HOA/COA Accounting

Managing accounts for a homeowner association can be challenging. Whether the homeowner association (HOA) is large or small, managing their accounts requires attention to detail, strong organizational skills, and clear communication. You’ll need to balance budgets, process work orders, collect payments, hire maintenance and repair workers, and handle many other recurring tasks.

On the other hand, managing HOA accounts can be highly rewarding. An efficient, well-managed HOA creates a thriving community that benefits all its residents for years to come.

What are the  best ways to manage your HOA’s accounts? Here are 10 tips to help you manage homeowner associations.

1. Read All HOA-Related Documents

When you’re getting started in association management, familiarize yourself with common HOA documents. Read all rules, regulations, covenants, governing charters and membership guidelines, as well as all city, county and state ordinances that apply to the HOAs you manage. You may also benefit from researching local tax codes.

This research will help you manage your homeowner association accounts. When you understand the relevant legal framework, you’ll be able to make decisions quickly. You’ll also have a complete picture of your personal responsibilities as a manager.

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2. Get to Know the Residents of the HOAs You Manage

Reach out to HOA residents as often as you can. Ask for feedback. Invite comments and questions. This will help residents feel more comfortable approaching you for help. Open communication will enable you to anticipate your client’s needs and manage your accounts with everyone’s best interests in mind.

3. Create a New Budget Every Fiscal Year

Maintaining a budget is one of the most important duties of an association manager. In addition to monitoring monthly expenses, homeowner association managers are often responsible for creating the HOA’s annual budget.

Although an HOA’s finances may not change dramatically from year to year, it’s still important to draw up a new budget at the beginning of each fiscal year to reflect economic changes. Keep your budget updated and manage HOA accounts accordingly.

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4. Keep Vendor Lists and Contracts Current

Depending on the needs of your clients, their HOA may require regular services from vendors and contractors. This may include plumbers, electricians, general contractors, gardeners, and cleaning and office staff.

When you manage HOA accounts, it’s important to make sure that your list of contractors is accurate and up-to-date. By keeping a database of businesses you trust, you’ll know exactly who to call when your HOA client needs work. Building strong, long-lasting relationships with vendors can also help homeowner associations save money by receiving better deals or discounts on services.

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5. Use the Best Accounting Software for Your HOA Clients

Accounting software is crucial to successful HOA management. HOA accounting software like CINC Systems streamlines an association’s finances and makes it easier than ever to stay organized. Use  homeowner association accounting software to receive fee payments from residents, complete vendor invoices, and automate monthly bills.

Depending on the size of your HOA client and its unique needs, we offer accounting software that can improve the association’s financial situation.

6. Closely Monitor Income and Expenditures

Once you’ve found  the best HOA accounting software  for your needs, you can closely monitor your income and expenditures. Sync your HOA accounting software with your bank accounts so you can see transactions in real time. This will allow you to observe withdrawals, deposits, and scheduled payments as they happen.

By closely monitoring your HOA accounts, you’ll be able to align your client’s finances with their monthly and yearly budgets. This will limit clerical errors and cut back on excessive spending. It can also reduce incidences of fraud.

7. Automate Work Orders

When managing an HOA, we recommend implementing a community web portal where residents can submit work orders online. This will save you time and money. Processing work orders in an automated system allows you to sort by submission date, priority and category so you can solve issues more efficiently.

Members prefer to submit work orders online versus traditional paper systems. They can file 24/7 and check for updates in real time. Automating an HOA’s work order system will ensure that maintenance and repairs are performed accurately and quickly.

8. Establish Online Payment Portals for Residents

Your business can use accounting management software to create online payment portals so association residents can pay fees online. This saves time by eliminating the need for check collection. It also enables an HOA to process payments much faster.

An HOA payment portal can also be expanded to include an invoicing system for vendors. By establishing online payment processing, association managers, board members, and residents alike will be able to go paperless.

9. Maintain Adequate Insurance Coverage

Association managers have many duties. Maintaining an association’s insurance policy is one of them. Assess the needs of your HOA clients and make sure they carry liability insurance at all times. List the HOA’s assets, consult with board members, and speak to a licensed insurance agent to find the best policy for their association.

