Managing your HOA’s reserve fund is rewarding, but without the right systems and software in place, it can become time-consuming and stressful.
The many decisions you make as a board have an immediate impact on not only the finances of your community but on its well-being too. So, deciding what tasks should take center stage is tricky.
On top of that, managing your HOA’s finances manually makes it easy for mistakes to be made and important steps to fall through the cracks. But did you know that you might be performing complex tasks by hand that could be simplified with the right software?
Instead of using old and outdated systems and processes, why not take advantage of the technology available today? With all the issues that commonly arise in HOA fund management, the right software can enhance the way you respond to them.
Problem # 1: You used pen and paper to track your reserve and operating funds and the numbers are not adding up
First, it is important to understand that operating funds and reserve funds are two separate aspects of your budget, and they should never be mixed up. Operating funds include money used for everyday costs and expenses. They include expected charges and expenses, rather than surprise ones. An HOA should use operating funds to pay for groundskeepers, landscaping and snow removal, trash disposal, and general maintenance.
On the other hand, reserve funds are set aside for significant, often unexpected, and expensive expenses. These are bills that should not covered by an operating fund. An HOA reserve fund should be able to pay for unexpected roof or flood damage, foundational repairs, and long-term repairs that would become necessary in the future.
The difference between operating funds and reserve funds is night and day, yet many have one bank account for all their expenses. But these two very different funds should not be in the same bank account, let alone on the same page of your record keeping.
In cases like these, where reserve funds and operating funds are used interchangeably, it leaves HOAs in a financial mess.
If your HOA board has combined operating funds and reserve funds, and the financial health of your community is getting out of hand, then it is time to pull in expert help to get you back on track.
- Get a reserve study done as soon as possible.
A reserve study gives HOAs a comprehensive look at the state of their finances. It considers several factors, including your financial records, previous operating costs, expected and unexpected repairs and maintenance, and the cost of similar repairs today. It will also give you an accurate number that you should have set aside in your reserve fund. Reserve fund studies are accurate and relevant to your HOA, and they help your community prepare for what will happen in the future.
A reserve study might help you learn that you have less in your reserve fund than you should. Keeping in mind that a reserve fund should cover you for long-term, unexpected, and emergency repair costs, if it is not currently where it should be you should take immediate steps to ensure your reserve fund is healthy and secure.
- Consider External Help
For some HOAs, immediate action might look like hiring an HOA financial advisor who can help you navigate your next steps. An HOA financial advisor can provide a clear and tailored action plan to get your HOA to where it should be. Because while a reserve study is great for identifying future costs and how much you should have, a financial adviser can tell you how to get to that place.
So, if you’re experiencing tough financial difficulties within your HOA, and if you need more help than you currently have access to, a financial advisor could be just what you need to get back on track.
- Keep Secure Documents and Records
Once you have received the results of your assessment, you have a clear understanding of how much you have versus how much you ought to have, and you want to pull in external help, there is another step you should take.
To create predictability in your financial records, be able to refer to previous expenses, and plan better for the future, your HOA board should consider making the transition to digital record keeping.
Documenting your financial information on a secure, reliable, and user-friendly platform is critical to the security and well-being of your HOA. It is impossible to plan if you cannot obtain an accurate account of what happened before. And the best way to look back is to have a reliable financial record.
Digital records are more secure than paper. They are hard to manipulate, precise, and easy to maintain and protect. Digital record keeping allows you to control who has access to your files, and with the right software you can have access to those records wherever you are and as often as you want, when you have a smart device and access to Wi-Fi. So, take the important and necessary step towards financial security and transition to digital record keeping.
Problem #2: Your HOA’s building inspection revealed extensive repairs are needed. Your HOA does not have the money to complete these repairs and you must now communicate an immediate dues increase or a special assessment collection to residents.
Unexpected and urgent repairs are common, but when they catch you unawares, they can be particularly damaging. That’s why keeping the lines of communication open between residents and members of your board is critical.
In a lot of HOA communities, residents see the HOA board as a governing body of whom they are unable to ask questions. And they feel far removed from the events and decisions of the board. But it should not be this way.
HOA boards are supposed to work for residents. It’s their job to ensure a safe, secure, and efficient community, and when things go wrong residents should know why.
First, know that communicating an increase of dues or a special assessment collection to residents should not be the first communication about finances you have.
Part of your job as a board is to keep residents in the know about the state of the community’s finances.
There should be, at least, quarterly updates about your community’s finances, and these updates should be timely and transparent. Not communicating with residents about financial matters can lead to mistrust and suspicion of the board and the decisions it makes.
Start connecting with residents
Your residents want to hear from you, and they don’t want you to wait until things are dire before they find out what’s going on. Staying connected with residents will not only help you to gain their trust and respect, but it will also give you a richer understanding of resident priorities and areas you can and should focus on.
