How can an HOA software help with accounts receivable?

With an HOA software, you can manage multiple communities, customize assessments and fees, save time through automated processes, make collections and follow-ups easy, generate reports quickly, and take advantage of an integrated accounting system.

What are the reasons to levy HOA special assessments?

An HOA may decide to levy a special assessment to cover inadequate budgets, to defray the costs of capital improvement projects, to cover insufficient insurance, to replenish reserves, and other reasons deemed appropriate by the board.

What is accrual basis example?

For example, if your association has unpaid invoices to a vendor which you have yet to pay for, under the accrual accounting principle, you would record it under ‘Accounts Payable.’ The same goes for any debts owed to the association but have yet to be settled. Knowing that you have receivables or payable will give you a better idea of your financial condition. Using the cash accounting method, though, you might spend money without knowing that you have payables to take care of.

What are HOA financial reporting mistakes to avoid?

To major financial consequences, board members should avoid underreporting the budget, overreporting expenses, failing to itemize the budget, and not filing tax returns.

What are ways to avoid HOA financial reporting mistakes?

In order to avoid HOA financial reporting mistakes, board members must pursue education to learn the basics of financial management, seek the expertise of professionals such as an HOA manager or accountant, and to utilize resources such as HOA software which can lessen mistakes due to human error.

What are the best HOA accounting software?

The best HOA accounting software are AppFolio, FreshBooks, Condo Manager, Buildium, MoneyMinder, ATG Online (C3), ForwardPass, CINC Systems, FrontSteps, and QuickBooks.

HOA Accounting Archives - Page 2 of 2 - HOA Management Software

How Can Association Management Software Help With Accounts Receivable?

admin on November 13, 2020

Although homeowners associations are non-profit organizations, they still earn money for the purpose of maintaining the community. Keep up with your HOA accounts receivable with the help of an association management software.

What Are HOA Accounts Receivable?

A homeowners association receives money from its members in the form of regular dues or fees. The association treats this as revenues, which are then used to fund the various expenses within the community. Not all of these revenues are received at once, though. This is what is referred to as HOA accounts receivable.

Simply put, accounts receivable are money the association expects to receive. It is money that debtors owe to the HOA. This can take many forms. As explained in the previous paragraph, it can be the regular dues that homeowners owe to the association. It can also take the form of fees or monetary fines that homeowners incur as a result of violating covenants or rules.

Other times, an association’s accounts receivable can come from vendors issuing refunds. If an HOA undergoes litigation with a homeowner or vendor, any monetary damages the association expects to receive as a result can also be considered as accounts receivable.

Benefits of an HOA Software

While some homeowners associations can manage their receivables manually, there are many advantages to switching to a digital platform. In addition to other benefits such as work order management and homeowner communication, here is how an HOA software can help your association with HOA accounts receivable:

1. Manage Multiple Communities

HOA boards are usually responsible for looking after their own community, but that is not the case with management companies. Association management companies typically handle multiple communities at a time.

With so much on their plate, it can be difficult to track which receivables belong to which community. Additionally, every community has its own set of rules and payment guidelines.

With HOA software, management companies can juggle multiple accounts simultaneously. Separating communities into profiles makes it easier to stay on top of accounts receivables as well as other items.

2. Customize HOA Assessments and Fees

It is not unusual for regular assessment amounts to vary each year. A surplus in the budget for one year could affect the following year’s budget.

Rising labor rates, inflation, and a number of other factors can also influence how much an HOA charges in fees or the need for special assessments. Moreover, some associations do not charge a flat rate across all members. Some homeowners may pay more depending on the size of their unit.

This constant change can make things confusing when recording assessments manually. Plus, extra fees like pet fees and violation fees can further complicate the matter.

An HOA software, though, can simplify the process by allowing customization of fees and assessments. You can designate a profile for each homeowner and modify the charges as you see fit.

3. Save Time Through Automated Processes

It is no secret that technology has helped streamline many of our modern-day processes. The same applies to HOA accounts receivables. Manual processes can take up so much of your time — time better spent on more important issues plaguing your community. Additionally, a manual approach has more room for error.

An HOA software comes with fully automated features that can save you both time and money. You can pull up and print out statements of accounts for each homeowner with ease.

You can send out reminders for upcoming or overdue receivables. Most programs come integrated with calendars that you can use to schedule reminders so that they go out on their own at the appropriate time.

