Board members oversee association matters, including managing its finances. However, it takes them a long time to do so. For many, having HOA financial only management helps take a lot of that burden off.
What is HOA Financial-Only Management?
Many HOA management companies offer specialized services tailored to each of their planned community clients. While many associations want full management services, some choose to have only support in handling the HOA’s finances.
HOA financial-only management is a service where professional managers only handle the budgeting and financial side of your HOA’s responsibilities. This offering usually works well with associations that have directors who could manage their day-to-day community management on their own.
They would still handle meeting organization, landscaping and maintenance, architectural requests, and resident communications. However, they leave the large task of managing accounts and budgets to a professional management company.
This type of HOA service provides boards with a good middle ground. The association doesn’t have to shell out as much money as with full-service management. At the same time, the board also doesn’t have to do complex financial tasks alone.
Why Get HOA Financial Management Only Services
In keeping the HOA running, its finances are a cornerstone that keeps everything moving. Part of the board members’ fiduciary duty is to protect the HOA’s funds. They need to decide how to use these in the best interests of the residents and the community as a whole.
Volunteer board members will find this difficult. They will need specific skills and knowledge to do it properly, along with knowing the right tools to make things easier. But to keep things easier, financial-only services might be the key.
Some of its benefits include:
- Lightening the Workload: With professionals handling finances, the HOA board will have fewer responsibilities, making it easier to manage its other responsibilities.
- Better Financial Transparency: Having professionals handle finances ensures statements and records are prepared accurately and transparently. It helps put homeowners’ minds at ease, knowing that the HOA’s finances are being managed responsibly.
- Safeguarding HOA Funds: HOA management companies that offer finance-only services know how to protect your funds.
Common HOA Financial Only HOA Services
What do HOA financial only management services entail? The offerings will vary by company. However, here are some of the common ones they usually offer.
Financial Reporting
A crucial part of any HOA’s financial activities is proper reporting. Having accurate financial reports lets the board of directors know the exact state of the HOA’s financial health. If your reports are inaccurate, you’ll have a hard time knowing whether the HOA is staying within budget, collecting dues properly, properly funding reserve funds, or handling future expenses.
A financial-only management company usually will prepare monthly or quarterly reports for the board to use. These statements may include balance sheets, expense and income reports, general ledgers, and even reserve fund status.
Through financial reporting, the board will be better able to make informed decisions. It also creates proper documentation that is essential in keeping things transparent.
Annual Budget Preparation
One of the biggest responsibilities of the HOA board is creating an annual budget for the community. This budget will include everything from the amount of money the HOA needs to run to any expenses for larger projects planned in the year.
When hiring HOA financial services, professional managers can help provide directors with realistic budgets. They will usually base this annual budget on a review of the HOA’s financial history, including expected income and expenses that cover all costs. For HOA boards, hiring professional management for this function makes everything more organized and less stressful.
When your HOA has a good, strong budget, the association won’t be as affected by sudden financial expenses. It also helps board members make sound decisions based on the financial layout provided by professional managers.
Assessments and Collections
Homeowners’ associations get most of their income from regular assessments, or HOA dues. When homeowners fall behind on regular fees, the community may struggle to pay bills and fund reserves.
Professional financial-only management services will help HOA boards with assessments, billing, and collection. Usually, the service also involves delinquent tracking, which monitors residents who consistently fail to pay HOA dues. Professional managers may handle sending out late notices, applying penalties, handling collection records, and coordinating with the HOA and residents, according to the community’s governing documents.
Collecting dues can be time-consuming and stressful for volunteer board members. It involves handling funds and managing resident relationships, all while ensuring compliance with legal requirements. With professional support, collections can become consistent and less personal.
Tax Preparation
Despite being a non-profit corporation, HOAs still have tax responsibilities. Unfortunately, not all board members are familiar with the filing process. Incomplete or incorrect filings can easily lead to penalties and wasted resources.
Some financial-only management companies would include help in preparing HOA taxes. Others offer access to CPAs or tax professionals to make the process easier. They also help the association prepare all required documents and meet tax deadlines.
This service benefits HOAs whose board doesn’t necessarily have financial or accounting experience. The support provides the board with confidence that it can fulfill its annual obligation correctly.
Reserve Fund Monitoring
Reserve funds and reserve studies are a must-have for every homeowners’ association. This account helps the community prepare for large-scale repairs and long-term replacements.
Part of the financial-only management services includes monitoring your community’s reserve contributions. Professional managers can help track whether the HOA is setting aside sufficient funds for this allocation. Some management even offers reserve study coordination and recommendations to help HOA boards understand the impact of these funds on the HOA’s financial health.
Financial Consulting
Some boards only need professionals to guide them, rather than handing over full control to a management company. Through financial consulting, experts can help the HOA board with spending patterns, improve internal procedures, choose better tools, or better understand financial reports.
Apart from understanding finances, professional management companies can also help give advice on financial security and fraud prevention. They may also provide input on how to handle collections and adjust the budget. It greatly helps boards facing an upcoming major project or major financial issues, such as delinquencies and collections.
A Practical Option
HOA financial-only management provides HOA communities with the professional financial support they need, all without requiring them to commit to full-service management. This is a good, cost-effective solution for associations that want better reporting, smoother collections, stronger budgeting, and more organized accounting.
Creative Management Company offers financial-only management services to HOAs and condo communities in the Greater Houston area. Call us today at 713-772-4420 or contact us online to learn more!