When managing accounts, add the HOA’s insurance to your list of vendors and contractors. This will make it easy to access their policy information at all times.

10. File Annual Tax Returns

Finally, always file HOA tax returns on time. Accounting software will help you do this. HOA accounting software gives you a customizable system for organizing HOA finances and generating reports, which will assist CPAs or other tax professionals.

File local and federal taxes each year with detailed, accurate information. Make receipts easily available in the event of an audit, and always ensure HOAs pay what they owe in a timely manner. Filing taxes and managing an HOA’s accounts can seem like a lot of work, but with enough organization and planning, your organization will always run smoothly.

Try  new HOA management software today with CINC Systems and see how it can improve your organization.

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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.

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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.

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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.

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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.

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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.

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There are several reasons why you should use online accounting software to manage homeowner associations (HOAs) and condominium associations (COAs). As an association manager, you’ll be helping your clients by taking on many financial responsibilities for their organization.

From daily tasks like a general ledger to collecting fees and invoicing big projects, HOA/COA managers have many accounting duties. By using online accounting software, you can streamline your business and operate with greater efficiency. Whether you manage a large client portfolio of high-density HOAs or a smaller COA, you’ll find online accounting software that meets all your needs.

Here are some of the key reasons why you should use online accounting software to manage HOA/COAs.

General Ledger Accounting

No one likes crunching numbers by hand. As an HOA/COA manager, you’re responsible for balancing your clients’ books and balance sheets. In the past, this task required calculating withdrawals and deposits by hand. Say goodbye to spreadsheets and calculators. With online accounting software for HOA/COA management, general ledger accounting is fast and easy.

Online accounting software designed for associations includes the exact tools you need for general ledger accounting. This feature stores your clients’ financial data in the cloud, automatically synching with their bank accounts and updating the balance as transactions occur. Whether it’s an online bill, a resident fee, or a larger one-time invoice, online accounting software can process all transactions for the HOA/COAs you manage.

For a free consultation, call 855.943.8246

Automatic Bank Reconciliation

Automatic bank reconciliation is one of the best features of online accounting software for HOA/COA management. Automatic bank reconciliation means you can sync all your clients’ bank accounts to the accounting software’s dashboard.

Once they have been connected, accounts are updated in real-time. Using automatic bank reconciliation, you can check the balance of your clients’ association bank accounts any time, any place, from one convenient dashboard. This saves time because you won’t need to login to separate websites each time you want to check an account. You can also monitor transactions live, as they occur, which can help reduce potential fraud. Most importantly, the end of the month reporting becomes a snap when you have your automatic reconciliations done throughout the month.

Process Payments Online

Resident fees are the major source of income for any HOA/COA. Depending on the association’s governing policies, residents may be required to pay fees monthly, quarterly, or annually. As the association manager, it’s your job to collect them. Using online accounting software can help make this task much easier.

With online accounting software for managing HOA/COAs, you can create a convenient web portal where residents can pay their fees electronically via e-check or credit card. Payments are directly deposited into the HOA/COA’s account, saving you a trip to the bank. Additionally, you can use this software feature to see which residents have paid and which ones still owe.

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Increase Efficiency by Going Paperless

Going paperless is another reason you should use online accounting software to manage HOA/COAs. Online accounting software automates most accounting tasks and interfaces with most online banks. You can process fees, invoices, and pay bills for your clients’ association entirely online. This increases efficiency and keeps your costs down because you won’t be printing or mailing items nearly as often as you would with traditional accounting systems.

Additionally, most online accounting software for association management is cloud-based. This means that your clients’ data is stored remotely across multiple servers. You’ll be able to access data for the associations you manage from any computer. This will drastically reduce your need for an in-office filing system.

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Handle Invoicing and Accounts Payable and Receivable

In addition to creating a web portal for processing resident fees online, you can use online HOA/COA accounting software for accounts payable and receivable, as well as general invoicing. When the association owes money to a vendor or contractor, the service provider can submit their invoice online. Pay with the click of a button, or set up automatic payments for larger bills.