Management companies, in particular, can significantly benefit from automation. When you handle a multitude of associations and communities, the ability to process account statements and send reminders in large batches become a necessity.

4. Make Collections and Follow-Ups Easy

Perhaps one of the most tedious jobs associated with accounts receivables is the collection. Even though you send out timely reminders, some homeowners just miss deadlines either accidentally or intentionally.

With the help of an HOA software, you can keep track of these overdue accounts receivables in one neat place. Monitor how long payments have gone unpaid for each homeowner. You can also send follow-up reminders to homeowners who have yet to settle their balances.

In addition to this, you can also keep tabs on debtors who have settled payments with the association. For example, if a homeowner pays their association dues, you can log this information into the program immediately. Most programs even allow you to attach supporting photos and documents (such as deposit slips), making it easy for you to cross-reference payments.

5. Generate Reports Quickly

Accounting will always remain a part of association management. That means preparing various accounting reports, such as income statements, balance sheets, and the like.

When it comes to accounts receivables, the associated report is the HOA statement of receivables.

Preparing the HOA statement of receivables is no easy task. If you have no prior experience or familiarity with this statement, you will find it fairly difficult to create or understand one.

An association management software, though, does the job for you. With technological help, you can generate a statement of receivables for any time period and learn how much the association is owed in one fell swoop.

A statement of receivables also usually comes with aging information. This will help you determine which overdue accounts have gone past 30, 60, and even 90 days.

6. Integrated Accounting System

Association management software offers fully integrated accounting solutions that comply with Generally Accepted Accounting Principles (GAAP). On top of keeping track of your HOA accounts receivable, an HOA software can help you with other accounting problems, too. This includes managing your HOA accounts payable, which are amounts and payments your association owes to other parties.

Efficiency Beyond Manual Solutions

Managing HOA accounts receivable can come as a challenge, especially for large associations or management companies with plenty of clients. When done improperly, accounts can get mixed up and overdue amounts may go uncollected. With an HOA software, though, you can say goodbye to endless hours of perusing through books and statements.

If your association or management company requires help handling accounts receivable, Condo Manager offers a fully integrated HOA software. Reach out to us today to learn more!

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When Should Your Association Levy HOA Special Assessments?

admin on August 30, 2019

In certain situations, a homeowners association may decide to levy a special assessment. Most homeowners are not amenable to this because of the unexpected financial burden. To prevent any misunderstandings between homeowners and the board, here’s what you need to know about HOA special assessments.

The Basics of HOA Special Assessments

Living in an HOA community comes with perks and privileges. You gain access to attractive amenities such as swimming pools, basketball courts, and gyms, as well as convenient services like landscaping, maintenance, and security. In order to pay for the maintenance and upkeep of these common areas, the HOA will collect monthly or quarterly assessments. However, many new homeowners are surprised when they are asked to pay for an additional fee called HOA special assessment.

What Is an HOA Special Assessment?

Compared to monthly or quarterly HOA assessments, HOA special assessments are one-time fees used to finance capital improvement projects. Ideally, HOA reserves fund capital improvement projects.

However, not all associations are able to maintain adequately funded reserves. HOA boards may also decide to levy a special assessment due to significant property damage following a natural disaster. Since these events are unexpected, the association may not have saved enough to pay for the repairs and replacements.

Are Homeowners Required to Pay for HOA Special Assessments?

Yes, homeowners are legally obligated to pay HOA special assessments. Every HOA will have a section regarding special assessments written in their Covenants, Conditions, and Restrictions (CC&Rs). A standard Covenant to Pay Assessments will include the annual/quarterly/monthly assessment dues, assessments for rule violations, and special assessments. Upon joining an HOA community, homeowners sign a contract which means that they accept all the stipulations in their governing documents.

How Does a Special Assessment Work?

HOA boards must first send an HOA special assessment notice to inform homeowners of an impending collection. However, if the amount exceeds the HOA special assessment limit stipulated in the governing documents, the board must obtain approval from the homeowners.

For instance, the governing documents stipulate that special assessments must not exceed 5% of the total budget. If the HOA needs more than 5%, they must hold a meeting with a quorum. The board needs a majority vote to proceed with the special assessment. Although, this requirement can be waived in emergency situations.

The board must send the HOA special assessment notice 30 to 60 days ahead of the established due date. After the due date, homeowners who do not pay their assessments within 15 to 60 days may be declared delinquent. The HOA can levy late fees and interest charges. They could also place a lien on delinquent homeowners’ properties.

