Five Financial Health Tips for HOAs
Nevada HOAs take note: The health of your finances dictates the health of your community. Just like with your physical health, your financial health requires a regular check-up, too. Consider this to be one of those check-ups, and take stock of your financial habits to make sure they match up with these healthy activities.
1. Segregate duties.
Proper internal controls help prevent confusion and misconduct. It’s especially important that certain responsibilities, such as receipts and deposits, not be handled by a single person. A good community management company should have the resources to separate financial duties. Believe it or not, mishandling of association funds is an all-too-common problem in the HOA industry. The best way to inoculate your community against it is by appropriately segregating duties.
2. Conduct audits.
Audits are one of the linchpins of good financial health. A Nevada community management company staffed with CPAs can conduct regular audits and assist with your HOA’s other accounting needs. If yours is a smaller association, a less extensive review may be appropriate.
Your community management company shouldn’t be above getting audited either. As a publicly traded company, FirstService Residential undergoes extensive internal audits on a regular basis.
3. Make smart investments.
Choosing the right mix of earnings and liquidity is essential to the financial wellbeing of your HOA. Most importantly, you don’t want to gamble with HOA money. CDs are much safer investments than corporate bonds, municipal bonds, or stocks.
Need help with your investments? You may be able to count on your community management company to work as a financial partner. For example, if your community is managed by FirstService Residential, you can take advantage of our partnership with FirstService Financial to get lower interest rates. Other value-added services include ongoing analysis and consultations to make sure your association’s money is working as hard as it can—safely.
4. Have the right insurance.
Effective HOA management requires purchasing appropriate insurance coverage. This goes beyond property or casualty coverage. You’ll also need umbrella/excess liability coverage, liability insurance for your directors and officers, and fidelity insurance. Together, these types of policies protect the association and board members against lawsuits and help cover claims in case of theft. A community management company with its own insurance division can advise you on what policies are best for your HOA. And if the company also has a large national presence, it probably can negotiate lower premiums and better terms.
5. Make the most of technology.
Tech tools, such as FirstService Residential’s proprietary software, FirstService Residential ConnectTM, can streamline many of your financial processes. FirstService Residential ConnectTM enables board members to approve invoices online, track assessment and vendor payments, and develop budgets based on real expenses.
Feeling healthier yet? Good, but this is just the beginning. An excellent community management company can help you keep your finances fit year round. To find out more, contact FirstService Residential, Nevada’s leading community management company.