A homeowners’ association (HOA) board of directors has several duties, including keeping the community’s finances in order. This means maintaining the HOA’s budget and accounting records, collecting assessments, and using funds wisely for community expenses. However, staying on top of the HOA’s financial health can sometimes be overwhelming for board members. That’s why support from a financial professional might be beneficial.
If your HOA’s accounting duties are challenging for your board, you likely need professional financial management support. Here are seven signs that you do.
Reasons to Consider an HOA Financial Management Professional
For many HOA boards, hiring a financial management service provider helps balance responsibilities and busy schedules and streamline the community’s overall operations. Here are some reasons your board may want to consider outsourcing your financial duties to a professional.
1. You’re not a financial expert.
While some board members may have accounting knowledge, it might not be the professional experience needed to handle complicated taxes, balance statements, and budgets specific to community associations. HOAs are typically set up as complex organizations with unique taxation. Working with a skilled financial service provider who specializes in HOAs can ultimately help you avoid common accounting mistakes.
2. You employ manual bookkeeping methods.
Making accounting errors is too easy if your board still uses manual bookkeeping techniques. Even if you’re careful, one small oversight can lead to major issues down the road. Manual methods are also time-consuming and require a lot of updating that can take your focus away from other community needs.
When you hire a certified public accountant (CPA) or management company with an expert accounting staff, you have access to the latest financial tools, such as a digital financial management system to make bookkeeping simpler and more secure.
3. You have to rush to meet deadlines.
HOA boards and budgeting committees often find themselves rushing through the budgeting process to meet deadlines and keep operations moving forward. However, speeding through complicated numbers can lead to inaccuracies and unbalanced budgets that hurt the community in the long run. With a professional management team to oversee the budget, support committee efforts, and manage some of the board’s financial responsibilities, you’re more likely to have an accurate representation of funds and efficient processes that allow you to meet critical deadlines.
4. You’re making costly recordkeeping mistakes.
Handling your HOA’s finances in-house may not be the most cost-effective way to keep your records in order. Financial recordkeeping mistakes can end up costing residents more than anticipated if they’re not caught and remedied quickly.
A financial management professional has the expertise to keep accurate records and avoid errors that can be overlooked by an untrained eye, including:
- Tax return mistakes
- Insufficient funds in your reserves
- Inaccurate balance sheets
- Overdue bills or expenses
- Delinquent assessments
5. You’re spending an excessive amount of time on the budget.
Budgeting is one of the most challenging tasks for HOA boards, which is why it can take a long time to complete. However, spending a disproportionate amount of time on the budget takes away from other essential responsibilities. Hiring a CPA for your HOA can free up your schedule and leave the budgeting to the experts.
6. You’re paying providers too much for HOA services.
A CPA will conduct a regular financial management analysis to ensure all records are accurate and align with your HOA’s policies. They also identify what areas need improvements and where you can cut costs. In many cases, associations overpay providers for HOA services that are available at a much lower rate. Your community management company or CPA can catch these discrepancies and help your association save money.
7. You’re not regularly collecting late fees and assessments.
If you find it difficult to stay on top of HOA assessments and late fees from homeowners, you’re missing out on crucial income for your association. Working with a community manager and a financial service provider means you have reliable support to collect regular dues, assessments, and late fees that keep the community running at its best.
Do you have a collections policy in place? Download our “Step-By-Step Guide to Developing an HOA Collections Policy” to build one for your community.
How to Find a Professional Accountant for Your HOA
An experienced accountant can significantly impact your community’s financial health. If you’re ready to work with a professional, here are a few tips to help you connect with the right CPA for your HOA:
- Reach out to your community manager. If your association has a community manager, they’ll likely have in-house CPAs specializing in HOA financial management. Ask about their financial services and how they can help with your needs.
- Send requests for proposals (RFPs) for accounting services. It’s important to do your due diligence when searching for the best CPA. Compare rates, methods, and experience by sending an RFP to potential candidates to ensure they offer services you need at a price that fits your budget.
It’s easy to send an RFP. Download our free “Sample RFP for Your HOA CPA Candidates” and fill in your community’s information in the template.
- Ask for recommendations. Get recommendations from neighboring HOAs or other industry connections. A personal endorsement from an insider says a lot about a financial service provider’s expertise with homeowners’ associations.
The Beginner’s Guide to HOA Budgets
Financial management and budgeting can be intimidating for many board members—especially if they have no background or experience in accounting. However, educating yourself and understanding the basics can go a long way in helping your HOA maintain financial stability. Check out our ebook, “The Beginner’s Guide to HOA Budgets,” for insight on financial planning for your association.