How Are Special Assessments Calculated?

When the board collects a special assessment, the total amount must be equally divided among the homeowners. Each homeowner must pay the same rate.

Does Homeowners Insurance Cover Special Assessments?

If homeowners have loss assessment coverage, their insurance provider may cover the costs of HOA special assessments. Make sure to double-check with your insurance provider to avoid unexpected or surprise charges.

Reasons to Levy HOA Special Assessments

HOA boards have the authority to levy a special assessment on homeowners. However, they must abide by the HOA special assessment rules or limits written in the governing documents. Here are possible reasons why your HOA might levy a special assessment.

1. A Special Assessment to Cover Inadequate Assessments

The HOA may levy a special assessment if they determine or anticipate that the association funds will not be enough to cover the expenses for the fiscal year. This could be due to extraordinary circumstances, which led to spending more than what was budgeted, or it may also be due to improper budgeting.

2. A Special Assessment Due to Defray Costs of Capital Improvement Project

HOA special assessments can also be levied to cover the costs of capital improvement projects. If the association’s reserves are not enough, the special assessment may be necessary to pay for the repairs or replacements of major components or assets.

3. A Special Assessment Due to Insufficient Insurance Coverage

HOAs can rely on their insurance coverage to cover the costs of property damage due to natural disasters. However, there are instances when the insurance payout is not enough to cover.

Thus, the board may decide to levy a special assessment to make up the difference between the insurance payout and the actual cost of repair or replacement.

4. A Special Assessment to Replenish Reserves

HOA boards may levy a special assessment to replenish the reserve account. Associations must always have an adequate amount saved in their reserves in case there are emergencies, natural disasters, and other unfortunate situations.

5. Other Reasons Deemed Appropriate by the Board

The board has the authority to levy special assessments for reasons that they deem appropriate. They could use it for expenses incurred as a result of performing their duties and obligations. However, in some cases, the governing documents will first require approval from the homeowners via a majority vote.

What Are Special Individual Assessments?

There are also cases where the HOA board may levy special assessments to specific homeowners. Here are some possible reasons for levying special individual assessments.

A special assessment to cover property damage in common areas caused by the willful misconduct or negligence of a homeowner.
If a homeowner’s property is creating a nuisance or hazard, the HOA may levy a special assessment to cover the costs of correcting the said nuisance or hazard.
If a homeowner’s action results in the increase of HOA insurance rates, the board may levy a special assessment to cover the additional insurance costs.
A special assessment to cover the delinquencies of a homeowner who was responsible for maintaining/overseeing a project.

Understanding Why Boards Levy HOA Special Assessments

It can be shocking to receive a notice for a special assessment — on top of the HOA fees that you already have to pay. However, homeowners must also understand the reasons why the board has decided to levy the special assessment. If major components are left unfinished or utilities are left unpaid, there will be major consequences for the entire community. Your quality of life could deteriorate without the added funds from HOA special assessments. To avoid them in the future, homeowners should consider working with the board to find better financial management solutions.

Need help with HOA special assessments? Condo Manager has the software that can make HOA financial management a breeze. Call us at (800) 626-1267, email us at sales@condomanagerusa.com, or contact us online to learn more about our HOA software solutions.

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HOA Accrual Accounting: Why It’s The Best For HOAs

admin on May 16, 2019

Homeowners association accounting is a critical part of managing any HOA community. The key to successful accounting, though, starts at the beginning — choosing your accounting method. Among the three possible options, HOA accrual accounting remains unsurpassed.

What Is HOA Accrual Accounting?

The accrual basis of accounting dictates that you should record revenues and expenses as these transactions occur. It does not take into account when you actually receive payment or disburse cash.

When using accrual accounting for HOAs, you record all of the association’s financial activities on the HOA financial statements. Because of the timing of reporting revenues and expenses, account titles such as “Assessments Receivable” and “Accounts Payable” appear on the Balance Sheet. This gives you a better understanding of your association’s current financial standing.

HOA accrual accounting is inherently more complicated. Therefore, many find it more difficult to comprehend and execute. Regardless, it remains one of the HOA accounting best practices. It is widely used among homeowners and condo associations since it provides you with a more accurate view of your finances. Additionally, this HOA accounting method is the only one that conforms with the Generally Accepted Accounting Principles (GAAP).

