Hiring a Financial Manager for Your Community
All too often, communities start looking for a new property manager because their current manager did not properly keep up with the accounting. Bills start to go unpaid, invoices do not get sent out on time, the books are not kept up with; it can become a real problem. The reason is not always because the property manager is failing at his or her job. Sometimes, there is simply too much to handle.
A property manager is responsible for all projects related to the community. They must take maintenance requests, research vendors, oversee the work, schedule and attend meetings, and field resident calls and emails, in addition to handling all financial aspects of the community. At a certain point, something is going to fall through the cracks. When a major project is in the process of being completed what becomes more pressing: ensuring the expensive new community pool is built to community specs or that collection letters go out on time? Many times, the project manager will have to pick and choose where their attention is concentrated leaving some details “until tomorrow.” What if being one day late paying a vendor invoice is the difference between losing and keeping the contract with the amazing maintenance company?
Hiring a financial manager to handle the accounting aspect of property management can increase the efficiency of your current property manager by freeing them up to focus on maintenance and projects while leaving all financial responsibilities to a trained professional.
Hire a Specialist
There is a reason why you don’t get your car’s engine repaired at a tire shop. Shops that work on tires require a different set of skills and equipment compared to shops that work on engines. The same goes for HOA and condo property management. The property manager is a generalist. They understand what needs to be done to keep a community operational. When it comes to a specialized field such as HOA accounting, they may not have all the necessary skills to manage it properly.
Hiring a financial manager to work with your property manager is the ‘divide and conquer’ method of community management. The property manager can handle projects, maintenance, and board meetings, while the financial manager can maintain records, send out invoices, pay vendor bills, and prepare financial statements.
Financial managers come with a specialized set of tools as well. Because HOA finances is all they do, they will have the best software and technology available to keep track of accounting information. They will also have more training and certifications, most are CPAs when compared to property managers. In general, they are more equipped to handle association financial information.
HOA Financial Management
Managing the finances of an HOA or condo association is more tedious and time-consuming than many people believe. Detailed financial statements including a balance sheet, income statement, receivables, and payables statements, bank statements, and general ledgers for all community accounts need to be prepared and presented to the board at regular intervals so that they can make educated decisions regarding the community budget and allocation of funding. The frequency is determined by the community board of directors and state law. Most communities prepare financial statements monthly.
The financial manager will also be responsible for preparing and collecting all member dues and responding to homeowner inquiries in a timely manner. Many times, the property manager alone will not have time to properly keep track of delinquent dues or work on collections thus losing the community association money. By hiring a financial manager, they can focus all their time on collecting the money owed to the association. A professional financial manager will also have the resources to report delinquent accounts and affect credit scores which will help to ensure dues are paid in the future.
HOA laws can be confusing and differ from state to state and region to region. A general property manager may not be aware of the laws affecting the financial management of a community association. Having a trained professional on staff will ensure that all state and local financial laws are being followed and enforced. They can also help when it comes time to pay taxes or prepare for an audit.
Having one person in charge of paying bills will also ensure that all vendor bills are paid in time. Not only does this help to maintain good relationships with community vendors, but it can also avoid any late fees and save the association money.
In the unfortunate event that your community is unsatisfied with the work that a hired manager is providing, having a separate financial manager and property manager will cause less of a disruption in the community when one is removed. If your community only has a property manager, in the event their work becomes less than satisfactory and they need to be relieved from duty, the HOA board of directors is on their own until they can find a replacement. That leaves all the responsibility on community volunteers with their own full-time jobs, families, and social lives.
Hiring a specialist can relieve some of that shock. If there are two specialists working in a community, firing one of them will cause less of a disruption because there will still be a professional available to handle some of the workload.
Some financial management companies offer a 24/7 maintenance and support phone line as well. If you have ever had trouble getting in touch with your property manager during a maintenance emergency, you know how frustrating it can be. With a financial manager on staff, you will have a backup if the general property manager is unavailable. The financial manager will also have a list of approved vendors and can make vendor calls on behalf of the community.
Need More Information
CSM is an experienced HOA and condo association financial management company with years of experience working with homeowners in almost every state in the US. We offer a wide variety of financial services including financial management, back-office services, collection services, and homeowner communication services.
For more information on the benefits of adding a financial manager to your community management team, contact us online, call CSM at 865.315.7505 or email us at firstname.lastname@example.org. Our trained professionals are ready to answer all your questions.