements. It combines balance sheets with income and expense ledgers, as well as cash flow, accounts payable, and accounts delinquency. General ledger accounting gives you an immediate snapshot of an association’s financial health.

HOA/COA accounting management software like CINC Systems largely automates general ledger accounting. Although you’ll need to add financial data for your HOA/COA clients, you won’t need to crunch the numbers. The software will do it for you.

Monitor Financial Transactions

HOA/COA accounting software also helps you monitor financial transactions. With a feature called automatic bank reconciliation, you can link your clients’ bank accounts to your association management software dashboard. This enables you to see their accounts in real-time from one convenient place, rather than having to log into multiple bank websites.

By monitoring financial transactions, you can ensure the association stays within its budget. This will also reduce the risk of fraud.

Process Resident Fee Payments

Processing resident fee payments is another great feature of HOA/COA accounting software. With software such as CINC Systems, you can create online web portals where your clients’ residents can pay their association dues automatically.

This streamlines the payment process for everyone involved. Residents can make easy payments via credit card or e-check, which are automatically deposited into the HOA/COA’s account. This saves you a trip to the bank to process paper checks.

Additionally, processing resident fees online means that your list of accounts delinquency is maintained by the software. This makes it more convenient to contact residents with outstanding dues.

Pay Invoices Online and Automate Bills

Similarly, using HOA/COA accounting software gives managers the option to automate bills and pay invoices online. This cuts back on your paperwork and streamlines the organization.

Association management accounting software allows vendors and service providers to submit invoices electronically. You’ll see bills and accounts payable appear automatically. Simply pay them with the click of a button.

Generate Financial Reports

When you manage an HOA/COA, there will be many occasions where you need to provide your client’s board with a financial report. The association board uses these reports to file taxes, conduct internal audits, set budgets, and more.

Prior to the development of accounting software, creating a financial report for HOA/COAs could be very time-consuming and require a lot of accounting knowledge. With accounting software, however, you can generate reports automatically. These reports can be customized to specific dates, income/expense categories, or any other variable.

Try CINC Systems Today

Try CINC Systems today and see how HOA/COA accounting software can help you manage your clients’ associations. You don’t need to be a financial wizard to use CINC Systems. Call (855) 943-8246, or request a free demo.

Approximately 42% of the American workforce is continuing to work from home, and many companies have announced their plans to stay remote until the summer of 2021. Because of this, cloud computing is no longer considered just a benefit; it’s an essential part of your business. And when you’re handling HOA accounting records and personal information for hundreds of homeowners, it’s even more important to work in the cloud. So, why exactly is cloud computing so essential in a WFH world? Here are five main reasons you need the cloud when working from the couch:

1. Easy Accessibility

As the cloud is accessible to anyone using the internet, cloud-based software systems are easier to access from varying locations and allow for more centralized systems. Do you have certain systems or tasks that can only be done by one person at a time? Have you ever had to text your co-worker to get out of a system so you can finish a time-sensitive task? This is extremely inefficient when working from home. Through cloud-based systems, your employees can work on multiple projects at once in one centralized location without interruption.

2. Improved Security

As we’ve adapted to working from home, so have cybercriminals. A recent study showed that 91% of executives reported a rise in cyber attacks since their teams started working from home. Cloud computing operates on a shared responsibility model, meaning that it guarantees the safety of the overall cloud while letting the user themselves enact various measures to protect data. For association management companies, this means that a cloud accounting system enhances the safety of clients’ data and reduces the risk of cyber attacks. Since HOAs are managing personal data of their homeowners, security is a top priority for their boards when choosing the right software system.

3. Increased Productivity

Since cloud computing enables employees to work with fewer interruptions, and gives employees the ability to work in one centralized system, productivity naturally increases. Data and analytics can be shared across the company in real-time, which empowers one to make decisions quicker while reducing the chance for duplication errors. Cloud systems are also less prone to IT issues and security breaches, which reduces downtime for employees. In the association management industry, this benefit is very important when producing month-end reports to HOA boards. Since the financials are consistently up-to-date and available in a centralized location, many CINC customers are able to get their reports completed as early as the 3rd and 4th of the month.