HOA Accrual Accounting vs Cash and Modified Accrual Accounting

There are three accounting methods available to homeowners and condo associations: Accrual accounting, cash accounting, and modified accrual accounting. Typically, though, associations choose from one of the first two identified.

But, how does HOA accrual accounting differ from the other two methods anyway?

Cash accounting dictates that you should record all revenues and expenses as money moves. It primarily relies on the timing of the cash exchange. In this case, you would only record a revenue or expense account when you have either received (revenue) or paid (expense) money for it. Because of the timing of the cash method, account titles such as “Assessments Receivable” or “Accounts Payable” do not appear on homeowners association financial statements such as the Balance Sheet.

The final method, modified accrual accounting, is simply a combination of the other two methods. Using a modified basis, revenues are recorded when they are earned as opposed to when money is received. It follows the accrual principle. Expenses, on the other hand, are recorded when you disburse money regardless of when you incurred it. It follows the cash principle.

The Best Accounting Method for HOA

Given that there are three accounting methods that associations can choose from, you may wonder why most people favor the accrual basis of accounting.

Simply put, accrual accounting remains the best HOA accounting method because it paints a more accurate picture of your association’s finances.

For example, if your association has unpaid invoices to a vendor that you have yet to pay for, under the accrual accounting principle, you would record it under “Accounts Payable.” The same goes for any debts owed to the association but has yet to be settled.

Knowing that you have receivables or payable will give you a better idea of your financial condition. Using the cash accounting method, though, you might spend money without knowing that you have payables to take care of.

While modified accrual accounting does give you a clearer view of your revenues, it does not do the same for your expenses. HOA accrual accounting is simply superior because it helps you financially plan and budget for the future as well as allows you to make informed decisions.

Understanding the Pitfalls of Cash Accounting for HOAs

When your association uses cash accounting, it fails to report any receivables or payables. That means you have no way of knowing about any money coming in or any expenses you expect to pay — at least, not with a simple look at your financial records. This opens you up to the possibility of operating under a misapprehension regarding your finances.

Because receivables and payables do not appear on financial statements, you might think that your association has more cash than it actually does. Your cash account might reflect solvency, but you would not know for sure because you do not record payables. With the cash accounting method, you will find it hard to keep track of the money you owe and money owed to you. Thus, when unexpected expenses arise, you might end up spending money you actually do not have.

You can prepare reports to track your payables and receivables if you wish. But, you have no way of determining their accuracy because you cannot cross-reference them with your Balance Sheet or General Ledger.

Granted, the cash accounting method is the easiest to understand and execute, which is why some associations prefer it. But, it is best reserved for cash-based businesses and handling your personal finances. For an organization like an HOA, use accrual accounting.

The Role of the Law and Your Governing Documents

It is equally important to check state laws to see which accounting method you should ultimately use. Some states are more specific when it comes to HOA accounting, while others have no such laws. California, for instance, requires the use of the accrual basis of accounting when preparing a pro forma operating budget.

Your governing documents may also have a say in the decision. Some associations have it in their CC&Rs or bylaws that a certain method of accounting should be used when recording and preparing financial statements. Though, since HOA accrual accounting is the best, consider amending your governing documents if it asks you to use a different method. Check with your HOA attorney to see how you can amend your governing documents.

A Helping Hand

Accounting is a difficult subject that requires some background knowledge in order to execute properly. Understanding the idea behind HOA accrual accounting is just the tip of the iceberg. This is why many associations choose to seek the help of an accountant or invest in HOA accounting software.

Condo Manager USA provides software solutions for self-managed associations and HOA management companies. Our HOA and condo management software comes with a comprehensive accounting system that uses the accrual method of accounting. Schedule a free demo, call us at (800) 626-1267, or contact us online for more information.

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4 HOA Financial Reporting Mistakes To Look Out For

admin on March 1, 2019

Do you have problems with homeowners association financial reporting? Even with a financially literate board, mistakes can still happen. What’s important is that you’re able to identify these HOA financial reporting mistakes early on and make changes so that they never happen again. If you want to protect the financial position of your HOA, here’s what you should look out for.

HOA Financial Reporting Mistakes You Must Avoid

Accurate financial reporting is essential to the successful operations of an HOA. Financial statements reflect the financial health of your community. These documents let homeowners know that the HOA board is putting their money to good use. With accurate financial reports, you can also attract potential homebuyers to join your community.

But what happens when there are problems with homeowners association financial reporting? The board loses the confidence of the homeowners and the community fails to attract new members. Not only that, but financial reporting issues can also lead to higher insurance premiums and difficulty getting loans — should the need for one arise.

