Managing your HOA budget is no easy feat. Many HOA boards are learning how to manage the community association budget as they go along. As a result, budgeting mistakes can become a regular part of HOA budget management in your community. However, community association budget management does not need to be a costly learning experience every time. Here’s a handful of tips for managing the HOA budget, so you can make the most out of your funds.
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Manage Your HOA Budget Better With These 8 Tips
Many communities are not actively trying to find ways to save money. This is a major mistake because if you can use money effectively, then you will be able to do more for your residents. Among other things, this will increase their satisfaction with their current management.
One good mindset to get into and get the most out of your association’s money is to stretch your budget as far as it can go. There are also several important factors to be aware of. Bear these issues in mind when trying to manage your HOA budget and how to make it do as much good as it can.
1. Prioritize Your HOA Projects
Some HOA projects are simply more important than others. If your association is like most HOA, your projects are likely limited by budget constraints. It’s always a good idea to spend some time going through your HOA projects, and list them in order of priority.
Prioritize the most important projects, the urgent ones so that you know they are already budgeted for. After those, you can look at projects that you expect to complete by the end of the year. By paying for these nearly completed projects, you can have them done and over with so you have more room next year, budget-wise.
2. Anticipate Increasing Expenses
Expenses increase year after year. That’s a fact you’re already aware of when you budget your home expenses. HOA expenses are no different – there are many costs that increase as time goes by. Make sure to anticipate increased expenses when it comes to utilities and vendor services. Don’t forget to factor in the accounting, legal, and insurance services that you rely on, as well.
3. Build Your Reserve Funds
One of the most important things to remember when you manage your HOA budget is to prepare for reserves. Every year, your HOA should be putting aside a portion of their income and saving them up in a reserve fund. This reserve fund can be used for major repairs, replacements, and upgrades to facilities that your community uses.
4. Negotiate Effectively with Vendors for Better Prices
Every year, make sure to review your contracts with vendors. This way, you can ensure that you’re getting the best out of the deal.
These vendors should be giving you some sort of incentive pricing, particularly if your community is larger. You could be able to get discounted maintenance rates along with replacement parts. Do not hesitate to ask for these perks. If you don’t, you miss out on the opportunity to save a lot of money on expenses that your community requires to run effectively.
Be sure to regularly question invoices and negotiate better prices. You will be amazed at how much money your HOA budget will gain just from merely asking.
5. Order in Bulk
There are times where you need many parts or services. Use this to your advantage. If you study your prior orders, you can order these goods or services in advance for a better price. This could have a substantial impact on your overall budget, which would be an excellent extra saving for your community. Your residents will like to see that your community is organized, efficient, and intelligent with how it uses money. If you can demonstrate these practices, your residents will be very satisfied with their current management.
6. Do Complete Cost-Benefit Analyses Regularly
Many managers that cost-benefit analyses are something that should only happen once. This could not be further from the truth. You need to always be looking at the cost and benefit of the fiscal decisions that your community association is making.
These decisions will be vital for the long-term goals that you are trying to reach. Be sure that you are conducting cost-benefit analyses as frequently as possible to avoid making common pitfalls as community associations often do.
7. Regularly Research and Apply for Grants for Your Community
There are so many different grants that are not allocated each year. Grants are an excellent opportunity for your community association to benefit a great deal. Grant applications are quite long and complex; however, when their funding does come through, it can make a substantial difference in your community’s budget.
You should be regularly researching different grant opportunities that present themselves to your community. You should then be actively applying for those grant opportunities and follow the instructions carefully. By doing so, you will potentially be obtaining more funding for your organization that you can use effectively.
Make sure that you are not missing out on grant opportunities. If you are not familiar with them, then be sure to hire or consult an expert who does have grant-related experience. This way, you will not be missing any opportunities to benefit from grant funding.
8. Audit Yourself
As a manager, it is your responsibility to see how your community is allocating its funds. You can’t just set budgets and expect everything to go smoothly. Your employees need to know that you are checking their work. Many careless mistakes can waste money. Implement regular internal audits to see which area of the budget can be stretched further and you will be amazed at the savings that you experience.
Manage Your HOA Budget with A Trusted Partner
If your HOA is just about to start planning for next year’s budget, consider getting a trusted partner to help. A finance professional can assist your HOA board with this task. Consider hiring one from a professional HOA management company to make sure that they can help you make the best financial decisions for your community. Call us today.
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