Managing the finances of your HOA is not easy. Successful financial management requires experience and expertise. Because of this, your HOA board should get help and consider hiring financial management services from an HOA management company. The following are reasons to hire these services:

Board Members May Not Have Financial Expertise

HOA board members can have varying experiences. However, unless one member is an accountant or attorney, the board may not have financial expertise in general. Dealing with HOA finances includes issuing yearly 1099 forms to association vendors, giving financial statements, or handling audits. When these tasks are not fulfilled properly, costly mistakes can occur. 

HOA financial details show the association’s current financial health. They can demonstrate whether adjustments must be made to some expenses or costs. Difficulties with financial decisions and situations can lead to huge penalties for the association. 

A Financial Expert Can Commit to Management Every Day

Unlike board members who have busy personal lives, an HOA finance manager can focus on managing the association’s finances every day. They can keep up with details regarding financial statements, reserve funds, and loan applications. The services they offer ensure that nothing is left out.

Avoid Fraud

Staying on top of the finances of your HOA can help identify fraud. A manager will reconcile the bank statement of your HOA with the financial reports. A board member who doesn’t have an eye for this may not be able to identify possible fraud. 

Avoid Conflicts of Interest

A board member can propose a transaction they have a financial interest in. This can result in conflicts of interest as the board makes financial decisions. When board members manage HOA finances, they must disclose potential relationships or connections before they make decisions. A full accounting system must be in place to make it easy to record transactions and make financial reports. But the board can avoid the expense and hassle associated with establishing this system by working with a financial professional from a management company. 

while it is great to have all board members with adequate financial experience, it is usually hard to fill the board with able, experienced, and willing individuals to handle HOA finances. This requires a strong team of members who can fulfill responsibilities and support one another. Financial management services can include monthly records of payments and delinquencies, handling HOA bill payments, customized financial reporting, internal controls to protect HOA funds, annual budget preparation, and more.

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