What to Consider When Planning a Community Association Budget
Planning your Community Association Budget is essential. If you do not organize your finances well, you will not be able to cover the costs of your residents, which will lead to questioning your practices and ultimately, a lower level of resident satisfaction. If you are trying to organize your Community Association Budget or to refine your existing budget, consider these important factors:
Know Your Community’s Strategic Vision
Before you start considering the numbers, it is important to know the long-term direction of your association. The reason for this is that if you set short, medium, and long-term goals, you will be able to see where you need to go and will be able to anticipate your community’s needs. Carefully strategize with your board members what the direction of your community association is and then implement effective financial practices to get there.
Review Your Reserve Study & Update if Required
Every HOA needs to have a reserve fund. If you do not have one, then you need to implement one. Reserve funds are used to finance unexpected large repairs that happen year-round. Some of these repairs are standard and others give little warning. Your community needs to carefully study what policies you have in place regarding reserves and integrate the essential changes to not be short on your cash flow.
Consult Your Committees for Input
It is wise to work with many different individuals on the strategy for your Community Association Budget. Many minds are better than one and perhaps many of your committee members will have a diverse professional experience to contribute to your decision making that will improve your budget substantially.
Create a Long-Term Plan for Your Goals
Long-term planning is essential. Make sure that you are setting financial goals for the long-term for your HOA. If you do so, you will have a target to meet and the accountability to have full transparency about how your association is managing its finances.
Project Your Revenues
Community associations to make revenues and you should be forecasting yours. You also need to be sure that you are collecting what is owed to you. If you can do so, you will have a steady stream of cash flow that can only contribute to your community association’s fiscal growth if your funds are managed well.
Plan for Any Taxes
Community associations have to pay taxes too. Be sure that you are aware of common taxation provisions that apply to community associations. You should also potentially meet with an accountant who knows these regulations and that can give sound advice on how to be sure that your finances are compliant with taxation regulations. This will save you a considerable amount of capital in the long-term.
Examine Historic Data
If your community association is well-established, then you will have historic data to look at. Review these old statements to see how to structure your budget, but to also look for areas of potential improvement.
Develop a Budget
Having a budget is something that takes careful thought. Merely throwing out arbitrary numbers is not going to help your Community Association Budget. Consult with an accountant if you need additional help and structure your budget efficiently for your community association.
Keep an Eye on Trends
Look at spending trends in your Community Association Budget. When you do so, you will see areas where you can cut costs or areas that you need to increase spending to provide a higher quality of life to your community’s residents.
Don’t Forget to Pay Attention to Your Budget
Don’t forget to follow your budget. Many times, arbitrary budgets are made and then they are not followed. Make sure that you are creating the best possible budget that you can realistically follow, and your community will benefit as a result.
How Clark Simson Miller Can Help You Manage Your HOA Finances
Clark Simson Miller has a great deal of experience in helping plan out Community Association Budgets in communities all over the United States. To learn more about how Clark Simson Miller can help, give us a call at (865) 315-7505 or contact us online.