- Provide residents with updates on the financial health of your HOA
Financial updates are a great way to be transparent with residents. They can be done quarterly through a digital newsletter or an email. Digital news blasts help you keep a record, and they go out to everyone quickly. Papers are often thrown away or discarded, but emails and newsletters go directly to your resident’s smart devices. Software that allows you to communicate this message is invaluable.
- Offer residents an education on HOA finances
Everyday financial matters, like garbage disposal, maintenance of lawns, snow removal, and general community upkeep can be routine, but chances are there are a lot of residents who are unsure of where their money goes. Rather than leave them in the dark, share an informative newsletter where you explain the general use of the HOA funds, HOA reserves, budgeting, and why a special collection or dues increase is necessary.
- Poll your residents
A poll is a great way to connect with residents. They are powerful digital tools that can be used frequently. Residents don’t have to drag themselves out of bed to have their voices heard. And you can get valuable feedback about what issues residents feel should be addressed urgently.
- Host financial town halls
This is a great opportunity to receive feedback from residents on common areas that need special attention and have open discussions and updates on HOA finances. Town halls have an immediate impact on the community in several ways:
- They inform residents about the financial status of their community
- They inspire residents to get engaged and involved in community matters
- They motivate residents to speak and be heard
- They encourage residents to follow up and become more invested in the community they call home.
So, using software that has the capacity to host town halls virtually, including for residents who might be out of town or away at the time town halls are hosted, helps.
Giving every resident the opportunity to hear, speak, and understand is critical to building a strong HOA reserve and community.
Ultimately, the benefits of using the right software in your management of the HOA reserve have benefits that extend beyond your reserve fund.
Problem #3: Your HOA has had long-standing problems with communicating financial transitions and changes to residents. And now, you are looking for a quick and easy way to stay connected.
Communication neglect or breakdown can have a lasting impact on your community, your reserve fund, and your finances at large. This is because when you have residents who feel discontent, checked out, or unmotivated to engage in community matters, it’s because of a larger issue.
In one way or another, your community residents learned not to care, or they learned that their voice was not going to make a difference to decision-makers.
In this scenario, there is a lot you can do to build a culture of transparency, reliability, and trustworthiness. When residents trust you and feel that their voice matters, they won’t detach themselves, check out, or start looking for somewhere else to live.
The work begins first, by acknowledging that there is a lot to be done to win back residents’ trust, and it starts with preparing a plan of action.
It is critical that you make every effort to get back on track and win the trust and respect of your residents. Failing to connect with residents on issues that matter to them, such as finances, repairs, community maintenance and updates, and social culture, sets a tone.
But, coming up with a comprehensive communication strategy can seem like even more of an undertaking than living with a lack of communication. However, it does not have to be that way. There are great digital solutions that can help you connect with residents quickly, and consistently. And they can help you win them back.
Use digital communication software to stay connected with residents.
Digital software has come a long way, and it has continued to make incredible strides over the last fifteen years. Now software, which once seemed difficult and unpredictable, is much easier and reliable.
But with so many options available on the market today, it can be difficult to identify which one is the right fit for your HOA. And, for those of us who like user-friendly and responsive software, many seemingly modern solutions are not so user-friendly.
Control is the ultimate solution for your needs. Many people on our team are condo and HOA community members, and some serve on boards in their HOA or Condo communities!
Our software has been trusted for over fifteen years by HOAs because our smart and user-friendly interface works. We do everything digitally, on the cloud, because it makes keeping track of your communication with residents a breeze.
The Ultimate Solution
Finding a solution to all these different problems might seem difficult. While there are many HOA management software systems on the market, not all of them offer a complete solution to the day-to-day management of an HOA community.
In the case of HOA reserve fund management, boards should lean on software that is reliable, user-friendly, and effective at streamlining financial tasks and ensuring that documents and records are kept properly. If you’re still relying on a paper and pen system in 2023, or multiple software systems that never seem to meet all of your needs, then perhaps it’s time to consider a new solution.
Condo Control has been trusted by HOAs and Condo communities across North America for more than fifteen years. Our user-friendly, safe, and reliable software is an all-in-one management tool that covers virtually every aspect of managing an HOA.
Condo Control software makes complex and time-consuming tasks and processes, a breeze. So why waste time and money logging expenses, identifying trends in your finances, keeping track of who pays fees late, and managing your reserves manually, when you don’t have to? It’s easy to make the switch to using software. And Condo Control is the solution you need.
The efficiency and accuracy of your HOA reserve fund can make the difference between a healthy and prepared community and a mismanaged one. This is because an HOA that struggles to maintain a healthy reserve fund usually has other struggles too.
But, if any of these issues previously outlined are relevant to you, know that they can find their root in mismanaged time and productivity. So why not take advantage of the technology that exists? After all, wasting time roughing it with pen and paper and other drawn-out processes, does nothing but waste your HOA time and money.