You can also use online accounting software to automate monthly bill pay. Most HOA/COAs require monthly services such as landscaping, sanitation, utilities, and security. Rather than pay each bill individually as it arrives, you can use your online accounting software to pay automatically on a specific schedule.

Work Remotely with Mobile Features

Online accounting software for HOA/COA management also offers you the flexibility of working remotely. Because most online association accounting software is cloud-based, you can access your clients’ data from any computer or tablet with an internet connection. Some software applications also have mobile apps you can use on your phone.

With mobile features, you can access data for one client while you’re on-site at another location. This lets you monitor transactions, process work orders, or handle other HOA/COA business while multitasking more efficiently.

Generate Financial Reports

Finally, you should use online accounting software to manage HOA/COAs because these applications allow you to generate financial reports with the click of a button. As an association manager, you’ll often interface with your clients’ board members to discuss the financial health of the association. Whether you’re helping the board conduct an annual audit or assisting with the HOA/COA’s taxes, you’ll need to provide data in a clear, presentable report.

Using online association accounting software, you can generate reports automatically. Each report can be customized to include specific data sets, such as time periods, transaction categories, or specific accounts. These reports can then be emailed to your clients’ board members or other relevant third parties, such as a tax attorney. Generating financial reports will save lots of time for everyone involved, especially you and your employees or co-workers.

Optimize Your HOA/COA Management Business with CINC Systems

If you’re running an association management business, the right online accounting software can help you increase your efficiency without hiring new employees or outsourcing to expensive CPAs. Online accounting software like CINC Systems provides everything your association management business needs to help your clients with their finances.

To see how CINC Systems can optimize your business, call (855) 943-8246 to request a free software demo.

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At their core, homeowners associations (HOAs) are financial organizations. HOAs collect dues and assessments from members, then manage the funds to provide various services and amenities to residents who live in HOA properties. HOAs are run by an elected board who makes financial decisions on behalf of the members. To help the board make well-informed decisions, it’s important for HOAs to perform a type of financial examination called an audit.

An audit is a thorough, detailed examination of all of the association’s financial accounts and financial documents. Usually performed under the expert guidance of a CPA, an audit cross-checks all of the HOA’s financial accounts with physical documentation. During the audit process, a CPA may also call vendors and debtors to confirm outstanding balances associated with the HOA’s accounts payable and receivable.

In some regions, state law requires HOA audits at least once a year. However, whether or not an audit is legally required, all HOAs need to be audited periodically. Audits ensure that current board members understand the financial decisions made by their predecessors. This provides valuable insight that can help them make better choices for the HOA’s future direction.

As an HOA manager, it’s unlikely that you’ll be directly involved in an association audit for your clients. However, you can assist your clients in preparation for an audit by providing them with information and financial reports. When it comes to HOA management, it’s always better to know as much information as you can about the rules and guidelines that may affect an association.

By understanding why HOAs need to be audited, you’ll be able to offer better service to your HOA management company’s clients. Here’s why HOAs need to be audited.

Why HOA Audits Matter

HOAs need to be audited because the process of auditing reveals valuable information about the association’s financial history, its current financial health, and its prospective financial future.

Evaluate Budgets

One of the best reasons to conduct an HOA audit is to help evaluate the budget. An audit provides you and your clients with in-depth details about the HOA’s spending, income, reserve fund, investments, liabilities, outstanding debts, liens, and other financial data. You can help your clients create a better budget for the HOA by reviewing the results of an audit with them.

An audit will show you and your clients where the HOA’s financial patterns are working effectively. In these areas, you can help your clients develop a strategy to continue capitalizing on these budgetary successes. Additionally, an audit will reveal where the budget may be falling short. These are the areas that can be improved upon in the next budget.

Future Financial Planning

HOA board members are often tasked with long term financial planning for the association. It’s unlikely that you’ll be making these big decisions yourself, however, you clients will benefit from your expertise. You may be called upon to assist with long-term financial planning as an outside advisor.

If the HOA has been audited recently, the information provided by the audit can be a powerful tool for future plans. For example, the audit may reveal information about previous construction projects or upgrades to shared community spaces. If the audit determines that a prior construction project went over-budget, you and your clients can learn from this mistake and plan the next project differently.