4. Disaster Recovery

One of the biggest corporate pain points to remote work is managing IT issues. An IT team simply cannot go from one home to another to resolve computer issues, especially when so many are trying to socially distance. Luckily, cloud computing can resolve many IT issues in the absence of IT professionals. The cloud can monitor, check, and maintain storage and servers in data centers. This makes recovery efforts for a company faster and far more cost-effective.

5. Paperless Efficiency

If you manage several millennial and Gen Z employees, you know that at-home printers are a thing of the past. Luckily, cloud-based systems prevent the need for many printing projects that could greatly hinder WFH capabilities. A cloud accounting software system can be connected to a client’s bank account, which means their financial data automatically updates online. This eliminates the need to receive paper statements from the client’s bank while also providing better financial transparency.

If you do not have a cloud-based system but want to share the benefits with key decision makers in your company, download CINC’s Association Management Software Buyer’s Guide for tips on sharing key benefits and making the right software decision for your company.

A homeowners association (HOA) audit can be expensive. Depending on your client’s needs, HOA audits cost between $4000 and $6000. This is because an HOA audit is a very thorough, time-consuming process that must be performed by a certified public accountant (CPA). However, the cost of an HOA audit is a valuable investment for any association, big or small.

By understanding the true value of an HOA audit, you can help your clients through the audit process and ensure the long-term financial success of their association. Although HOA audits are expensive, they’ll end up saving your clients more money overtime. This is because a financial audit provides priceless information that the HOA can use to inform its decisions.

If you’re helping your HOA clients create an annual budget, remind them to include the cost of an audit. Audits for HOAs are a priority and shouldn’t be skipped, even if the audit isn’t required by state law or association’s Covenants, Conditions & Restrictions (CC&Rs).

Learning more about HOA audits will also help you become a better HOA manager. As an HOA manager, it’s unlikely that you’ll be directly involved in an HOA audit. Typically, audits are organized by the HOA’s board. However, by increasing your knowledge of all topics that are relevant to HOAs, you’ll be able to offer expert advice to your clients and act as a third-party counsel.

Here’s why the cost of HOA audits is well worth it, for any size HOA.

The Audit Process

First, let’s examine the audit process for HOAs. The process is the reason why HOA audits tend to be expensive, as they are very time-consuming and may take days or weeks to be completed.

During an HOA audit, a certified personal accountant who specializes in association financing will work with your client’s board members. This needs to be an independent professional who has no existing ties to the HOA. Once the board makes arrangements to work with a CPA, he or she will conduct a highly detailed, forensic examination of all financial documents.

The documents used in an HOA audit may include:

• Past, present, and future budgets
• Bank statements
• Deposit slips and canceled checks
• Insurance premiums
• Contracts from service providers, both short-term and long-term
• Financial reports about HOA funds (general operating fund and reserve fund)
• Copies of board minutes and committee minutes
• Paid invoices
• Delinquency lists for member fees
• Fee structures
• HOA governing documents, such as bylaws and CC&Rs
• Tax documents

After carefully reviewing these documents, the association’s CPA will use them to verify the information available in the HOA’s online accounts. Then, he or she may also contact third-parties to confirm outstanding balances and debts.

Finally, the CPA will draft conclusions regarding the HOA’s financial health. The CPA may also make recommendations to help the board members ensure continuing financial success, or offer constructive feedback if he or she has identified any problems.

Why HOAs Do Audits

There are several reasons why HOAs need to do financial audits. In a nutshell, an HOA audit gives your clients a complete “bill of health” that can be used to inform future decisions. HOA finances can become messy overtime and audits help clean them up.

Whether you’re managing a large HOA with hundreds of members or a smaller association with a few dozen, it’s important to encourage your clients to perform annual audits. In some cases, HOAs are required to conduct a regularly scheduled audit. For example, certain states have specific HOA laws that make a yearly audit mandatory for all associations. Audits may also be required by the HOA’s bylaws, or demanded via a majority vote by members.