If you don’t want to experience these pitfalls, here are four HOA financial reporting mistakes to avoid.

1. Underreporting Budget

The HOA budget should be realistic and cover all the anticipated expenses for the coming year. The board should also cushion the budget for inflation, overspending, bad debts, vendor rate adjustments, and emergency expenses. If the anticipated income is not enough to cover all these expenditures, HOA fees must be increased. However, since these fee increases do not go over well with homeowners, some board members might decide to underreport their annual budget.

Underreporting the budget is a major financial reporting mistake that HOAs should avoid. As a board member, it is your fiduciary duty to act in the best interests of the association. That means ensuring that financial reports, including budgets, are accurate. Remember, is not your responsibility to appease homeowners with low assessment fees.

2. Overreporting Expenses

Overreporting expenses is one of the HOA financial reporting problems to look out for. Mistakes in your HOA financial statements might simply be due to human error but it can also be a sign of fraud or embezzlement.

Board members must carefully inspect their financial statements. For instance, is the HOA suddenly issuing payments to vendors that don’t exist or paying for excessive repairs and amenity upgrades? You can also check if checks are being issued to individuals.

Many HOAs only discover cases of fraud or embezzlement when it’s already too late. Thus, to protect HOA funds, board members must know how to read HOA financial statements so that they can identify discrepancies or mistakes — no matter how minute they may be.

3. Failure to Itemize

The HOA budget must be as detailed as possible to have an accurate picture of the upcoming year’s financial obligations. Accordingly, creating an annual budget requires a lot of time and effort. If your board is untrained or lacks attention to detail, you might end up with a budget that is not properly itemized.

For instance, instead of listing down roof maintenance, plumbing, electrical, and landscaping as separate expenses, the budget just has a maintenance category. This financial reporting mistake can result in overspending.

Without establishing specific budgets, the HOA may spend more for roof maintenance and leave less for the other maintenance projects. Thus, there is a chance that essential maintenance tasks cannot be accomplished. The board may also end up depleting funds, which can put HOA financials in a precarious situation.

4. Not Filing Tax Returns

Apart from the homeowners, HOAs must also report to the Internal Revenue Service (IRS). Some HOAs fail to file their Form 1120-H on time while others may not even know that they have to file taxes. Failure to file tax returns is a financial reporting mistake you should avoid. Otherwise, you might end up in trouble with the IRS.

Failure to file and pay taxes comes with penalties with interest. The IRS may also strip your HOA of its tax-exempt status. To avoid these costly consequences, make sure to file your HOA tax returns on the due date.

3 Solutions to Avoid HOA Financial Reporting Mistakes

Regardless if they were intentional or not, HOA financial reporting mistakes can have major consequences. Here are three solutions that can protect your association from the abovementioned financial missteps.

1. Pursue Board Member Education

Financial literacy is not a requirement for board members. However, once elected to the board, you must show initiative by pursuing HOA board member education. Newly elected members will have the opportunity to learn the basics of financial management. They do not need to be financial experts but at the very least, they should know how to read and interpret financial reports.

2. Seek the Expertise of Professionals

If financial management is not the forte of the board, considering consulting or hiring professionals.

HOA management companies and accountants have experience with financial management tasks so they can provide the guidance that your board needs. These professionals can also serve as checks and balances to prevent fraudulent activities within the HOA.

3. Utilize HOA Resources

Board members should not use the lack of financial background as an excuse for financial reporting mistakes. In this day and age, there are so many resources you can use to manage HOA finances.

For instance, HOA software can automate day-to-day financial tasks so that there are fewer accounting mistakes and errors. These programs can also analyze your data and produce financial reports. As long as the numbers are inputted correctly, HOAs can be confident that the generated financial reports are accurate and detailed.

Overcoming HOA Financial Reporting Mistakes for a Better Future

By now, board members have a better understanding of HOA financial reporting mistakes and solutions that can help them avoid these pitfalls. Through proper financial management, you can ensure that your community operates smoothly and that homeowners can see the results of investing their hard-earned money.

Looking for software that can help you avoid HOA financial reporting pitfalls? Feel free to contact the Condo Manager team today! Call us at (800) 626-1267, email us at sales@condomanagerusa.com, or contact us online to request a demo or to learn more about our HOA software solutions.