Assess HOA Fees

HOAs also need to be audited to help board members assess the association’s fees. Are member fees covering basic operating costs as well as hitting investment targets for the HOA’s reserve fund? If not, regular monthly dues may need to be raised, or the HOA may need to levy a special assessment.

By examining the financial data presented in an HOA budget, you can assist your clients’ board as they make decisions about changing membership fees. You’ll be able to see in detail how the current fee payments fit into the association’s financial goals.

Prevent Fraud and Misuse

Finally, HOAs need to perform a regular audit to help prevent fraud and misuse. Although no one likes to think about an HOA board member or employee committing fraud, financial abuse is a common occurrence in many fiscal organizations. As an HOA manager, it’s important for you to monitor your clients’ finances and protect them.

By reviewing the information in a financial audit, you’ll be able to gain a stronger understanding of the HOA’s financial history. You can use this as a baseline to spot discrepancies or unusual patterns in financial transactions. This will enable you to catch fraud or misuse.

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Audit Alternatives

Because of the complex nature of an HOA audit, the process can be time-consuming and expensive. Some associations may wish to skip auditing and pursue alternatives. Although we recommend an annual audit for all HOAs, here are some other options. If your clients ask about audit alternatives, you can offer these methods as a suggestion.

Financial Review

The difference between a financial review versus an audit lies in the amount of assurance provided. In other words, a review is less thorough and less detailed than an audit, so the information presented in a review may not be as accurate. However, reviews can be performed in a shorter period of time and do not need to be conducted with a CPA. As a result, reviews are less expensive than an audit.

Financial Compilation

A financial compilation is even quicker than a financial review. In a compilation, experts examine previous financial statements instead of performing a detailed examination of accounts and financial assets. Compilations can be a great option for mid-year financial assessments.

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If you’re wondering whether an HOA needs to be audited, the answer is yes. As an association manager, you can assist your clients with their financial audits by preparing financial reports in your HOA accounting software. If your accounting software can’t generate custom financial reports automatically, try CINC Systems cloud-based software today. Click here to request a free demo.

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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.

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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.

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As a homeowners association (HOA) manager, your clients rely on you to assist them with managing their finances. This is a significant responsibility that shouldn’t be taken lightly. As the HOA manager, you’re in a position to help the association create and maintain a strong foundation for lasting financial health. To ensure your clients’ fiscal success, it’s important to implement certain accounting best practices.

These accounting best practices for HOA financial management require organization, dedication, and attention to detail. However, you don’t need a background as a CPA or a financial expert to implement these policies for your association management business and your clients. With these best practices, you’ll be able to streamline all aspects of financial management for your client’s HOA.

Understand State and Local Laws

As you undertake the financial management for your client’s HOA, it’s important to understand state and local laws. Many regions have specific rules that may affect the governance of an HOA.

For example, in some states, the HOA is required to hold an annual audit regardless of whether the board or HOA members have requested one. Some states also have guidelines about how financial data is reported to the HOA’s board.

Make sure you know the legal requirements that pertain to each of your clients’ HOAs so that you can provide the most accurate accounting services.

For a free consultation, call 855.943.8246

Use Cloud-Based HOA Accounting Software

Another best practice for HOA accounting is to use cloud-based HOA software, such as CINC Systems. Cloud-based accounting software is a type of program that stores your financial data remotely across multiple servers, known as the “the cloud.”

This offers multiple advantages over traditional accounting software. Cloud-based HOA accounting software is more secure because the data is encrypted. You’re also protected against hardware failures; if your computer crashes, your client’s data is safe in the cloud.

Plus, cloud-based accounting software enables you to manage your HOA clients’ finances from any location remotely. This enables your HOA management company to go mobile.

Setup Online Payment Portals

When performing HOA accounting duties, the best practices are the ones that streamline your business and provide a more optimized service for your clients. One way to do this is by setting up an online payment portal using your association management software.

With an online payment portal, the HOA’s residents can pay their fees and assessments electronically. The funds are automatically deposited into the HOA accounts. You’ll save time by avoiding the lengthy process of collecting and depositing checks.