Often, HOAs also perform audits to assist new board members and management companies. Since an audit provides a complete financial picture of the HOA, this information is highly beneficial to anyone who becomes involved in the association’s leadership. (As an HOA manager, you should ask to see the most recent audit whenever you acquire a new client.)

Additionally, HOA audits offer valuable assurance for the association’s financial future. Because audits are so in-depth and verified by a CPA, the data presented is very accurate. In other words, an audit is the most reliable type of financial review that can be performed for an HOA.

With an HOA audit, associations are also able to set budgets with greater confidence. They can adjust fees, levy assessments, or renegotiate contracts to help the HOA’s financial future. You’ll play a role in this by assisting your clients in the implementation of new fiscal strategies inspired by the audit.

Finally, conducting an audit will help an HOA prevent financial mismanagement and fraud. As an HOA manager, you can assist with this process by reviewing the results of the audit for any suspicious activity. An HOA audit also gives you and your clients a “baseline” for normal financial transactions. This will make potential fraud or mistakes easier to catch.

How You Can Help

As previously mentioned, audits are usually instigated by board members. However, as an HOA manager, you can advise your clients and assist in the auditing process. You can help them gather physical documents and use your association accounting software to generate financial reports.

With cloud-based accounting software for HOAs, such as CINC Systems, you’ll be able to streamline the audit process by gathering data quickly and efficiently. CINC Systems uses banking integration to host all your client’s financial data in one place.

Then, it gives you the tools you need to easily generate a customized financial report. Reports can be sent via email to your clients and their CPA, as well as attorneys or anyone else who may be involved in the audit process. By going paperless with digital financial reports, you’ll help make auditing faster and easier.

Try CINC Systems Today

When it comes to HOAs, it’s important to invest wisely. For your clients, this means the cost of HOA audits is a price that needs to be paid. For you, it’s vital to invest in the best association management accounting software. To improve your HOA management company and provide better service for your clients, click here to try a free CINC Systems demo.

When you manage a homeowner association (HOA), you have many important responsibilities. Your clients depend on you to create a thriving, successful community for every resident living in the association neighborhood. As part of the logistical support you provide, financial knowledge plays a key role. Accounting knowledge is very useful when managing HOAs.

Although you don’t need to be a CPA to be a successful HOA manager, understanding accounting concepts will help you do your job more efficiently. You’ll be able to assist your HOA clients with day-to-day accounting tasks as well as big-picture projects, such as audits and budgeting. Association managers also help their clients by collecting resident fees, monitoring transactions, and assisting with annual audits and tax filing.

Using online accounting software for association management, such as CINC Systems, will help with all aspects of financial management for your clients. HOA accounting software automates many processes that formerly needed to be completed by hand. However, even with great software, it still helps to understand how accounting is useful when managing HOAs.

Let’s review some of the accounting basics you’ll need to understand to be a successful HOA manager.

Income and Expense Ledger and General Ledger

First, let’s look at the income and expense ledger. This is a vital financial statement for any organization, especially an HOA. Income and expense ledgers track the association’s monthly financial statements. It shows how much money the HOA receives each month and how much it spends. This data can then be compared with the association’s budget to see how well the HOA is staying on track with its financial projections.

The general ledger functions similarly but focuses on smaller individual transactions. Essentially, the HOA’s general ledger shows each unique withdrawal and deposit from the association’s various accounts. General ledgers provide much greater detail than income and expense ledgers. Together, the two ledgers are a valuable tool for understanding the association’s current financial state.

With online HOA accounting software, both types of ledgers can be fully automated. Use your HOA accounting software to sync your clients’ bank accounts to your software dashboard. This allows you to monitor all ledger transactions live, in real-time, from one convenient place rather than multiple websites or bank statements.

Check Register

The next accounting principle to understand for HOA management is the check register. Also known as a cash distribution statement, the check register tracks all paper checks written.  Typically, the check register includes a detailed entry for each check.

Checks are numbered, and then a meticulous record is kept for everyone. This record includes the name of the check’s recipient, the amount, the invoice date, and the reason the check was written. It may also include a unique invoicing code or other tracking information determined by the HOA.

