In many ways, Tacoma, Washington, HOA board members must be jacks of all trades. From implementing policy changes to navigating homeowner disputes and managing finances, there are many tasks that an HOA board must undertake as part of their obligatory duties. Understandably, your board members may not have the professional expertise in HOA financial management that an accountant or other expert might; with so many other responsibilities to manage, it can be hard to know where to start. If you need HOA financial management guidance, try these four simple yet critical financial tips that all HOA boards should know.
1. Evaluate Insurance Policies
During your annual budget review, take time to review your existing insurance policies and refine them to cut costs, if possible. While you should always make sure that you have ample insurance coverage, you may eliminate specific policies that are unnecessary. For example, your HOA may not need coverage for damages resulting from natural disasters such as earthquakes or snowfall, depending on your region. You should also compare your insurance statements to previous years to see if rates have increased. Shopping around to different insurance companies may help you find a comparable policy at a lower rate. Just make sure that you have enough coverage for all of your community association’s needs!
2. Double-Check Financial Reports
Mistakes happen, but financial mistakes can be highly inconvenient and even costly. Make sure that your financial reports are precise and detailed. Don’t make categories that are too vague or commingle funds. Have several people check the reports to ensure no mistakes and compare reports from the year before to avoid apparent discrepancies. Make sure that you are creating clear and separate funds for operations, deferred maintenance, and reserves. Detail and accuracy will make life much easier for your HOA in the long run.
3. Create an Investment Plan
If you want to mitigate any potential future financial problems, consider creating an investment plan for a portion of your reserve fund. Allowing your funds to earn returns is an excellent way to protect your community in the future and make each dollar go the extra mile. However, make sure that you follow any investing guidelines set out in your community’s bylaws. There may be restrictions on how much you invest and in what you can invest. Regardless of bylaws, make sure that your investments are low-risk and can be converted into cash quickly if needed.
4. Leave it to a Professional HOA Management Company
If you want to ensure that your community’s finances are in the best hands possible, invest in professional HOA financial management. Many community association management companies such as The Management Trust offer community management services, including HOA financial management. Our financial services include record keeping, fund management, collection services, monthly statement prep, budget preparation, audit coordination, escrow services, and more. When you leave your HOA financial management to trained experts, you can rest assured that your community’s budget is in good hands while your board has more time to focus on the bigger picture.
Especially in the wake of the pandemic, many community associations are taking a closer look at their financial records and planning for the worst-case scenario. However, it can be difficult for everyday board members to tackle these nuanced financial matters. If you want only the best HOA financial management for your Tacoma, Washington, community association, trust the experts at The Management Trust. To find out more information about our full range of community management services, including HOA financial management, call The Management Trust at (253) 472-0825 or fill out our online contact form today.