You can also use HOA accounting software to generate a list of which residents have paid and which ones are delinquents. This makes it easier to issue warnings and follow up with potential citations or liens.

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Create an Online Vendor Directory

We also recommend creating an online vendor directory as an HOA accounting best practice. In your role as the HOA manager, you’ll often find yourself dealing with vendors on behalf of your clients. This may include contractors, plumbers, electricians, landscapers, and other service professionals.

When you need to hire a vendor to perform work for your client, it’s important to choose the vendor with the best value and remain within your client’s budget. By having a directory of vendors you’ve already worked with, and knowing what their rates are, you’ll be able to save time because you won’t need to hire new workers.

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Balance the Books Electronically

Balancing the books is vital to maintaining a fiscally sound HOA. It’s recommended to do this electronically as an accounting best practice. By balancing the books in your HOA accounting software, instead of doing it by hand, you can help eliminate errors and ensure accuracy.

Whether you’re working with the general ledger, reserve fund or accounts payable/accounts receivable, do your bookkeeping with HOA accounting software such as CINC Systems. CINC Systems automates many of the processes involved with balancing the books and gives you an accurate real-time update for each of your clients’ financial accounts.

Use HOA Accounting Software to Pay Bills

No one likes to pay bills. Whether it’s a bill for your HOA management business or one for your client, the paperwork can quickly add up and become a hassle. But did you know that you can use most HOA accounting software programs to pay bills online?

For your clients, this is another HOA account best practice that we recommend. Use your HOA accounting software to set up automatic payments for any of your clients’ recurring bills, from utilities to landscaping.

Monitor Financial Transactions in Real-Time

Unfortunately, HOAs are at risk of financial fraud because so many individuals have access to the association’s financial accounts. One of your responsibilities as an HOA manager is to help protect your clients from fraud and other forms of financial abuse. To do this, make it a best practice to monitor your clients’ financial transactions in real-time.

Use your HOA management software to perform automatic bank reconciliation, a feature that syncs each of your client’s financial accounts to your software dashboard. This means you won’t need to login to multiple bank websites to see the account balances. Plus, accounts are updated in real-time.

This means you’ll be able to see each transaction as it occurs. If a particular financial transaction looks suspicious, you can flag the activity, report it to your client, and take appropriate action to prevent further problems.

Perform an Annual Audit

An annual audit should be part of every HOA’s financial best practices. In some states, HOAs are required to perform audits due to local law. In other states, the association’s members can force the board to perform an audit by majority vote. Whether or not your clients are required to hold an annual audit, it’s still a good idea.

This is because financial audits provide valuable information about the HOA’s fiscal health. The data revealed by an HOA audit can help the board make important decisions about budgeting, fees, and more. Additionally, if the HOA is in poor financial health, an audit can help diagnose the problem and highlight the steps you and your clients can take to solve the problem.

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To see how CINC Systems association accounting software can help you implement these financial best practices for HOAs, request a free software trial now.

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Budgets are a crucial part of every homeowners’ association (HOA). Budgets enable the HOA to provide services for residents, maintain common areas, and create a safe, desirable community for homeowners. However, a poorly managed budget can lead to disaster. That’s why it’s crucial to avoid common HOA budgeting mistakes.

If you’re getting ready to help your clients prepare their annual budget, here are some common HOA board budgeting mistakes to avoid. By identifying these pitfalls in advance, you can do your part to make sure that your clients create a successful HOA budget.

Mistake #1. Poor Bookkeeping Habits

One of the most common budgeting mistakes is poor bookkeeping habits. Because HOA finances can be complicated, it’s easy to get overwhelmed trying to keep track of all the data. Some HOA managers and boards fail to balance the general ledger accurately. Others may lack an organized system for filing receipts, invoices, and other relevant paperwork.

To avoid this common budgeting mistake, use HOA accounting software like CINC Systems to perform bookkeeping duties online. CINC’s powerful association accounting software offers users the ability to consolidate accounts onto one platform. Use one login to work seamlessly across accounts, and monitor financial transactions in real-time.

CINC makes it easier than ever to create a reliable bookkeeping system for your associations’ clients.