Using a check register helps you reconcile the association’s accounts payable and accounts receivable. It also helps you monitor your clients’ accounts for potential fraud. Unfortunately, HOA fraud such as embezzling is somewhat common. By keeping a watchful eye on the check register, you can catch any financial discrepancies and report them to your clients right away.

Accounts Payable and Receivable

Accounts payable and accounts receivable are another core concept that’s useful for HOA management accounting. Like the ledgers and check register mentioned above, accounts payable and accounts receivable are important parts of any association’s finances.

What is the difference between accounts payable and accounts receivable? Accounts payable refers to any money the association owes, such as outstanding bills or invoices from contractors. Accounts receivable cover the money that is owed to the association.

Together, both types of accounts are crucial for HOA bookkeeping. Using your HOA accounting software to balance the books, you can process accounts payable and accounts receivable for your clients and ensure their association stays on budget.

Collecting Resident Fees

When it comes to income for an HOA, resident fees are the major sources of revenue. Resident fees cover maintenance and repairs, upgrades, services like landscaping, and community amenities such as common recreational areas. Resident fees are also used to fill the association’s reserve account, which is like a long-term savings funding for big projects or emergencies.

As an HOA manager, you’re responsible for collecting resident fees and processing them. This can be done with the aid of your association management accounting software. Create an online payment portal, then instruct residents to submit their payments online via credit card or e-check. You can also generate a list of delinquent residents to see who hasn’t paid yet.

Preventing Financial Fraud

Accounting is also very useful for preventing financial fraud within your clients’ HOA. Unfortunately, associations are considered an easy target for many types of fraud because of the way they’re structured. With multiple individuals having access to the association’s accounts, an unscrupulous board member can embezzle funds from the HOA reserve or write bogus checks.

Unchecked, this activity can be ongoing and cause substantial damage to the association. With accounting knowledge, you can learn how to spot suspicious transactions right away. This is very important for managing HOAs. Your clients are counting on you to help protect their association from fraud.

Annual Audits and Budgeting

No discussion about accounting is complete without mentioning audits and budgets. An audit is a detailed, thorough review and analysis of an organization’s finances. It covers income, expenditures, and more. Many HOAs perform audits each year to check the pulse of their finances. When you help your clients conduct their annual audit, you can see how well the HOA stayed on track with its projected budget.

Did the association go over-budget? Was it under budget? After the audit, you can assist your clients with the creation of a new budget for the next fiscal year. Creating a budget will be informed by your accounting knowledge, including your awareness of the association’s current bookkeeping.

With software like CINC Systems, you can also help your clients prepare a budget by sharing financial reports via email. To try this convenient feature, call (855) 943-8246 to request a free CINC Systems demo.

Accounting is one of the key tasks of homeowner association (HOA) management. When you manage a client’s HOA, you’re responsible for ensuring the organization’s financial health. You will help the HOA pay its bills, collect resident fees, balance the budget, and more. Thankfully, you can now set aside your spreadsheets and calculators. HOA accounting software automates many of your daily management tasks. With applications like CINC Systems, you can use integrated accounting to help manage your clients’ HOAs.

What Is Integrated Accounting?

This term refers to a single platform where all parts of an organization’s finances are accessible in one place. With integrated accounting, there are no separate books or balance sheets. Data from separate bank accounts is also consolidated. Integrated accounting for HOAs means you can see the association’s entire financial picture at a glance and manage your client’s accounts from one unified dashboard.

Integrated accounting for HOA management has several uses. CINC Systems’ integrated accounting platform will allow you to save time and streamline your operations. Here are some of the ways in which integrated accounting can help you manage HOAs.

Monitor Transactions in Real-Time

With CINC Systems, you can use integrated accounting to do automatic, real-time bank reconciliation. This means you’ll be able to link each of your client’s HOA bank accounts to your online dashboard. Once synched, accounts will update in real-time. You’ll be able to see financial transactions as they occur without logging into multiple banking websites to check balances.

By using integrated accounting for HOA management to monitor the association’s finances, you can protect your client’s assets. If the HOA is about to go over-budget, you can see this before it happens and notify the board so they can take action. Similarly, monitoring transactions with real-time bank reconciliation will help you to prevent fraud.