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Condo Fees: Everything You Need To Know

admin on March 12, 2018

Condominiums are becoming increasingly popular in the United States, with many choosing to live in condos due to their affordability and convenience. But, with condo living comes condo fees.

What Are Condo Fees?

If you have ever lived in a condominium, then you know there are common areas that all owners share. These common areas, though, do not just maintain themselves. All owners are responsible for keeping these common areas in good condition. This is where condominium fees come in.

Condo fees, also known as condo maintenance fees, are fees that condo owners pay to the condo association (COA). The association then uses these fees to pay for various maintenance and repair costs. Condo owners pay these fees on a regular basis. Depending on the association, it could be on a monthly, quarterly, semi-annual, or annual basis.

Given the number of condominiums nowadays, it is essential to weigh your options first before coming to a decision. That means comparing the cost of condo dues as well as what these fees cover. After all, not all condo associations charge the same fees for the same things. For instance, a COA’s fees might cover the cost of common area maintenance but not trash removal services.

Are condo fees and HOA fees the same? In a lot of ways, condo fees and HOA fees are the same. But, the difference is that condominium fees related to condo associations, while homeowners association fees relate to — surprise, surprise — homeowners associations. The former exists to cover the maintenance and repair of common areas, which all condo owners have joint ownership of. On the other hand, in a homeowners association, the common areas are owned by the HOA.

Additionally, you may wonder, “Do all condos have HOA fees?” Almost all condominiums charge fees to owners for the maintenance and upkeep of common areas.

What Is Included in a Condo Fee?

Before choosing a condominium to live in, you must first understand how condominium fees work and what they cover. Again, not all condo maintenance fees cover the same things.

So, what do condo HOA fees cover? Typically, a condominium maintenance fee covers the maintenance of amenities and common areas. This includes landscaping, lobbies, sidewalks, patios, tennis courts, gyms, and elevators. They might also cover utilities, wages, management fees, and emergencies.

Apart from the operating fund, which the association uses to pay for day-to-day expenses, condo associations should also have a reserve fund. The association taps into this fund to cover the cost of large repairs or replacements as well as contingencies. Every association must keep its reserves properly funded.

How Are Condo Association Fees Calculated?

Every condo association has a set of members, called the board of directors, who manage the association. Along with overseeing the maintenance of the community, the board also carries the task of preparing the budget for the upcoming year. From this, the board can calculate how much to charge each condo owner in fees.

To prepare the budget, the condo board must consider all of the association’s basic expenses. They anticipate how much the COA expects to pay for things like trash collection, snow removal, landscaping, and other maintenance work. They also take into account things like insurance, utilities, housekeeping, property taxes, legal fees, wages, office expenses, etc.

Once the board has a projected cost of expenses in mind, they will then divide this by the total number of condo owners in the association. This includes the board members themselves as they are not exempt from paying condo dues.

Condo Fees on Average

How much are condo fees? Condominium fees can vary from association to association. If your condominium has a lot of amenities, your fees tend to reflect that. After all, swimming pools, tennis courts, gyms, and outdoor areas cannot stay in good condition without proper care.

Similarly, larger amenities also usually command a higher condo fee given the extent of maintenance required. The location and exclusivity of your condominium can also play a part in influencing the cost of your condo fee. If you live in an upscale neighborhood, then expect to pay a higher condo fee. Some associations even calculate fees based on how large your unit is.

Condo maintenance fees can vary wildly from $50 to $1,000. Again, there are a lot of factors that can affect the cost. Average condo fees, though, sit somewhere in the $300 to $400 range.

Can the Board Increase Condo Fees?

The short answer is yes. Condo boards do hold the power to raise condo maintenance fees, provided the association’s governing documents say so. Some states have laws regulating the increase in fees, though. For example, according to Civil Code Section 5605 in California, a condo board may not raise the fee by more than 20 percent of the amount levied the previous fiscal year.

Additionally, your association’s CC&Rs might have certain restrictions about a fee increase. It is worth noting, though, that should your CC&Rs conflict with state laws, the latter takes precedence.

Why Are Condo Fees So Expensive?

The location, exclusivity, and amount or extent of amenities in your condo can affect the cost of your fees. If you feel like your fees are too high, though, the condo board should take a look at some of the ways it can reduce the association’s expenses.

Investing in energy-efficient solutions, for instance, can have a long-lasting impact on a condominium’s budget. Additionally, condo associations should not be afraid to ask for special promos or discounts from vendors. It is also worth digitizing COA processes with the help of management software.