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Mistake #2. Overlooking Basic Costs

Another common mistake that HOAs make when budgeting is to overlook necessary costs. Everyday expenses, including insurance, utilities, and garbage disposal, can be easy to forget when budgeting, especially if they’re inexpensive or if the HOA uses an automatic bill-pay system.

Even small operating costs can quickly add up and wreak havoc on an HOA’s budget. That’s why it’s vital to review the HOA’s bills with a fine-tooth comb and every expenditure when creating a budget.

Mistake #3. Disregarding Previous Financial Reports

Budgeting is about the future, yet you can’t create a healthy budget without considering the past. Disregarding financial reports from previous years is a common HOA budgeting mistake. By reflecting on the HOA’s economic history, the board can avoid repeating the same mistakes.

Previous reports also provide essential data about the HOA’s current financial status, including account balances and outstanding debts. It’s vital to understand this information for successful HOA budgeting.

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Mistake #4. Ignoring Inflation And Changing Tax Rates

When budgeting, some HOAs exclude external economic factors like inflation and fluctuating tax rates. For example, the HOA may set aside a specific amount of money to pay for new construction without realizing that the material costs may rise. States and cities may also levy new taxes or require more permitting fees.

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Mistake #5. Neglecting the Reserve Fund

Neglecting to maintain the HOA’s reserve fund is another severe budgeting mistake. The association’s reserve fund is a particular account set aside for emergencies and other unplanned expenses, funded by a fixed percentage of membership dues.

While the reserve fund may go untouched for months or years at a time, it’s crucial to monitor this account and maintain a precise minimum balance whenever possible. When creating a budget, HOAs need to determine how much to set aside for the reserve fund each year to keep this safety net intact for the community.

Mistake #6. Failing to Review Vendor Contracts

Some HOAs also fail to review vendor contracts for ongoing services like landscaping, security, and garbage disposal. Whenever these contracts come up for renewal, HOAs must carefully assess any changes to the service’s cost. Failing to negotiate with the vendor can harm the HOA’s finances.

When both parties agree to a new contract, the HOA’s budget needs to be updated to reflect the adjusted service fees. For vendor contracts that may change after the budgeting season has passed, consider budgeting for a small cushion to cover additional service costs in advance.

Mistake #7. Ignoring Foreclosures

HOA’s generate their income by collecting dues, fees, and assessments from homeowners. During the creation of a budget, board members will estimate this income based on the number of homeowners in the HOA. Unfortunately, many associations make the mistake of ignoring foreclosures when they figure this number.

No one can predict foreclosures; however, associations can assess the overall economic climate in their region. For example, if unemployment is rising in your city, foreclosures will be more likely to occur. Some properties may also have liens against them, indicating that a foreclosure is on the way. When budgeting, try to account for theoretical foreclosures and a subsequent reduction in income.

Mistake #8. Failing To Review Debts

Another budgeting mistake occurs when HOAs fail to review outstanding debts or unpaid invoices. Next year’s budget needs to include any money the HOA owes to another party; otherwise, this may result in a budget shortfall.

Ensure your HOA clients acknowledge all debts and accrued interest in the new budget by examining previous financial reports, bank statements, and other business documents.

Mistake #9. Disorganized Collection Protocols

Finally, one of the worst common budgeting mistakes an HOA can make is a disorganized protocol for collecting fees. Make sure your HOA immediately deposits collected fees into the correct account.

Additionally, HOA managers need to keep track of which residents have paid their fees and which ones still owe. If there are members who owe extra fees or penalties, you’ll need a streamlined protocol for collections.

Consider switching to a cloud-based association management platform like CINC Systems. CINC’s dynamic association management software platform empowers HOAs to collect fees and process payments online with increased accuracy and efficiency and minimized manual work.

CINC supports all types of accounts receivables, including checks, credit cards, and bill pay service — delivered daily in a single consolidated receivables file.

Try A Free CINC Systems Demo Today

By avoiding these common HOA budgeting mistakes, you can help your clients remain in high financial standing for years to come. CINC Systems is here to help you get the most from HOA management. Try a free demo of our HOA management system today by clicking here.

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