Collect Fees Online

HOAs are financially supported by resident fees, which are paid monthly or annually by members of the community. These fees help the association pay for maintenance and repairs, as well as services for the community such as shared recreation spaces. With integrated accounting, you can create an online web portal that will allow residents to pay their fees online.

As residents pay fees, the money is automatically deposited into the HOA’s accounts, saving you a trip to the bank. Integrated accounting software can also generate a list of which residents have paid their fees and which ones haven’t. This will make it easier for you to communicate with delinquent residents.

Manage Work Orders and Accounts Payable

In addition to accepting fee payments online, association managers can use integrated accounting software to set up web portals for work orders. Once a work order has been completed, service providers and vendors can submit their invoices online. You can manage these accounts with the click of a button.

By paying the HOA’s invoices online, you’ll avoid unnecessary paperwork and save time. You can also see the HOA’s account balance change in real-time as invoices are paid. This will allow you to help with budgeting.

Automate Bill Pay

Similarly, integrated accounting software for HOAs gives managers the option to automate bill pay. Most associations have monthly expenses, including utilities, maintenance, and services like landscaping. With accounting software, you can set up automatic payments for any bills the HOA may have.

Using integrated accounting for automated bill pay is one of the most convenient features this type of HOA management software has to offer. When you’re busy managing an HOA, paying individual bills is often the last thing on your mind. Automating payments ensures that the association will never have any outstanding debts or delinquent accounts.

General Ledger Accounting

With an integrated accounting platform, you can work with the client’s general ledger in real-time. You will see deposits and withdrawals as they occur, as well as other transactions being processed. This makes it easier than ever to balance the books for the associations you manage. Additionally, accounting software does most of the math for you–there’s no need to create complicated spreadsheets.

Generate Financial Reports

In the past, a financial report involved a lot of work for managers. Now, integrated accounting software makes this easier than ever. With HOA management accounting software, you can generate financial reports at any time with the click of a button. Customize reports by date, category, and other criteria. Your accounting software will generate the report in a digital format that you can email directly to your clients.

Manage Accounts Remotely Via Mobile App

Finally, integrated accounting software for HOAs also gives you the ability to work remotely. Cloud-based data storage and mobile apps will allow you to access the association’s financial accounts from any location. This is an essential feature for association managers with a large client portfolio. You can monitor accounts for one client while being on location for a different HOA.

Integrated accounting software that offers a mobile app also offers added data security. HOA accounting software like CINC Systems uses powerful security, such as data encryption, to guard your clients’ information. You’re also protected in case something happens to one of your computers. When your accounting data is stored in the cloud, it’s automatically backed up.

Help Manage Client HOAs with CINC Systems

Integrated accounting helps HOA managers in many ways. Whether you’re collecting resident fees, monitoring transactions, or generating financial reports for board members, using integrated accounting software for HOAs will help you optimize your business. Use integrated accounting for HOAs to work smarter, not harder.

If you’re ready to see how integrated accounting software can assist your business, try CINC Systems. Call (855) 943-8246, or request a free demo.

So you’ve just become an association manager. Congratulations! Leading a homeowner association (HOA) can be a very rewarding experience. You’ll be personally involved in the success and growth of your client’s community. But to provide the best possible service to the associations you manage, you’ll need an in-depth understanding of HOA bookkeeping.

Although association management software like CINC Systems provides valuable accounting features, it helps to familiarize yourself with basic financial functions. Even if you’ve done accounting for yourself or another business, you still need to educate yourself in the unique financial needs of an HOA. Bookkeeping for HOAs presents different challenges because it involves multiple people and shared interests.

Be prepared to handle an association’s daily finances as well as unexpected situations, like homeowner bankruptcy, expensive repairs for common areas or even fraud among board members. You’ll certainly learn a lot as you gain management experience, but in the meantime, here’s what you need to know about bookkeeping for HOAs.

Understand the Balance Sheet

First, you need to understand an HOA balance sheet. Accurate reporting is crucial to maintaining the finances of any business, but it’s especially important for an association with multiple members. You’ll need to pay close attention to daily, monthly and annual numbers. Understanding of an association’s balance sheet will ensure that your client always stays within their budget and make good financial decisions.