What Happens When You Don’t Pay Condo Fees?

If your daily living expenses are already too high for you to handle, you may feel tempted to skip paying your condominium fees altogether. That is a bad idea, though.

These fees are mandatory, which means there is no way you can get out of paying them. Once you agree to live in a condo managed by an association, you agree to its many stipulations as well. That includes paying condo dues.

Condo owners who default on their payments can face a number of potential consequences. Depending on what state laws and a COA’s governing documents permit, a condo board can impose one or all of the following:

Charge a Late Fee. Failure to pay your dues on time can result in a late fee.
Restrict Owner Privileges. The condo board can suspend your privileges and restrict your access to condo amenities if you stop paying your fees.
Take Legal Action. Refusing to pay your fees can lead to the board filing a lawsuit against you. In more extreme cases, the condo board may file a lien on your unit and initiate a foreclosure.

Given the severity of some of these outcomes, it is best to simply pay your dues on time. If you are experiencing financial troubles, talk to your board about setting up a payment plan.

Take Everything Into Consideration

While it is true that condo living poses many benefits, it also comes with responsibilities. Whether or not you intend to use a condo’s amenities, you still need to pay condo fees regularly. As such, before you dive straight into a decision, you must examine all the pros and cons first. Condo living is not for everyone, but it is certainly a lifestyle worth considering.

Managing a condo association can come as a challenge, especially if you have little to no experience. Condo Manager streamlines and automates most of the management processes, making it easier for any condo board or management company. Call us today at (800) 626-1267 or contact us online for a free demo.

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10 Best HOA Accounting Software

admin on March 23, 2016

Gone are the days of manual bookkeeping for homeowners associations nationwide. With HOA accounting software, you can automate accounting processes and generate financial reports with ease!

What Is HOA Accounting Software?

HOA accounting software helps HOA boards and managers perform day-to-day financial tasks such as payments, invoices, and wages payments. These actions automatically create accounting entries in the general ledger, which the system then uses to generate financial statements such as Balance Sheets, Income Statements, and Cash Flow Statements.

It differs from HOA management software, which is more comprehensive in its features and capabilities. HOA management software usually includes accounting and financial reporting services in addition to other features such as event management, service request automation, communication, resident portals, and the like. HOA accounting software typically does not offer these other services.

What about property management software? This type of software differs from the other two HOA software in terms of purpose. Property management software is used to aid the management of rental properties, whether they are of a residential or commercial kind. It shares some functional similarities with HOA management software, such as tenant portals, communication, work order management, and online rent payment.

What Are the Benefits of HOA Accounting Software?

Here are the top advantages of getting HOA accounting software:

Accuracy. The error margin is much smaller than if you were using a manual system since the software only requires one accounting entry per transaction.
Speed. The software makes it much faster when adding data to the computer from its built-in databases and details for each property owner.
Faster Documents. You can easily get your invoices printed quickly and efficiently.
Automatic Updates. Your program will automatically update everything so that you’ll always see the most recent account balance.
Financial Reports. With HOA accounting software, you can generate financial statements in real-time with the click of a button. Accurate reports allow you to make smart and informed decisions for your community.
Savings. Although you will initially pay an amount for the software, the cost more than pays off as you cut down on time spent manually performing tasks.
Cross-usability. Information can be easily shared and worked on from any location and with more than one user at a time, making it easy for managers to share information with the HOA board and vice versa.
Legibility. Having numbers on screen makes them more easily readable than handwritten figures, which improves accuracy.

Best HOA Accounting Software

1. AppFolio

AppFolio Property Manager comes with all the accounting features you need in HOA software, including bill entry and automated accounts payable. It also integrates debt collection with online payments and even automates late fees. You also get real-time flexible reporting as well as performance insights, allowing you to make adjustments as you go.

Although AppFolio is primarily a property management software, HOAs can still benefit from this system thanks to its powerful accounting features. Pricing starts at $0.80 per unit per month, with a minimum monthly fee of $250. You can even sign up for a free customized demo.

2. FreshBooks

FreshBooks promises to make bookkeeping easy, allowing you to spend time on more important matters. This software focuses purely on HOA accounting. You can send invoices, track your expenses, and record payments. After the initial setup, you can basically step back and just let it run by itself. FreshBooks is even available as a mobile app for on-the-go use.

