How Can Accurate HOA Bookkeeping Prevent Homeowner Assessment Increases?

Is your Homeowners Association penny-wise and pound-foolish? If you’re relying on a board member to do your bookkeeping you may have fallen headfirst into a cliché. Let’s look at the best way for your HOA to save money and prevent homeowner assessment increases.

Fees, Dues, or Assessments?

No matter what you call them, every HOA collects money from its members to keep the community running. The HOA board is responsible for letting the members know how their money is being used.

The fastest way to get in hot water with the members of your community is not being able to provide that information. Preferably at your fingertips, at all times. How often does a board member find themselves in casual conversation with a neighbor who asks where their dues money is going? Far more often than non-board members think.

The HOA board is also responsible for keeping fees and other assessments as low as possible. It’s a balancing act between two separate needs of the community. They need the services that the HOA provides, but they should not be paying more for them than is necessary.

So how do you keep fees reasonable and neighbors happy? The very first step is meticulous HOA bookkeeping.

Professional Bookkeeping Services

This is where many HOAs find themselves in the penny-wise and pound-foolish dilemma. Yes, there is a cost for a professional bookkeeping service. But remember what you get in return.

Accuracy, accountability, and reliability are all worth the cost. Without an accurate accounting of expenses and assets, you won’t have an adequate picture of the financial stability of your organization.

When you have ready access to all of the details, and someone to help you understand them, it’s far easier to plan for major expenses and budget for minor ones. If your board treasurer is not an HOA accounting specialist, don’t expect them to provide this service.

Having an HOA bookkeeping service helps you avoid common accounting errors that can leave you short of funds. The last thing you want to explain to your HOA members is that a data entry error led to an unexpected special assessment or an increase in dues.

Your bookkeeping professional will help you understand reserve reports, monitor expenses, and provide budget insights and financial discrepancies when they occur. Bookkeeping and accounting errors are costly. Avoiding them is worth the cost of a professional.

You’ll also have the peace of mind that comes with knowing that all of your financial information is in one place, meets applicable requirements, and remains consistent through changes on your HOA board.

Where your HOA bookkeeping service will prove most valuable in avoiding excess fees is in long-term planning and budgeting. You’ll have the full picture of your association’s finances when making decisions about when and where to allocate resources.

The single best thing you can do to keep fees and assessments down is to enlist the expertise of an HOA bookkeeping service.

A responsible HOA board will also review and evaluate ongoing expenses on a monthly basis. Not only does this help control costs, but it also ensures the HOA is addressing the current needs of the community.

Review Services and Vendor Contracts

Just like you might look over the services you pay for at home, an HOA should regularly make sure it is getting the most from its vendors. Make sure you need all of the services your HOA is paying for, and shop around to see if you’re getting the best price.

Sometimes an HOA uses a vendor or has a service simply because that’s what they’ve always done. If that seems strange, ask yourself how often you examine your cell phone or streaming subscription services. Things fall through the cracks when people are busy and they end up paying for things they aren’t using.

A professional bookkeeper will set up an approval process that ensures the board is regularly reviewing vendor contracts and services so that all expenses the HOA is preparing for are necessary and cost-efficient.

Compare Insurance Rates

Just like any other service, make sure you’re getting the best rates for insurance. That doesn’t necessarily mean changing companies. Sometimes you can negotiate a lower rate or your company may have a new product that suits your needs and is less costly.

One important caveat when looking at insurance: be sure you know exactly what your HOA is required to have for coverage. It is the job of the board to make sure the HOA is adequately insured.

If you aren’t sure what’s required, talk to an insurance agent you trust.

Review Landscaping Services

We’re pulling this out for separate review because, for many HOAs, it is one of the costliest items in the budget. There are also more ways to reduce costs here than with other services.

Review both the company and the services they provide. Decide if you would like to move to ground cover and plants that require less care or look at alternatives to costly fertilizers or pesticide treatments.

Keep in mind the environmental impact of your choices, as well as their effect on the well-being of your community members. Like an investment in a professional bookkeeper, an investment in sustainable, low-maintenance landscaping may have a front-end cost that is offset by later saving.

In this case, those savings may come from using less water and less frequent mowing. You may also decide to switch to perennial plants to reduce the annual cost of both plants and labor.

HOA members often have strong opinions about landscaping in community spaces. Be sure to know what services you’ve chosen and why for any public meeting. Honestly, this is one you should just always be prepared to discuss. It will come up, if not at a meeting, then in your driveway when a neighbor stops by to chat.

Being part of an HOA board can be time-consuming and exhausting, but it doesn’t need to be. By hiring professionals for your bookkeeping you’ll remove a huge burden from board members and have the information you need to make decisions that keep fees low and special assessments to a minimum.

Contact Homey Bookkeeping today to learn more about how a professional bookkeeping service for your HOA can keep dues low for you and your community members.