An HOA balance sheet gives you a snapshot of an association’s fiscal health. It will show how much money is currently in the HOA’s bank accounts and compare your client’s assets to their liabilities. An HOA balance sheet will list items like insurance payments, bills, resident fees, petty cash, compounded interest, and any equity in the HOA’s reserve accounts.

Statements of Income and Expenses

Statements of income and expenses are an important association management tool. These reports show all of the association’s financial transactions for a given time period, usually on a monthly basis. You’ll be able to compare the HOA’s expenses and see if they are over or under budget for the month.

These statements also track the association’s income in the form of resident fees, investments or loans. Use income reports to verify your client’s financial standing and update their budgets accordingly. You and your clients can examine the income and expense statements to make more informed decisions on future projects.

General Ledger Accounting

Next, learn about general ledger accounting. A general ledger isn’t the most exciting part of managing an association’s finances, but it’s one of the most important tools at your disposal for HOA bookkeeping. General ledgers can take many forms depending on the accounting software you’re using, but they all have the same basic features.

An HOA’s general ledger will contain all of the associations’ financial transactions. It will list these transactions in numerical order and date of occurrence. Depending on the accounting software you use, you may also be able to sort the general ledger by income/expense categories or other variables. No matter how you use this data, general ledger accounting offers a hyper-detailed look at the finances of the association you manage.

Cash Disbursements

Also known as a check register, a cash disbursements register keeps track of all the checks an association writes. This will include information such as who the check was issued to, the date it was written, the account it’s withdrawing from, and the check number. When applicable, there will also be a record of specific invoices or bills being fulfilled.

As with an HOA’s statements of income and expenses and general ledger, cash disbursements allow you to monitor association transactions very closely. Although most payments today are made online, a cash disbursement ledger is still very important in the event of an audit or financial issues such as fraud.

Accounts Payable Reporting

Accounts payable is the next item to understand when you’re learning how to take care of HOA bookkeeping. This refers to any unpaid expenses for the association, such as invoices for repair work, utility bills and municipal fees. Accounts payable reporting keeps the HOA aware of every expense that needs to be paid in the current month.

This type of reporting can also include a delinquency report. A delinquency report will include HOA residents with unpaid, overdue fees. It can also keep a record of any other institution that owes money to your client’s HOA.

Manage Accounts Daily

Once you understand the unique features of each bookkeeping method mentioned above, the real work begins. Use HOA accounting software like CINC Systems to start managing your client’s accounts. Dedicate just 20 or 30 minutes a day and you will understand how to monitor the money going in and going out of the homeowners association.

Most financial issues can be avoided by simply monitoring the HOA’s financial accounts. Watch for unfamiliar invoices, double charges and any other suspicious activity. The sooner you catch a problem, the sooner you’ll be able to solve it.

Prepare for Annual Audits

When you hear the word “audit,” most people immediately think of the IRS. But an audit isn’t always initiated because of taxes and it isn’t always a huge headache. In fact, an annual audit can ensure an HOA is in good financial standing for years to come. Some associations require an annual audit as part of their rules and regulations. Even if the association you manage doesn’t require this, we recommend doing a yearly review anyway.

Find a reliable CPA to perform an all-inclusive audit. Provide them with reports generated by HOA accounting software, like the custom reporting available from CINC Systems. There is a huge advantage to using an online accounting system. The CPA will be able to pull reports directly from the accounting software without taking up your time to run them! The CPA will also check for accounting errors and verify your bookkeeping. Additionally, you can request a “positive assurance” to guarantee the accuracy of your financial reports and confirm the HOA’s financial health.

Use CINC Systems to Make HOA Bookkeeping Easier Than Ever

HOA bookkeeping doesn’t have to be complex or overwhelming. By learning the basics and practicing due diligence, you’ll be able to manage any association’s finances without problems. But you can make your job even easier with CINC Systems. The CINC Systems platform offers multiple accounting tools for the HOA you manage. Try a free demo now.