You can try FreshBooks for free for 60 days. After that, subscriptions start at $4.50 a month with five billable clients. If you have over 500 billable clients, you will need to contact FreshBooks for custom pricing.

3. Condo Manager

Condo Manager is specifically designed to cater to HOAs and COAs, though it also has property management capabilities. This software boasts full-service accounting — from budget planning to bank reconciliation to generating monthly reports. You can stay on top of your accounts receivables and accounts payables as well as automate invoicing and receive payments online. With Condo Manager, you can say goodbye to manual entries for good.

This HOA and condo management software does not stop with accounting, though. It is an all-in-one self-managed HOA software that also offers website services, online resident portals, communication tools, and service request management. It even has modules for CC&R violations, collections, and architectural requests. Both HOA management companies and independent communities can benefit from this self-managed condo association software.

You can contact Condo Manager online for a free demo.

4. Buildium

Buildium is a property management software that HOA communities can also use. It offers maintenance request tracking, online payments, and comprehensive accounting features. Buildium also generates financial reports, has a portal for residents and property owners, and even offers a professional website to top it all off. Some of its features, such as tenant screening and property inspections, come with additional fees, though.

It is hard to find software that comes free of charge, but Buildium comes very close. With a 15-day trial at your disposal, Buildium is definitely one of the best free HOA management software you can try. After that, pricing starts at $50 per month.

5. MoneyMinder

MoneyMinder is one of the few providers that solely focuses on HOA accounting. This particular software has been in the business for 17 years, making it a true veteran when it comes to accounting for HOAs. With MoneyMinder, you can track resident dues as well as other income, generate reports, send invoices to homeowners, receive payments online, and compare your budget with your actual expenses. You can even integrate it with your bank account, allowing for easy bank reconciliation.

Although MoneyMinder is chiefly an HOA accounting system, it also offers a few other management features. This includes document management and sharing as well as member communication.

Perhaps the best part about MoneyMinder is that it has a completely free version, though it understandably comes with limited functions. You can try the paid version for 30 days before subscribing to it for $159 a year.

6. ATG Online

ATG Online understands the difficulties self-managed communities face. With C3 (Complete Control for Communities), it aims to make financial management easy for HOAs everywhere. C3 comes with A/R and A/P management capabilities, budgeting, reporting, and delinquency processing. It also boasts association management features, such as work order management, maintenance, architectural, and covenant tracking.

Pricing available upon request.

7. ForwardPass

ForwardPass offers full-service accounting features, from accounts receivable and accounts payable right down to the general ledger. It can manage and track assessments, automate processing fees, send invoices and statements, create purchase orders, reconcile bank accounts, and generate real-time financial reports.

This HOA software is not limited to accounting, too. It comes with work order management, amenity reservations, community calendars, communication tools, and complaint processing. Pricing begins at $49 a month per user plus $49 a month per community with a minimum of $147 a month.

8. CINC Systems

CINC Systems is an all-in-one association management software that comes with robust accounting features. This software boasts modules for accounts payable, collections, homeowner billing and payments, lockbox services, and monthly reports. It also offers other features typical in HOA management software, such as communication, CCR management, and ACC management. CINC Systems even provides a customized website for easy access.

Pricing starts at $39 a month.

9. FrontSteps

FrontSteps allows you to build your own custom HOA website with features like violation tracking, dues management, and online payments. You can even make it easy for residents to file work orders and maintenance requests. On the management side, you can keep track of these requests and stay on top of your community’s financials with seamless accounting services.

You can sign up for a free trial with FrontSteps, though you need at least 750 homes/units to be eligible. After that, pricing begins at $79.95 per month.

10. QuickBooks

For most people, QuickBooks is the first thing that comes to mind when it comes to accounting software. And while there is no QuickBooks product that specifically caters to community associations, you can still use QuickBooks for HOA purposes. With this software, you can automate dues payments, wages, and bills. You can also track your income and expenses, allowing you to compare your budget with actual figures. Many HOA management systems even integrate with QuickBooks for streamlined use.

Pricing starts at $12.50 per month.

Making a Decision

HOA accounting software definitely makes financial management easier for many communities, self-managed or otherwise.

With so many options available, choosing one can come as a challenge. Not all software providers offer the same features, though. When looking for the best HOA software for your community, make sure to evaluate your needs, compare it with the features your prospects offer, and consider your budget.

Condo Manager offers extensive HOA management solutions to companies and communities alike. Call us today at (800) 626-1267 or contact us online for more information.

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