What Should Your Management Company Be Doing for You?
Pillar #2 Financial Management
When you think of a thriving community, what comes to mind?
We envision perfectly manicured lawns, crystal-clear pools, and pristine clubhouses that invite everyone to enjoy. However, this exterior beauty is only possible with thorough, proactive, and transparent financial management on the inside.
Financial Management is the Key to a Thriving Community
It ensures your HOA can meet its obligations, maintain common areas, and plan for the future. Here’s what your community association management company should be doing in terms of financial management.
1. Budgeting: Building a Solid Financial Foundation
Budgeting is essential for planning the community’s annual expenses and ensuring that funds are allocated appropriately. A good association management company works closely with the Association’s Board of Directors to develop a realistic budget based on historical data and community goals. This ensures that expenses like maintenance, repairs, and utilities are covered, and detailed reports are provided to build homeowner trust. The budgeting process should begin early, typically during the summer, to allow enough time for Board and community review and revision, if necessary.
2. Reserve Contributions: Preparing for the Future
Your HOA must plan for major repairs and capital improvements by setting aside funds in a reserve account. A community management company, alongside a trusted reserve study vendor approved by the Board, should conduct regular reserve studies to forecast future expenses and recommend contributions to avoid financial surprises or special assessments. It is considered best industry practice that this process occur every 1-3 years.
3. Financial Planning: Setting Long-Term Goals
Effective financial planning extends beyond daily operations by setting long-term goals for the community’s financial health. This involves strategic planning for future projects and expenses, ensuring that the board can meet the evolving needs of the community. A well-thought-out financial plan lays the groundwork for long-term stability and success.
4. Forecasting: Anticipating Financial Challenges
A strong community association management company should anticipate potential financial risks, such as inflation or unexpected repairs. Accurate forecasting helps the homeowner’s association adjust its budget and maintain adequate reserve contributions. This approach ensures the financial health of the community association over time.
Hear From Our Team!
“In my role, I take a proactive approach to managing community assets. After all, here in Texas, swimming pools are not just a great way to beat the heat; they also bring folks together for fun times with family and friends!
As our communities age, maintenance needs inevitably increase. I prefer to conduct pool inspections right after the season ends, when issues are still fresh and before lead times and repairs become a concern.
This allows me to develop a comprehensive plan addressing both urgent repairs and cosmetic updates. By creating a financial timeline tailored to the community’s needs, I can prioritize expenses and budget accurately.
In partnership with the board of directors, I provided a detailed overview of proposed expenses and developed a budget for the upcoming years. This approach ensured our reserve contributions aligned with actual repair costs, enabling the association to prepare effectively for future expenses and manage financial planning more efficiently.”
Cobi Barnett | Community Manager | Texas
5. Reporting: Ensuring Transparency and Accountability
Financial reporting is crucial for maintaining transparency and accountability. Your community association management company should provide detailed monthly, quarterly, and annual reports, including income statements, balance sheets, and reserve fund updates. These reports enable the board and residents to track finances and make well-informed decisions.
Hear From Our Team!
“Financial management is more than just managing money. The association funds are important, and we are here to help the Board ensure that the requirements for managing all business accounting and required budgets are met in a timely manner. This includes monthly management reports with full account records and backup data, along with aging reports so the Board is aware of homeowner default accounts. We believe that transparency and communication with the Board and understanding of financial reporting is essential to the proper operation of the association.
Keeping accurate records is vital for tracking expenditures and proper legal responsibilities. So, that when homeowners request to review these records, it shows the fiduciary duty has been met by the Board. We also partner with the Board to ensure reserves match the assets of the association and that proper calculations and balances are established to offset deterioration of capital expenditures. This is your association, and we are here to guide you along the way. When you’re successful, we’re successful!”
Jennifer Jordan | Community Manager Supervisor | Florida
Financial Management: The Key to a Thriving Community
Inframark understands that effective financial management is integral to a community’s success. Through budgeting, reserve planning, forecasting, and transparent reporting, we help communities stay financially healthy and prepared for the future. When your community association management company excels in financial management, your community association can thrive with confidence, knowing that its financial future is secure, and your assets will be well maintained for generations to come.
